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IMF official suggests financial regulations on household debts

All News 21:36 June 16, 2017

SEOUL, June 16 (Yonhap) -- A senior International Monetary Fund (IMF) official advised South Korea on Friday to consider tightening financial restrictions on mortgage loans, rather than rate hikes, to curb its chronic household debt program.

Rhee Chang-yong, director of the IMF's Asia and Pacific department, said the key Asian economy needs to save the card of raising interest rates for the future.

He was speaking at a forum here with the theme of "Macro-Financial Linkages: IMF toolkits and application."

Rhee, a Korean economist, was apparently referring to the debt-to-income (DTI) and loan-to-value (LTV) ratios.

"In the case of South Korea, real estate prices in Seoul are on the rise but nobody views it as a housing boom," he pointed out.

If South Korea opts for a rate increase, it would increase the debt payment burden and have a negative impact on economic recovery, he added.

He stressed that South Korea's current account surplus has reached around 7 percent of its gross domestic product, a quite high level for other countries.

Rhee Chang-yong, director of the IMF's Asia and Pacific department, in a file photo. (Yonhap)

lcd@yna.co.kr
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