IMF chief: “Korea’s approach of combining tight monetary policy with neutral fiscal policy is appropriate”

[Financial News] IMF Managing Director Kristalina Georgieva, who met with Lee Hyoung-il, Deputy Prime Minister and Minister of Finance and Economy, said Korea’s approach to combining monetary and fiscal policy is appropriate.
Lee attended the International Monetary and Financial Committee (IMFC) meeting in Bangkok, Thailand, on the 17th (local time), and met separately with IMF Managing Director Kristalina Georgieva and First Deputy Managing Director Dan Katz to discuss these issues.
Lee met separately with Managing Director Georgieva and First Deputy Managing Director Katz and outlined Korea’s policy efforts to support sustainable growth, including efforts to address polarization based on three key social policies (housing, jobs and financial services for ordinary people), three mega-projects and seven SEED projects.
Georgieva, who noted that the IMF had significantly raised its forecast for Korea’s economic growth, said, “Korea’s approach of conducting monetary policy in a moderately contractionary manner while maintaining a neutral fiscal policy is appropriate.” She also said the Future Response Fund could build up resources without burdening monetary policy and serve as a buffer against changes in future economic conditions.
Georgieva added that more detailed discussions could take place at the annual consultation in November.
Lee and Georgieva also signed a letter of intent (LOI) on cooperation regarding Korea’s participation in the Korea-IMF Global AI Hub and the continuation of their capacity-development partnership.
Lee conveyed Korea’s commitment to continuing support for digital capacity development in vulnerable countries and said he hoped the signing of the letter of intent would mark a milestone in close cooperation between Korea and the IMF.
Lee also attended the IMFC as a representative of an IMF member country and exchanged views with finance ministers and central bank governors from major countries on the need to reduce polarization for sustainable growth, inclusive AI-led growth and the IMF’s policy direction.
The IMF said at the committee meeting that the global economy was showing signs of recovery but continued to face high uncertainty and downside risks. It also emphasized the importance of policy responses to support macroeconomic and financial stability in each country, as well as structural reforms to underpin AI and digital transformation, and called for stronger international cooperation to address global imbalances and the debt problems of low-income countries.

[email protected] Kim Jun-hyeok Reporter