Choo Kyung-ho, First Absence Accompanying President Yoon on State Visit... Final Mission 'Passing the Budget' at Stake

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is putting all his efforts into passing next year's budget bill during his remaining term. With the legal deadline for budget approval (December 2) already exceeded by four days, the government and the ruling party have expressed their determination to complete the budget approval by the end of the regular National Assembly session on the 10th.

According to related ministries on the 6th, Deputy Prime Minister Choo has decided not to accompany President Yoon Suk-yeol on his state visit to the Netherlands scheduled for next week (November 11?14). This is the first time since Choo began his term in May last year that he will not personally attend a presidential state visit. A government official said, "Since this state visit to the Netherlands is expected to focus on semiconductor supply chain cooperation, Deputy Prime Minister Choo and the Ministry of Economy and Finance are not included in the accompanying delegation."

However, within the Ministry of Economy and Finance, there is an interpretation that this decision was made considering criticism from opposition parties regarding Choo’s accompaniment on President Yoon’s previous state visit to the United Kingdom. The opposition pointed out that as the direct party involved in budget negotiations, Choo’s participation in the UK state visit just a week before the legal deadline inevitably caused disruptions in the negotiations. Hong Ik-pyo, floor leader of the Democratic Party of Korea, criticized, "During the period when the Deputy Prime Minister was abroad, Ministry of Economy and Finance officials said they could do nothing until the minister returned, halting all negotiations."

It is true that time is tight to finalize both next year’s budget and this year’s tax law amendments during this regular National Assembly session. A Ministry of Economy and Finance official said, "With the new Deputy Prime Minister nominee appointed, Choo is focusing on passing the budget and ensuring stable policy management," adding, "He is especially concentrating on mediating conflicts of interest between the ruling and opposition parties regarding next year’s budget and persuading the opposition."

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is giving a proposal explanation on next year's budget bill at the plenary meeting of the Special Committee on Budget and Accounts held at the National Assembly on the 3rd. Photo by Hyunmin Kim kimhyun81@

The most controversial area in next year’s budget is the research and development (R&D) sector. Earlier, the Ministry of Economy and Finance decided to increase total expenditure for next year to 656.9 trillion won, a 2.8% increase from this year, while cutting the R&D budget by 16.6%. This decision was based on the judgment that a comprehensive review is necessary due to South Korea’s R&D spending being the highest in the world relative to its gross domestic product (GDP). The government maintains that eliminating leakages is inevitable to normalize the worsening fiscal situation, with national debt exceeding 1,000 trillion won this year.

The opposition, mainly, argued that the sharp reduction in the R&D budget could lead to the suspension of ongoing projects and negatively affect the future supply of research personnel. The government and ruling party have taken a step back and are considering increasing the R&D budget focused on basic research and researcher salaries for future generations, but no concrete negotiations between the ruling and opposition parties have yet taken place.

Discussions on securing resources for local governments due to revenue shortfalls in the central government are also facing difficulties. As the central government’s revenue budget decreases, securing grants, which are a key resource for local governments, becomes challenging, leading to conflicts between the ruling and opposition parties over solutions. Additionally, contentious budget items such as the regional love gift certificates (local currency) budget, known as the Lee Jae-myung budget, nuclear power and renewable energy budgets, and prosecution special activity expenses are piling up, prolonging agreement. A government official said, "Considering the time needed to prepare follow-up measures after the passage of the budget and bills, the National Assembly’s prompt approval is necessary."