Why Is the IMF, the “Grim Reaper” of Korea’s Currency Crisis 30 Years Ago, Envious of South Korea?

IMF Director Choi Jiyoung's Press Briefing
South Korea Is the Only Advanced Economy with Expanding Fiscal Space
IMF Sees a "Neutral Fiscal Stance" of Paying Down Debt and Building Reserves
Publicly Warns of AI Risks, but Internally Says, "It Will Last 10 Years"

IMF Director Choi Jiyoung said, "South Korea is the only advanced economy whose fiscal space (Policy Room) is increasing," adding that "within the IMF, South Korea is truly in a state of 'positive differentiation.'"

Choi Jiyoung, an IMF director visiting Bangkok, Thailand, to attend the annual meetings of the International Monetary Fund (IMF) and the World Bank (WB), speaks with reporters. Ministry of Finance and Economy.

At Every Meeting, South Korea Is Singled Out... The Only Country in the World with Expanding Fiscal Space

Choi, who is visiting Bangkok, Thailand, to attend the annual meetings of the IMF and the World Bank (WB), made the remarks at a meeting with reporters covering the Ministry of Finance and Economy on October 15 (local time). "The recently released World Economic Outlook (WEO) and Fiscal Monitor show just how exceptional the South Korean economy is," she said. While the global economy faces downward pressure from conflict in the Middle East and trade restrictions between countries, South Korea alone is riding an artificial intelligence (AI)-driven semiconductor supercycle and achieving growth that outpaces the global economy, she explained.

Choi said South Korea is treated as an "enviable exception" at IMF board and staff meetings. "While 99.9% of countries are being asked to pursue tight fiscal austerity in the wake of rising oil prices and inflation, South Korea alone is seeing its fiscal space expand," she said. "The mood within the organization is such that whenever staff explain global economic trends, they have to preface their remarks with 'South Korea in particular.'"

Most advanced economies have exhausted their policy tools amid stagnant growth and fiscal pressures. The IMF, too, is advising countries to tighten their overall fiscal policy stance out of concern about inflation. Choi said, "These broad-based recommendations do not fit the economic situation in South Korea at all." Even IMF staff acknowledge the country's growth, she said, exclaiming, "It's so enviable that South Korea is the only one doing better amid all this."

"A Fiscal Stance of Paying Down Debt and Building Reserves Is Reasonable"

Choi Jiyoung, an IMF director visiting Bangkok, Thailand, to attend the annual meetings of the International Monetary Fund (IMF) and the World Bank (WB), speaks with reporters. Ministry of Finance and Economy.

Choi also said Krishna Srinivasan, director of the IMF's Asia and Pacific Department, views the South Korean government's fiscal stance as "neutral." "Even though fiscal revenue surged by more than 30%, the government capped the increase in fiscal expenditure at 12.8% and is setting aside the remaining fiscal space for government bond repayments and the Future Response Fund. This is very positive," she said. She explained that, for a company, this is akin to investing to gain market share rather than using a sudden increase in earnings to pay off all its debt.

Regarding the IMF's projection that South Korea's government debt ratio would reach 63.1% in 2031, which sparked controversy domestically at the annual meetings in April, she said, "There was a lot of concern and criticism at the time, but we should focus on the data released this time." According to the IMF's Fiscal Monitor released ahead of this year's annual meetings, general government debt (D2) is projected to reach 46.1% of gross domestic product (GDP) this year. That is 8.3 percentage points lower than the April forecast of 54.4%. The projected debt ratio for 2031 was also revised down substantially, from 63.1% to 51.3%, a reduction of nearly 12 percentage points. Choi emphasized, "For countries like South Korea, where government debt is around 50% of GDP, the debt ratio can fluctuate dramatically depending on how well the economy grows. Rather than rigidly fixating on the government debt ratio itself, it is far more important to invest in innovative sectors and strengthen the drivers of growth."

"External Warnings About AI Risks Are General in Nature... Internally, the View Is That 'It Won't Lose Momentum for 10 Years'"

The IMF's internal thinking also differed on concerns about "AI peaking" and stock market volatility. While the IMF has publicly warned of risks such as financial system instability and labor market disruption resulting from AI development, it considers the industry's underlying strength to be solid. "The AI data center infrastructure that global companies are now racing to build is a massive undertaking that alone takes 10 years to complete," Choi said. "Because it involves long-term investment rather than a short-lived boom, the prevailing view within the IMF is that the AI cycle will not become irrelevant or sharply lose momentum next year or the year after." She explained that investors should focus on long-term fundamentals rather than overreacting to short-term stock price declines or market fluctuations.

Choi entered public service after passing the 37th Higher Civil Service Examination and went on to serve in key international economics and finance roles, including director of the International Finance Division, director of the Foreign Exchange Policy Division, director general of the International Finance Bureau, and deputy minister for international economic affairs at the Ministry of Economy and Finance, now the Ministry of Finance and Economy. She also served as a senior economist at the International Bank for Reconstruction and Development (IBRD) and as deputy head of the Economic Security and Supply Chain Planning Group. After more than 30 years in public service, she took office as an IMF director this past April and now represents South Korea's macroeconomic policy positions to the international community.

This content was produced with the assistance of AI translation services.