Lee Again Rebuts Austerity Calls, Citing IMF Remarks on Korea’s Fiscal Room

South Korean President Lee Jae-myung again defended expansionary fiscal policy on May 15, citing International Monetary Fund remarks on the country’s fiscal stance.

The post was his latest public rebuttal of austerity arguments. Lee pointed to IMF comments that South Korea has sufficient fiscal room.

Lee shared a media report on X, formerly Twitter, writing that it was "an article that those who unconditionally argue for austerity must read if they are truly thinking about the country."

The report said Julie Kozack, the IMF’s director of communications, told a regular briefing that South Korea’s debt remains at a sustainable level and that 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 explanation that the country’s current tilt toward fiscal expansion is an appropriate response and emphasized that expansionary fiscal policy can be used to support structural reform.

Kozack said South Korea’s fiscal expansion is ultimately intended to back structural reforms that raise productivity. Given the demographic pressures the country faces, productivity gains will be an important driver of future economic growth. Lee shared those remarks to underscore the need for fiscal investment.

It was not the first time Lee has publicly pushed back on austerity arguments. On May 5, he criticized calls for fiscal tightening while citing a report on an analysis by the Institute for Government Finance showing South Korea’s projected net debt ratio was lower than those of other major economies, based on the IMF Fiscal Monitor.

He delivered the same message at a Cabinet meeting. On May 12, Lee said, "Now is the time to build up potential through investment," adding that the government "must not fall into the trap of populist austerity arguments that deceive the public."

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