South Korea announces aggressive spending plans, USD/KRW drops to lows
|In order to further stimulate the battered economy affected by the coronavirus pandemic, the South Korean Finance Ministry ramped up spending plans for the next few years.
Key details (via Reuters)
“Total spending will increase by 8.5% to record 555.8 trillion won ($468.30 billion) next year, while expected revenue is seen increasing a mere 0.3% to 483 trillion won.
That will take South Korea’s public finances further into deficit, raising its debt-to-GDP ratio by 6.9 percentage points to a record 46.7% in 2021.
The government projects fiscal spending to increase by 5.7% per year between 2020 and 2024, taking the debt level to 54.6% of the economy by 2023. Last year it predicted a level of 46.4% for 2023.
The Ministry has previously unleashed more than 277 trillion won of stimulus to fight the pandemic this year.”
Market reaction
USD/KRW reverses half the previous rebound and hits fresh daily lows at $1,183.21 amid a broad US dollar sell-off and South Korean additional fiscal stimulus.
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