Ruling and Opposition Parties Reach Provisional Agreement to "Maintain Total Budget"... 4 Trillion Won in Cuts, Further Talks on Increases

On December 1, just one day before the deadline for processing next year's budget bill, it was reported that the ruling and opposition parties had reached a tentative agreement to maintain the budget at the government's original proposal of 728 trillion won. The total amount of budget cuts was set at approximately 4 trillion won, and both sides agreed to continue negotiations on additional increases and the details of specific budget adjustments going forward.

As both parties, who had previously shown no signs of progress, moved from debating the overall framework of the budget to negotiating specific increases and decreases, some in political circles speculated that the ruling and opposition parties might reach a dramatic agreement on the budget bill by the legal deadline of December 2.

Democratic Party floor leader Kim Byung-ki and People Power Party floor leader Song Eon-seok, along with the floor leadership of both parties, met on the 1st at the National Assembly in Yeouido, Seoul, to hold final negotiations on the contentious budget and proposals to raise corporate tax and education tax, with Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul in attendance. Photo by Yonhap News

Kim Byungki, floor leader of the Democratic Party, Moon Jinseok, Senior Deputy Floor Leader for Operations, Heo Young, Senior Deputy Floor Leader for Policy, Song Eonseok, floor leader of the People Power Party, and Yoo Sangbeom, Senior Deputy Floor Leader for Operations, held negotiations at the National Assembly that afternoon to narrow their differences on key budget issues.

It was reported that both sides engaged in a tug-of-war over major initiatives of the Lee Jaemyung administration, such as the National Growth Fund, support for issuing local love gift certificates, the Artificial Intelligence Innovation Fund, and the transition to public AI (AX).

Although the two sides were in a standoff over whether to maintain the original proposal or make cuts, they reportedly broke the deadlock by forming a consensus to maintain the total budget expenditure at the government's original proposal of 728 trillion won. In addition, they agreed to set the total amount of budget cuts in the revised plan at about 4 trillion won, while also acknowledging the need to increase funding for essential (statutory and mandatory) expenditures.

After the meeting, which lasted about two hours, Senior Deputy Floor Leader Moon explained to reporters, "The negotiations on cuts have been completed, but the negotiations on increases have not yet been finalized."

The two sides met twice that day. During the first meeting in the morning, floor leader Song and Senior Deputy Floor Leader Yoo walked out of the negotiations about 20 minutes after they began, leading to a temporary cooling of the atmosphere. However, about 50 minutes later, both returned to the negotiating table and discussions resumed.

The legal deadline for processing the budget bill is midnight on December 2. This is in accordance with Article 54, Paragraph 2 of the Constitution, which states, "The National Assembly must pass the budget bill at least 30 days before the start of the fiscal year (January 1)." However, the National Assembly has repeatedly failed to meet this deadline, and even after the introduction of the automatic referral system for the budget bill to address this issue, the deadline has only been met twice-once in the inaugural year of 2014 and again in 2020. If the ruling and opposition parties reach an agreement on December 2 and the budget bill passes the plenary session on the same day, it will mark the first time in five years that the legal deadline has been observed.