By Kang Seung-woo
Staff reporter
Korea's fiscal soundness is expected to become one of the healthiest among advanced economies in the coming years, with its debt to GDP ratio falling to mid-20 percent by 2015, according to the International Monetary Fund (IMF).
In its latest fiscal outlook report, the IMF forecasted that the ratio for Asia's fourth-largest economy will stand at 26.2 percent in 2015, the third lowest among the 28 industrialized economies, only behind Hong Kong (0.5 percent) and Australia (20.9 percent).
New Zealand and Switzerland, which each sits at 36.1 percent and 36.2 percent, rounded out the top five.
On the contrary, rich countries are likely to see their liabilities grow.
Japan is forecast to notch a debt-to-GDP ratio of 250 percent, the worst among the citied members and the United States and France also had bad projections - 109.7 percent and 94.4 percent, respectively.
The so-called PIGS countries ― Portugal, Italy, Greece and Spain ― which are struggling with huge budget deficits ― are still expected to be stuck in a bad state, when all of them post higher than 94 percent (Spain) up to 140 (Greece).
The Washington-based organization said that Korea is a role model that has maintained fiscal health while undergoing a faster-than-expected economic rebound.
According to the international lender, Korea, whose debt accounted for 33.8 percent of its GDP in 2009, much lower than the OECD average of 90 percent, will see the ratio slightly lower to 33.3 percent this year, and it is projected to be on a steady decline through 28.5 percent in 2014 to an eventual 26.2 percent in 2015.
The government held a cabinet meeting in the wake of a worsening debt crisis that has engulfed Greece and is threatening to spread to other southern European countries, Sunday and discussed a financial policy to restore its fiscal soundness.
For the past two years, the nation's financial soundness was affected by aggressive fiscal spending introduced to minimize the economic downturn.
However, the spending has prompted many to worry about the fiscal health of Asia's fourth-largest economy.
``Appropriate budget spending is required for economic recovery but I think it is time to care about financial stability,'' said President Lee Myung-bak.