National Assembly Approves Next Year's 673.3 Trillion Won Budget... Unprecedented Opposition 'Reduced Budget' Passed (Update)

4.1 Trillion Won Cut in National Assembly Review
Ruling and Opposition Parties Failed to Reach Agreement Ahead of Plenary Session
Unprecedented Opposition-Only Budget Passed

On the 10th, the National Assembly approved a budget worth 673.3 trillion won. After review by the National Assembly, 4.1 trillion won was cut from the government’s budget proposal. This marked an unprecedented opposition party's unilateral budget reduction.

On the same day, the National Assembly held a plenary session and passed the budget for the next year. Among the 278 members present, 183 voted in favor, 94 against, and 1 abstained.

Prior to the budget approval, the government and the ruling and opposition parties negotiated but failed to reach an agreement. The opposition party, which had been negotiating over increases related to local currency, ultimately rejected the government’s proposal and passed a budget that only applied reductions from the original government proposal. Although the budget was passed after the legal deadline, it was processed within the regular session of the National Assembly. However, it was an unprecedented budget passed without political coordination between the ruling and opposition parties.

On the 10th, the amendment to the Income Tax Act, which focuses on the abolition of the financial investment tax and the postponement of virtual asset taxation, is being passed in the plenary session of the National Assembly. Photo by Kim Hyun-min

Initially, the opposition party approved a budget in the National Assembly’s Budget and Accounts Committee that fully cut special activity expenses of the Presidential Secretariat and National Security Office (8.251 billion won), specific task expenses of the prosecution (50.691 billion won) and special activity expenses (8.09 billion won), special expenses of the Board of Audit and Inspection (4.5 billion won) and special activity expenses (1.5 billion won), and police special activity expenses (3.16 billion won) from the government’s budget proposal. Additionally, the government’s contingency fund of 4.8 trillion won was cut by 2.4 trillion won, and the budget for national treasury bond interest repayment was reduced by 500 billion won. The contingency fund refers to an amount pre-allocated within a certain limit to cover unpredictable expenditures outside the budget.

The ‘Great Whale Project’ budget, which was 50.5 billion won in the government proposal, was cut to 49.7 billion won; the Yongsan Park development project budget, originally 41.6 billion won, was reduced to 22.9 billion won; and the public-private partnership advanced nuclear reactor export infrastructure (R&D) budget, initially 7 billion won, was cut to 6.3 billion won. The opposition party also cut 7.4 billion won from the government’s 50.8 billion won budget for the nationwide mental investment support, which they labeled as the ‘Kim Geon-hee budget.’

Park Jung, Chair of the Special Committee on Budget and Accounts (Democratic Party), explained, "Rather than bypassing the Budget and Accounts Committee review by automatic submission of the government proposal, we judged that processing the budget within the committee by the legal deadline, as promised to the public, was the right path." However, the ruling party strongly opposed the budget review without consensus.

According to the Constitution, the National Assembly must obtain government consent to increase the budget or create new budget items, but reductions can be made without government consent.

The opposition party plans to prepare a supplementary budget next year. Park Chan-dae, floor leader of the Democratic Party, said, "If there are parts that need increases for people’s livelihood and economic recovery, they can be addressed later through supplementary budgets or other means." This means that the budget will be planned based on the reduced budget, and additional necessary funds can be allocated in early to mid-next year.

The ruling and opposition parties and the government held final negotiations before the budget approval but failed to reach an agreement. The government proposed restoring some of the opposition’s unilateral cuts to the contingency fund and national treasury bond interest in exchange for the local currency budget, but the talks broke down over the scale of the local currency budget.

Kim Sang-hoon, Policy Committee Chair of the People Power Party, said, "Today, the People Power Party proposed a total budget increase of 3.4 trillion won, including a 300 billion won increase for the issuance of local love gift certificates and restoration of 1.6 trillion won for the contingency fund, etc." He added, "The Democratic Party submitted a reduced amendment to the plenary session and, even in this situation, tried only to satisfy their own greed, effectively breaking off negotiations." He continued, "The Democratic Party demanded 1 trillion won for the issuance of local love gift certificates, insisting on their share until the end. The amendment reflecting only the 4.1 trillion won unilateral reduction originally processed by the Democratic Party was passed, resulting in unforeseen losses in the country’s future crisis response capability and inadequate investigation of livelihood-related crimes. The Democratic Party must take full responsibility for the problems arising from the unilateral passage of the reduced budget."

Jin Sung-jun, Policy Committee Chair of the Democratic Party, introduced the negotiation progress, saying, "The government only demanded restoration of the reduced budget but did not mention any increase in livelihood budgets, so the final breakdown was declared at 11 p.m. last night. However, today, Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok prepared a response to the Democratic Party’s demands, and they met again under the chairmanship of the Speaker of the National Assembly." Jin explained the reason for the budget negotiation breakdown, saying, "The Democratic Party maintained the position that if the reduced budget is restored, the livelihood budget must be increased accordingly. The Ministry of Economy and Finance did not accept this position."

The budget was passed in the form of the original Budget and Accounts Committee proposal with additional conditions from the Democratic Party. The Democratic Party amended the general provisions of the budget to prioritize support of 268 billion won from the 1.6 trillion won purpose contingency fund for free high school education and free education for 5-year-olds. Additionally, the opposition party prohibited the reallocation of previously cut budgets such as special activity expenses. The amended budget passed in the plenary session included provisions in the attached opinions stating, "While clearly reflecting the intent of some expenditure reductions in the amendment, the government shall not secure additional project budgets through reallocation or contingency fund allocation for reduced projects, excluding legally mandated expenditures. If additional funding is inevitably required, it shall be reflected in supplementary budgets and secured through National Assembly approval."