S. Korea to attain budget balance by 2014: IMF

By Koh Byung-joon
SEOUL, June 15 (Yonhap) -- South Korea's fiscal status remains in better shape
than other Group of 20 major economies and the country will likely achieve a
balanced budget by 2014, a report showed Monday.

According to the report by the International Monetary Fund, South Korea's fiscal
deficit will account for 3.2 percent of gross domestic product (GDP) this year
and rise to 4.7 percent next year.
The report, however, projected that the nation will achieve a balanced budget by
2014 as the government is expected to push for tough belt-tightening measures
following an economic recovery. The deficit-to-GDP ratio is expected to improve
to zero by the year.
South Korea will be among a few countries that will avoid a fiscal deficit. Of
the Group of 20 advanced countries, Saudi Arabia and Canada were cited to return
to a surplus in 2014, according to the report.
This year's deficit is also smaller than that of other countries, the report
showed. Of the G20 members, Brazil, Indonesia and South Africa were the only
countries expected to maintain better fiscal soundness than South Korea, while
the United States and Japan are expected to post double-digit deficit ratios.
The IMF report comes as the Seoul government is intensifying economy-bolstering
efforts with diverse tax cuts and additional fiscal spending as the global
recession dents demand for Korean goods at home and abroad.
In April, the parliament passed a 28.4 trillion won (US$22.5 billion) extra
budget, helping to speed up the government's bid to revive the sagging economy.
The additional spending, to be secured primarily through debt sales, raised
concerns it could hurt the nation's fiscal soundness.
South Korea's economy, Asia's fourth-largest, will likely shrink 2.4 percent this
year, the first negative growth in more than a decade, according to the latest
prediction by the central bank.
South Korea's Finance Minister Yoon Jeung-hyun told an earlier local forum that
the government will continue its "expansionary" macroeconomic policy stance to
help speed up an economic recovery.
kokobj@yna.co.kr
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