IMF Annual Consultation Chief: "Structural Reforms Must Be Undertaken to Achieve 3% Growth Rate"

"Short-term stimulus measures are appropriate… Capacity to respond to future shocks needs to be expanded"

Regarding the $350 billion investment in the U.S.: "It is inappropriate to comment on unconfirmed situations"

2025 IMF Annual Consultation Results Briefing (Seoul=Yonhap News) Reporter Shin Jun-hee = Rahul Anand, head of the IMF Korea Mission, is holding a briefing on the results of the 2025 IMF Annual Consultation at the Government Complex Seoul on the 24th. 2025.9.24 hama@yna.co.kr

The International Monetary Fund (IMF) has reiterated the necessity of structural reforms after concluding its annual consultation with Korea for two weeks.

The IMF emphasized that the goal of a "3% growth rate" can only be achieved if structural reforms, including fiscal reforms to prepare for the "shock of a super-aged society," are undertaken, separate from implementing confirmed fiscal stimulus measures to boost the economy in the short term.

Rahul Anand, head of the Mission, stated at a press conference for the "Announcement of Annual Consultation Results" held at the Government Complex Seoul on the 24th, "The current monetary and fiscal policies are appropriate for reaching a 2% growth rate, but structural reforms must be undertaken to reach a 3% growth rate."

Anand explained, "The government's economic growth strategy is heading in the right direction. If the introduction of artificial intelligence (AI) and innovation, strengthening service exports, and bridging the gap between large and small and medium-sized enterprises bear fruit, it will help increase potential growth and achieve a 3% growth rate."

The focus was placed primarily on medium- to long-term reforms in the fiscal sector.

Anand pointed out, "In the short term, given that real growth is lower than potential growth and the overall growth trend has slowed, stimulus measures such as the two supplementary budgets this year and the (expansionary) budget for next year are appropriate. However, as everyone knows, expenditures on health insurance and pensions are projected to increase significantly in the medium to long term, and national debt could rise."

He stressed, "We must secure the capacity to respond to future shocks. While it is appropriate to support reaching potential levels through short-term economic stimulus, medium- to long-term fiscal reforms are necessary to ensure fiscal sustainability."

While acknowledging the efforts of the fiscal authorities in restructuring expenditures, he stated, "More efforts are possible." Specifically, he suggested that special measures related to value-added tax could be made more efficient, as well as tax expenditures for corporate taxes.

He also raised concerns that AI innovation could exacerbate the polarization between large corporations and small and medium-sized enterprises. Anand emphasized the need for detailed policy support, stating, "Large corporations will likely find it somewhat easier to adopt AI and benefit from productivity gains. However, if support is not provided to enhance the digital proficiency of small and medium-sized enterprises, the productivity gap between large and small and medium-sized enterprises could widen."

Regarding the South Korea-U.S. trade negotiations, concerning the worry that "$350 billion in U.S. investment could undermine foreign exchange stability," he commented, "As negotiations are still ongoing, it is too early to discuss the details or related impacts. It is inappropriate to make provisional statements in an unconfirmed situation. I will not comment on such matters." Yonhap News