New Subsidy for Electric Vehicle Transition Introduced
Fiscal Spending to Drive Economic Growth
Securing Infrastructure to Become a Top Three AI Power
The Democratic Party of Korea and the government have agreed to formulate next year’s budget bill with expansionary fiscal policies, including securing the largest-ever budget for research and development (R&D). They also decided to introduce a new subsidy to support the transition from internal combustion engine vehicles to electric vehicles.
On August 26, Democratic Party leaders, including floor leader Kim Byungki and Policy Committee Chairperson Han Jeongae, along with budget authorities such as Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance Koo Yooncheol, held a party-government consultation at the National Assembly to discuss next year’s budget bill.
Kim Byungki, floor leader of the Democratic Party of Korea, is speaking at the 2026 budget party-government consultation held at the National Assembly Members' Office Building on the 26th. 2025.8.26 Photo by Kim Hyunmin
The party and the government agreed that fiscal policy should play a proactive role in responding to external instability and supporting economic growth. Their plan is to use fiscal spending as a catalyst for economic growth, which would in turn increase tax revenues and ensure fiscal soundness. Regarding R&D, they decided to correct the reduction that occurred during the Yoon Suk Yeol administration and secure infrastructure to realize goals such as becoming one of the top three global powers in artificial intelligence (AI) and building a foundational AI society. In addition, they plan to allocate AI-related budgets so that AI can benefit people’s daily lives, such as startups and job-seeking, and deliver AI services that the public can tangibly experience.
Policy Committee Chairperson Han stated, “We have also decided to expand the budget for responding to industrial accidents and fires,” adding, “We will support the cost of equipping smart safety devices to prevent accidents at construction and industrial sites, and expand equipment for responding to large-scale oil fires.” The government will also strengthen economic support for child-rearing by expanding the eligibility for child allowances and providing additional support in regions with declining populations. Other initiatives include increasing the budget for issuing local gift certificates, institutionalizing monthly rent support for low-income youth, expanding veterans’ benefits, and introducing measures to honor spouses of war veterans.
On the 26th, a party-government consultation on the 2026 budget bill is being held at the National Assembly Members' Office Building. 2025.8.26 Photo by Kim Hyunmin
Floor leader Kim emphasized, “The budget bill must reflect the national governance philosophy of a people-sovereign government,” and stressed, “The three pillars of an innovative economy, balanced growth, and a society with solid fundamentals must be included in next year’s budget.” Deputy Prime Minister Koo explained, “The first budget bill of the Lee Jaemyung administration is focused on performance, reducing or eliminating what needs to be cut, and boldly investing in what must be done to drive recovery and growth. Fiscal spending will serve as a catalyst to enhance public welfare and economic vitality by making the most of available resources, and through a major transformation toward a super-innovative leading economy, we have also secured mid- to long-term growth engines.”
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