The National Assembly Budget Office held a meeting with the International Monetary Fund (IMF) mission team on Friday, August 25. In accordance with Article IV of its Articles of Agreement, the IMF conducts annual consultations with member countries on broader economic matters, including macroeconomic, foreign exchange, and financial issues.
The meeting was attended by Ms. Hye-Jung Shim, Tax Analysis Counsel at NABO, Mr. Young-Il Choi, Head of the Macro-economic Analysis Division, and Mr. Harald Finger, Mission Chief for Korea at the IMF among others.
NABO and the IMF had in-depth discussions on short-term fiscal issues, such as Korea's fiscal outlook for this year, the government's plans to raise revenues in the face of tax shortfalls, and the direction of the 2024 budget, as well as long-term fiscal issues, such as the government's fiscal rule proposal and pension reform plan, and the outlook for health and pension funds.
The IMF mission team expressed the view that the overall economic situation in Korea does not display a significant downward trend and that the recent issues in the Chinese real estate market will have a limited impact on the global economy, with potential indirect repercussions for trading partners.
On the other hand, NABO and the IMF mission team shared the view that it is necessary to develop alternatives to minimize the negative spillover effects on the economy, particularly concerning this year's revenue deficit and countermeasures.
The IMF mission team expressed the need to make full use of automatic stabilizers considering the weakened fiscal discipline and its compatibility with monetary policy.
Finally, regarding the introduction of a fiscal rule, NABO and the IMF mission team agreed that the role of independent fiscal institutions, such as NABO, will become more important in ensuring the efficacy of the fiscal rule.
Upon the meeting’s conclusion, Mr. Harald Finger, the head of the mission team, said that he was pleased to hear various opinions on Korea's fiscal situation from the experts at NABO, and expressed his hope for continued exchange of views and communication in the future.