Credit Rating
The Ministry of Strategy and Finance announced on September 24 that S&P decided to maintain the sovereign credit rating of Korea at A+ with a stable long-term outlook. S&P mentioned its favorable policy environments, fiscal soundness, and robust foreign debt structure as the reasons for the evaluation.
In its recently-published report, the credit rating agency said that the Korean government’s policy efficiency and predictability have contributed greatly to the stable development of the Korean economy in spite of harsh external conditions. It added that the fiscal surplus, which has continued for years since 2000 and the low level of the government debts, have had a positive effect on the country’s fiscal soundness. When it comes to foreign debt structure, its current account surplus and the won’s international circulation have alleviated the burden associated with foreign liabilities.
Still, the agency mentioned the geopolitical risks of the Korean peninsula and the contingent liabilities that could arise from the possible reunification of the two Koreas as negative factors for the sovereign credit rating. It pointed out that the stable credit rating outlook is based on the assumption that no political instability is witnessed in North Korea for years down the road.
In the recent past, Fitch and Moody’s maintained their sovereign credit rating outlook at AA- and Aa3, too. In September last year, S&P had adjusted the rating upward from A to A+.