The global credit rating agencies Fitch and Moody’s have given positive assessments of the country's 2027 proposed budget, citing its focus on strengthening fiscal soundness while expanding the basis for future growth. (Yonhap News)

By Kim Seon Ah

Global credit rating agencies Fitch and Moody's have given positive assessments of Korea's 2027 proposed budget, citing its focus on strengthening fiscal soundness while expanding future growth engines.

The Ministry of Finance and Economy and the Ministry of Planning and Budget on Sept. 9 quoted Fitch's report released the same day as saying the country's fiscal performance from the budget will be stronger than expected.

Fitch forecast that the managed fiscal balance will improve from minus 3.9% of gross domestic product (GDP) this year to minus 0.1% next year, while the consolidated fiscal balance will post a surplus of 1.9%. The national debt-to-GDP ratio next year will reach 48.3%, falling below the previous forecast of 51.7%, it added.

Fitch said the Future Response Fund will mitigate fiscal revenue volatility and that investments in strategic sectors such as artificial intelligence and semiconductors could boost productivity and growth potential. But it advised channeling temporary increases in tax revenue into mid- to long-term growth to prepare for the normalization of the semiconductor market cycle.

Earlier on Sept. 3, Moody's said in a report that the 2027 budget proposal eyes a balance between maintaining fiscal soundness and securing future growth engines.

It said using a portion of the Future Response Fund to lower the net issuance of public bonds will have a positive effect on the country's sovereign rating by reducing government leverage.

sofiakim218@korea.kr