The nation is in a much better position to cope with the ongoing global economic slump than the United States, Britain, Japan, and other advanced economies, thanks to its sound fiscal finance, according to the International Monetary Fund (IMF) Thursday.
The ratio of national debt to gross domestic product (GDP) for Korea is projected to reach 32.9 percent this year, up from 32.7 percent in 2008, ranking the seventh lowest among G20 economies. The G20 average will likely reach 72.5 percent.
Given its relatively low debt-to-GDP-ratio, the nation has more room to pump money into the economy and its fiscal soundness will unlikely suffer much even if it draws up an estimated 30 trillion won surplus budget.
Korea's debt ratio is expected to rise to 33 percent in 2010 but fall back to 29.3 percent by 2014 as the global economy recovers.
The IMF forecast that Japan's debt-to-GDP-ratio will top 217 percent in 2009 as its government continues to spend taxpayers' money to prevent the world's second largest economy from heading further south. The debt ratio for the United States will reach 81.2 percent, followed by Germany with 76.1 percent and France with 72.3 percent.
In particular, Britain is expected to see the debt-to-GDP ratio jump sharply down the road as its government spends more taxpayers' money than other advanced countries to keep the economy afloat. It has been the hardest hit economy by the worldwide financial crisis because the financial industry accounts for a greater portion of its economic output, compared to other economies.
The IMF said the debt-to-GDP ratio for Britain will likely stand at 61 percent this year and continue to rise to 68.7 percent in 2010 and 76.2 percent in 2014. It presented a similar outlook for the Unites States and Japan, with the national debt of the world's largest economy accounting for 99.5 percent of GDP in 2014.
The Washington-based organization said countries will be saddled with snowballing fiscal deficits for the time being as they try to prop up their troubled economies through stimulus steps, but stressed when the economy rebounds, governments around the world should make efforts to restore fiscal responsibility.
The IMF also said they need to overhaul pension schemes and other state-sponsored programs to more effectively improve their fiscal health.