We Want to Avert US-Style Fiscal Cliff: South Korea Fin Min

South Korea's 17.3 trillion won ($13.5 billion) stimulus package announced this week is essential to keeping Asia's fourth largest economy on track, and without it the country could face similar fiscal woes to the United States, said Hyun Oh-Seok, the nation's finance minister.

"The [country's] economic recovery is appearing slower than expected, so that's likely to spell a short fall in tax revenue. Without this measure we could face a similar situation as the U.S. 'fiscal cliff' that could worsen South Korea's economic prospects," he told CNBC on Friday.

The U.S. avoided going over the "fiscal cliff" - a series of tax hikes and spending cuts that were to kick in on January 1. But after that lawmakers were unable to reach an agreement on spending cuts, and $85 billion in so-called "sequester" cuts came into effect on March 1.

"Our goal is to preserve tax revenue and boost additional spending to create jobs and revive the domestic economy," added Hyun.

The South Korean government on Tuesday unveiled 17.3 trillion won in spending, 5.3 trillion won of which will go towards creating jobs, aiding small to medium sized companies and bolstering property prices, and the remainder to covering a shortfall in tax revenues resulting from the economic slowdown.

(Read More: South Korea Steps Up Fight to Boost Economy)

In addition to a deceleration in economic growth, which slowed to 2 percent in 2012 from 3.7 percent a year earlier, the country faces rising debt levels.

Seoul, South Korea
SJ. Kim | Flickr | Getty Images
Seoul, South Korea

South Korea's total debt (including households, companies and the government) to gross domestic product (GDP) rose to a record high of 283 percent last year, up from 278 percent a year earlier and significantly higher than the 227 percent level seen during the 1997-1998 Asian Financial Crisis.

Slowing economic growth had raised expectations for an interest rate cut by the Bank of Korea, which met last week. However, in a surprise move, the central bank, held rates steady for the sixth straight month at 2.75 percent.

(Read More: Why Bank of Korea Is Right Not to Cut Rates)

Discussing his views on the devaluation of currencies via domestic policy, Hyun, said, "Each country's domestic policy must be used for domestic purposes, not to weaken its currency, that's the agreed principle. How policies are implemented based on this principle needs to be discussed."

Intentions behind the Bank of Japan's aggressive monetary easing, which has contributed to a steep slide in the yen against the U.S. dollar, have been called in question in the recent weeks.

(Read More: Any G20 Criticism Unlikely to Derail Yen's Fall)

On Wednesday, the U.S. Treasury Secretary Jack Lew warned his partners in the Group of 20, against the perils of "beggar thy neighbor" currency devaluations, picking out China for special mention, while noting that Japan was also on Washington's radar screen, Reuters reported.

(Read More: US Keeps Up Pressure on G20 Over Currencies)