SEOUL, Sept 6 Reuters South Korea should maintain current, restrictive monetary and fiscal policies as it needs to take steps to return to sustainable finances and address inflation, the International Monetary Fund IMF said on Wednesday.

The monetary policy rate should stay above neutral for the time being to address inflation, with the interest rate path remaining data dependent, the IMF said in a statement concluding its twoweek long visit to the country.

Harald Finger, Korea Mission Chief of the IMF, said, Moderate consolidation of the 2024 government budget will help limit public debt and, at the same time, will support monetary policy in efforts to contain inflation.

Instead of undermining economic growth, the prudent fiscal policy is judged to be instrumental in keeping South Korea39;s economic fundamentals strong in the medium term, Finger said at a press conference.

Last month, the South Korean government proposed to raise budget spending for 2024 by the lowest rate in two decades, prioritising fiscal discipline amid weakening tax revenue due to slower economic growth.

The Bank of Korea held interest rates steady for a fifth straight meeting in August, in a balance between softer inflation and heightening risks to growth.

We do see a moderate increase in downside risk for Korea39;s growth, especially in 2024, with China39;s renewed slowdown, Finger said, also pointing out China39;s policy measures to mitigate economic slowdown and other positive factors…