Lee Cites IMF Comments to Rebut Austerity Calls Again

President Lee Jae-myung again stressed the need for expansionary fiscal policy, citing comments from the International Monetary Fund on South Korea’s fiscal stance.

Lee has repeatedly criticized calls for austerity in recent weeks. This time, he pointed to IMF remarks that South Korea has sufficient fiscal capacity as he renewed his pushback against tighter budget arguments.

On May 15, Lee shared a media report on X, formerly Twitter, writing that it was "an article that those who insist on unconditional austerity must see if they truly care about the country."

The report cited Julie Kozack, an IMF spokesperson, as saying at a regular briefing that South Korea’s debt remains at a sustainable level and the risk of a debt crisis is low.

Lee also reposted Kozack’s assessment that South Korea’s policy stance is "very prudent." He highlighted the IMF’s view that while the country is currently showing a somewhat expansionary fiscal stance, that approach is highly appropriate. He also emphasized that fiscal expansion is a policy tool to support structural reform.

Kozack said South Korea’s fiscal expansion is ultimately intended to support structural reforms that raise productivity. She added that productivity gains will be an important driver of future economic growth given the demographic pressures the country faces. Lee shared those remarks as he underscored the need for fiscal investment.

It was not the first time Lee had publicly rebutted austerity arguments. On May 5, he also cited a report saying an analysis by the Institute for National Finance of the IMF’s Fiscal Monitor showed South Korea’s projected net debt ratio was lower than that of major economies.

He struck the same note at a Cabinet meeting. On May 12, Lee said "now is the time to build potential through investment" and that the country "must not fall into the trap of populist austerity that deceives the public."

Oh Se-seong, Hankyung.com reporter, sesung@hankyung.com