[Lee Administration's First Budget] Inter-Korean Cooperation Fund Restored to 1 Trillion Won After Yoon-Era Cuts... Up 25%

In the first budget to be formulated under the Lee Jaemyung administration, the Inter-Korean Cooperation Fund for next year will be restored to the 1 trillion won range. This is due to a significant increase of over 25% in the related budget for next year, which had been drastically reduced under the previous Yoon Sukyeol administration.

Minister of Unification Chung Dongyoung is observing the northern Panmungak from the Freedom House in Panmunjom. [Provided by the Ministry of Unification]

On the 29th, the Ministry of Unification announced that the total budget for next year has been set at 1.2378 trillion won, representing a 20.2% increase compared to this year. The general account budget has been set at 235.3 billion won, a 2.8% increase, and the Inter-Korean Cooperation Fund has been allocated 1.0025 trillion won, up 25.2%. On this day, the government, presided over by President Lee Jaemyung, held an extraordinary Cabinet meeting to approve the "2026 budget bill," which will be submitted to the National Assembly on September 2. An official from the Ministry of Unification explained, "Next year’s budget was formulated with a focus on areas that will deliver results in major national policy tasks, such as establishing the foundation for peaceful coexistence between the two Koreas and promoting North Korea and unification policies that resonate with the public."

The most notable aspect is the sharply increased Inter-Korean Cooperation Fund. Under the Moon Jaein administration, the fund’s project budget was 1.2431 trillion won in 2021 and 1.269 trillion won in 2022, but it was cut annually under the Yoon Sukyeol administration, dropping to just 798.1 billion won this year. The Lee Jaemyung administration has raised it by 201.7 billion won in a single year, bringing it back up to 1.003 trillion won.

Looking at the detailed items, the largest portion is the livelihood cooperation support budget, which has been set at approximately 555.4 billion won, a 16.7% increase from this year. The budget for grant-based inter-Korean economic cooperation projects has more than doubled (up 115.4%) from 102.6 billion won this year to 221.1 billion won, marking the largest increase. In particular, the "economic cooperation" budget within grant-based projects has been nearly tripled, from 60.6 billion won this year to 178.9 billion won next year. This category is allocated for infrastructure such as railways, roads, and other facilities agreed upon by the two Koreas. However, since this is premised on the resumption of inter-Korean dialogue and concrete cooperation between the authorities, the actual likelihood of execution remains uncertain. In fact, previously allocated budgets have also seen single-digit execution rates. A similar case is the budget for the restoration of the Kaesong Industrial Complex. The budget for the restoration of the Kaesong Industrial Complex, which was 1.3 billion won this year, has been doubled to about 2.6 billion won for next year. In response to concerns that these budgets may become "nominal" due to lack of execution, a Ministry of Unification official stated, "The budget bill represents the government's determination," and added, "Because we have a strong commitment to establishing the foundation for peaceful coexistence between the two Koreas, it is difficult to call these budgets nominal simply due to low probability of execution."

Within the general account, excluding personnel and basic operating expenses, a total of 169.9 billion won has been allocated for project expenses, a slight increase of 1.7% from this year. However, in specific categories, the budget for inter-Korean talks (up 175%) and North Korea situation analysis (up 37.3%) has increased significantly, while the budget for resolving humanitarian issues has been reduced by 36%. Notably, the "North Korean Human Rights and Liberal Democratic Peaceful Unification Public Awareness" budget, which was newly established under the Yoon Sukyeol administration in 2023, has been completely eliminated.