Selective Cuts and Strategic Realignment Mark Record R&D Budget Increase
Ministry of Land, Infrastructure and Transport Leads with 6.7 Trillion Won Restructuring
Comprehensive Survey Reveals Wide Disparities Among Ministries
An analysis of the newly released details on next year's budget expenditure restructuring shows that the level of restructuring varied widely by ministry. The Financial Services Commission restructured 70% of its budget, while the Ministry of the Interior and Safety adjusted only 0.2%. Even in the field of research and development (R&D), which saw the largest budget increase in history, there was extensive readjustment, indicating a process of strategic review.
According to the "2026 Comprehensive Survey of Expenditure Restructuring by All Ministries" released by the Korea Institute of Public Finance on the 3rd, the Ministry of Land, Infrastructure and Transport restructured 6.7 trillion won of its budget out of the total 27 trillion won in government expenditure restructuring. This was mainly due to cuts in programs such as housing purchase and jeonse loan projects, as well as housing sales loan projects.
President Lee Jae-myung is speaking at the National Fiscal Savings Meeting held at the Yongsan Presidential Office Building in Seoul on the 13th of last month. Photo by Yonhap News
Lee Sangmin, Senior Research Fellow at the Korea Institute of Public Finance, explained, "The housing purchase and jeonse loan program, which was reduced by 1.4 trillion won, is a financial loan project related to housing demand rather than supply. It has grown rapidly over the past few years, and this adjustment was made to mitigate side effects from the increase in jeonse loans." The budget for the housing sales loan program was also reduced by 1 trillion won.
In terms of total budget size, the Financial Services Commission's efforts in expenditure restructuring also stood out. Compared to this year's budget, the commission restructured 70% of its entire budget. However, this high percentage was largely due to the termination of a 500 billion won contribution to the debt adjustment program for small business owners and the self-employed (KAMCO contribution), as well as a 250 billion won cut in the special program for supporting semiconductor facility investment (Korea Development Bank contribution).
Conversely, the Ministry of the Interior and Safety restructured only 0.2% of its budget for next year compared to this year. Out of the 72.1 trillion won budget for 2025, only 137.4 billion won was subject to expenditure restructuring. Lee pointed out, "While a significant portion of the budget consists of legally mandated expenditures such as local allocation tax, this also indicates insufficient effort in expenditure restructuring." The Ministry of Health and Welfare also restructured 443.9 billion won out of its 12.55 trillion won budget, amounting to just 0.4% of its total budget.
Large-Scale Increase in R&D Budget Stands Out Despite Cuts Elsewhere
It is also notable that despite a significant increase in next year's R&D budget, there was large-scale restructuring. Many projects saw their budgets adjusted due to "reprioritization," suggesting a reset in the direction of national R&D investment. Lee commented in a phone interview, "The fact that not all project budgets increased simply because the overall budget grew, and that some were cut while others were increased, makes the expenditure restructuring of R&D budgets by ministries such as the Ministry of Science and ICT particularly meaningful."
This data was released for the first time following President Lee Jaemyung's directive in August to disclose the expenditure restructuring list. However, the institute explained, "Since the expenditure restructuring lists were published separately on each ministry's website, it was possible to confirm the restructuring projects of individual ministries, but difficult to get a comprehensive view of all ministries' restructuring projects." In addition, the Ministry of National Defense, National Intelligence Service, Defense Acquisition Program Administration, Presidential Secretariat and National Security Office, and the Presidential Security Service did not disclose information at the time of the survey, so only 56 out of 61 ministries were actually included in the disclosure.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
