The IMF predicts that South Korea's debt ratio will exceed the average level of developed non-reserve currency countries by 2027.

The International Monetary Fund (IMF) predicts that the share of our country’s national debt in gross domestic product (GDP) will exceed the average level of non-reserve-currency developed countries in 2027. This means that, because the growth rate of national debt is faster than the pace of expansion of economic scale, South Korea’s fiscal soundness may deteriorate more quickly than that of developed countries with similar conditions.

According to what was disclosed on the 19th by the Ministry of Planning and Finance and others, the IMF forecast in the April 2026 issue of its “Fiscal Monitor” report (IMF) predicts that South Korea’s general government debt (D2) as a share of GDP will rise from 54.4% in 2026 to 56.6% in 2027. General government debt is an indicator that includes central and local government debt as well as debt owed by non-profit public institutions, and it is the most widely used measure in international comparisons. South Korea’s projected value for 2027 exceeds the average level of 11 non-reserve-currency countries that the IMF classifies as developed (55.0%). Even in 2026, at 54.4%, it is still 0.3 percentage points below these countries’ average level (54.7%), but its position reverses just one year later.

It can be considered that this trend is due to the continued expansion of fiscal spending accumulated after the COVID-19 pandemic and the ongoing trend of an increase in debt in the process of responding to the economic cycle. South Korea’s debt ratio stayed below 40% until before 2020, but surged sharply after the pandemic. The IMF forecasts that from 2026 to 2031, South Korea’s debt ratio will rise at an average annual pace of 3.0%. Measured by growth rate, it ranks second only to Hong Kong (7.0%); measured by the increase, it rises by 8.7 percentage points—the largest among the 11 non-reserve-currency countries. Meanwhile, over the same period, Norway is expected to fall by 17.4 percentage points, Iceland by 10.6 percentage points, Andorra by 3.5 percentage points, New Zealand by 1.9 percentage points, and Sweden by 0.1 percentage points.

In terms of absolute values only, South Korea’s debt ratio is below the average level of 120–130% for major countries such as the Group of Seven (G7). However, for non-reserve-currency countries like South Korea, their currency value and capital flows may be hit more severely during crises; therefore, even if the debt level is the same, the burden felt by the market may be greater. Reserve-currency countries refer to countries that have currencies that are widely used in international financial markets, such as the US dollar, and these countries have a comparatively strong demand base for their government bonds. In this report, the IMF explicitly notes that the debt ratios of South Korea and Belgium are expected to increase significantly, which is not unrelated to this background.

In actual figures, the speed of debt growth also exceeds the speed of economic growth. According to data from the country’s statistical portal (KOSIS), from 2020 to 2025, nominal GDP increased from 2058.5 trillion won to 2663.3 trillion won, with an average annual growth rate of 5.3%. However, national debt D1, which represents direct debt of central and local governments, increased from 846.6 trillion won to 1304.5 trillion won over the same period, with an average annual growth rate of 9.0%. This means that the growth rate of national debt is about 1.7 times faster than the growth of the economy after adjusting for prices. If this trend continues and spending continues to rise without expanding the revenue base, it could further increase the pressure for the debt ratio to rise, and ultimately may lead to discussions about stricter management to create fiscal headroom.