SEOUL: South Korea said it will tighten government spending to slow an increase in its debt and keep the debt-to-GDP ratio at mid-50 per cent by 2027, following years of massive stimulus measures that have weakened the country's fiscal situation.
Its finance ministry said that the government will cut the ratio of fiscal deficit to GDP to a pre-pandemic level of 3 per cent or lower from about 5 per cent estimated for this year, as it released the new administration's fiscal policy plan on Thursday (Jul 7).
The government will normalise COVID-19-related expenditures, sell off unnecessary assets held by public enterprises, manage its employment quota and salary plans more strictly, among other measures, according to the plan.
South Korea's debt-to-GDP ratio increased to 50 per cent this year from 36 per cent in 2017 as the country launched various stimulus measures, such as cash hand-outs, to boost the economy's recovery from the pandemic.
The ministry said it will prepare a new fiscal rule based on the plan by early September and put it into effect as soon as the legislation process is complete.