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S. Korea needs proactive fiscal management amid demographic change: IMF director

All News 16:42 February 16, 2023

By Kang Yoon-seung

SEOUL, Feb. 16 (Yonhap) -- South Korea calls for a proactive fiscal management policy to cope with economic challenges, including its demographic change, a director at the International Monetary Fund (IMF) said Thursday.

Vitor Gaspar, director of the Fiscal Affairs Department at the IMF, made the remark during his meeting with Second Vice Finance Minister Choi Sang-dae in Seoul, according to the Ministry of Economy and Finance.

During the meeting, Choi told the IMF director that South Korea is tightening its belt to cope with the country's low birth rates and the aging population, and shared the latest efforts made by the country to maintain sound fiscal health.

Gaspar pointed out South Korea is one of the countries with the fastest increase in debt and that the country has made a reasonable decision to seek a sound fiscal policy, the ministry said.

South Korea has been seeking to enforce tighter fiscal rules that center on capping the deficit to 3 percent of the country's gross domestic product (GDP).

If the debt-to-GDP ratio exceeds 60 percent, the government plans to lower the deficit to 2 percent or less.

The rule is currently being reviewed at the National Assembly.

South Korea's total fertility rate came to just 0.79 in the third quarter of 2022, hovering far below the replacement level of 2.1 needed to keep South Korea's population stable at 51.5 million.

Second Vice Finance Minister Choi Sang-dae (C) speaks during a meeting with Vitor Gaspar, director of the Fiscal Affairs Department at the International Monetary Fund, in Seoul on Feb. 16, 2023, in this photo released by the Ministry of Economy and Finance. (PHOTO NOT FOR SALE) (Yonhap)

Second Vice Finance Minister Choi Sang-dae (C) speaks during a meeting with Vitor Gaspar, director of the Fiscal Affairs Department at the International Monetary Fund, in Seoul on Feb. 16, 2023, in this photo released by the Ministry of Economy and Finance. (PHOTO NOT FOR SALE) (Yonhap)

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