Seoul: The possibility of South Korea encountering a debt crisis similar to those experienced by some European nations is considered "limited," according to a local analyst. Concerns regarding President Lee Jae Myung's expansionary fiscal strategy potentially burdening the local economy were dismissed during a press conference held at the Korea Exchange, the nation's primary stock exchange.

According to Yonhap News Agency, Ahn Jae-kyun, an analyst at Korea Investment and Securities Co., emphasized that South Korea is actively working to reform its low-growth rate and economic framework by boosting government spending. He acknowledged worries that such efforts might elevate the government's debt ratio but assured that the figure would remain below the International Monetary Fund's (IMF) recommended threshold of 60 to 70 percent.

The national debt-to-gross domestic product (GDP) ratio is a critical indicator of a country's fiscal stability, with a lower ratio typically providing governments with more leeway to increase expenditures. As of the end of March, South Korea's debt-to-GDP ratio stood at 47.2 percent, according to data from the Bank of International Settlements. Ahn highlighted the high local ownership of government bonds as a distinguishing factor from the situations in developed European countries.

Korean Treasury bonds' outstanding balance has grown from around 300 trillion won (US$214.3 billion) in 2010 to 1,200 trillion won, with local investment firms holding nearly 80 percent of them. Ahn also noted the robust growth in foreign holdings of Korean Treasury bonds, which increased from 80 trillion won in 2010 to 300 trillion won this year, indicating a positive trend.

However, Ahn expressed concerns about a potential supply and demand issue for Korean government bonds in the future. He pointed out that the net government bond issuance, initially projected to decrease to around 72 trillion won by 2028, is now expected to rise to approximately 130 trillion won.