IMF lowers S. Korea's gov't debt forecasts on improved tax revenue prospects

By Kang Yoon-seung

BANGKOK, Oct. 14 (Yonhap) -- The International Monetary Fund (IMF) lowered its forecasts for South Korea's government debt to gross domestic product (GDP) ratio through 2031, citing its strong economic growth and prospects for improved revenue conditions, the budget ministry said Wednesday.

The Washington-based organization said in the IMF Fiscal Monitor report that Seoul's government gross debt-to-GDP ratio would reach 46.1 percent this year, projecting it will remain in the mid-40 percent to low-50 percent range through 2031.

The 2026 projection marks a decrease of 8.3 percentage points from the April edition.

The IMF also expected the ratio will reach 51.3 percent in 2031, down 11.8 percentage points from its April forecast.

The projected ratio for this year represents around 37 percent of the Group of Seven average of 123.6 percent and 43 percent of the average of 107.6 percent for 38 advanced economies.

The Ministry of Planning and Budget said the IMF's latest assessment reflects South Korea's efforts to create a virtuous cycle in which expansionary fiscal policy supports economic growth, which in turn generates stronger tax revenue.

The IMF highlighted South Korea's strong GDP growth, coupled with prospects for improved revenue conditions through 2030, the ministry added.

South Korea will continue efforts to invest proactively to bolster the country's growth potential and ensure fiscal sustainability, creating a virtuous cycle between fiscal policy and economic growth, the ministry said.

Earlier this week, the IMF raised its 2026 growth forecast for South Korea to 3.3 percent, up 0.7 percentage point from its July projection, citing strong semiconductor exports that more than offset the fallout from the Middle East war.

The 2026 Annual Meetings of the IMF and the World Bank Group, meanwhile, kicked off in Bangkok on Monday and will run through Sunday.