International credit rating agency Moody's has assessed South Korea's 2024 budget, noting a balance between fiscal health and securing future growth potential. The Ministry of Finance explained the budget and the achievements in issuing foreign currency stabilization bonds, as well as the government's policy direction to improve access to foreign exchange and capital markets.
On September 8, Moon Ji-sung, the International Economic Management Director at the Ministry of Finance, met with Maria Lee, Moody's Global External Relations Head, to share insights on the upcoming budget and recent economic conditions. The meeting also included Moon and Park Chang-hwan, the Budget Coordination Director at the Ministry of Strategy and Finance.
During the introduction of the budget, Moon and Park emphasized the focus on enhancing potential growth rates through three major mega-projects and investments in artificial intelligence (AI), while also addressing social stability to mitigate polarization.
They highlighted that despite the largest fiscal expenditure in history, the management fiscal balance is at its best level in 20 years, underscoring the ability to achieve both economic growth and fiscal health.
The direction for the Future Response Fund was also discussed. The government plans to use additional tax revenue for strategic investments rather than simple consumption, and to reinforce fiscal stability when necessary.
Notably, they announced that 12.5 trillion won (approximately 8%) of the total resources would be used to reduce new bond issuance, aiming to alleviate future debt burdens.
Moody's acknowledged that the 2024 budget and the establishment of the Future Response Fund seek to balance fiscal health with future growth potential. They also expressed a positive outlook on South Korea's economic growth prospects.
The two sides exchanged views on this year's foreign currency bond issuance achievements and the government's future response direction. This year, the South Korean government issued $3 billion in U.S. dollars and €1.7 billion in euros in foreign currency bonds. The euro bond's spread was lower than the previous record low in 2025, with 3-year bonds at 15 basis points and 7-year bonds at 24 basis points lower.
Moody's congratulated South Korea on the successful issuance of foreign currency bonds this year and expressed interest in the outcomes and future government responses. Moon noted that despite unstable market conditions, they achieved the lowest spread for euro-denominated foreign currency bonds without additional premiums. He also mentioned significant participation from high-quality investors, including major central banks and international organizations.
The government plans to diversify maturities and currencies while continuously seeking new investors. Additionally, they aim to enhance the role of foreign currency bonds as a benchmark interest rate for foreign currency procurement in South Korea.
Discussions also covered measures to improve access to foreign exchange and capital markets. Moody's praised the South Korean government's recent efforts to enhance market accessibility and inquired about future plans to expand participation from global investors.
Moon explained the progress in reforming the foreign exchange market, including improvements to the foreign financial institution (RFI) system. He also outlined the roadmap for internationalizing the won to allow for free holding, trading, and procurement overseas.
* This article has been translated by AI.
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