Lee Cites IMF to Defend Korea Fiscal Expansion, Rebuke Austerity Calls

President Lee Jae-myung has stepped up his defense of expansionary fiscal policy, brushing aside concerns about rising government debt.

Early on May 15, Lee shared on X, formerly Twitter, a Korea Economic Daily article quoting an International Monetary Fund official as saying South Korea’s fiscal expansion is appropriate and sustainable. “Those who insist on unconditional austerity should read this article if they truly care about the country,” Lee wrote.

The article cited comments by IMF spokeswoman Julie Kozack on South Korea’s government debt. “Korea is maintaining a very prudent fiscal policy stance,” Kozack said. “Although there is currently some fiscal expansion, that expansion is a very appropriate measure.”

Lee reposted those remarks on X. He also shared Kozack’s comment that the policy is intended to support structural reforms ultimately aimed at raising South Korea’s productivity.

On May 12, Lee made a similar argument. He said the government’s role is to keep the economy moving through investment and that the country should not fall into what he called the trap of populist austerity that deceives the public.

Later on May 15, Lee met at Cheong Wa Dae with Peter Howitt, a Brown University economics professor and Nobel laureate. Howitt told Lee that what had impressed him in watching the South Korean government’s policies was its ability to maintain a sound fiscal stance while minimizing the budget deficit.

Howitt also taught Ha Joon-kyung, the senior presidential secretary for economic growth. Lee told him that, thanks to the professor’s indirect guidance through Ha, South Korea posted the world’s highest economic growth rate in the first quarter of this year.

Han Jae-young, Hankyung.com reporter, jyhan@hankyung.com