Looking into Next Year's Reduced Government Budget in the National Assembly... R&D and SOC Increased, Education and Defense Decreased

The budget for next year has been finalized at 656.6 trillion won. The National Assembly reduced 4.2 trillion won from the original government budget proposal and increased 3.9 trillion won for research and development (R&D) and Saemangeum social overhead capital (SOC) projects, finalizing the total budget. The Yoon Suk-yeol administration stated that it maintained the principle of sound fiscal management while reinforcing the R&D budget in the basic science sector, which had been subject to cuts controversy, and strengthening support for low-income citizens and socially vulnerable groups, thus adhering to the policy of "increases amid cuts."

According to the National Assembly and the Ministry of Economy and Finance on the 22nd, the National Assembly approved the next year's budget of 656.6 trillion won at the plenary session held the day before. The government initially submitted a total expenditure of 656.9 trillion won as the next year's budget proposal to the National Assembly, but the ruling and opposition parties finally agreed to reduce it by 300 billion won during the budget review process in the National Assembly.

[Image source=Yonhap News]

R&D Increased by 600 Billion Won, Saemangeum by 304.9 Billion Won

The R&D support budget, which had sparked controversy over cuts, was increased by 600 billion won. The original government proposal had reduced the R&D budget by 5.1626 trillion won (16.6%), drawing backlash from the scientific community. The government explained that it reinforced the related budget focusing on alleviating researchers' employment instability according to the R&D structural reform.

First, 152.8 billion won was added to provide additional support for basic research project expenses, and 45 billion won was increased to establish a new postdoctoral research project. Graduate student scholarships and research incentives were also expanded by 10 billion won. It is also notable that 178.2 billion won in personnel expenses for completed corporate R&D projects will be temporarily supported. Investment to support the operation of high-performance large-scale equipment will also be strengthened. The operating costs for the latest high-performance large-scale equipment such as supercomputers, heavy ion accelerators, and proton accelerators were increased by 43.4 billion won.

The budget related to Saemangeum was also expanded by 300 billion won. This includes 113.3 billion won for highways, 119 billion won for new ports, 26.1 billion won for new airports, and 11.6 billion won for interregional connecting roads. The Ministry of Economy and Finance said, "We will focus on projects that meet corporate demand to support smooth management activities of resident companies and attract private investment."

3 Trillion Won for Small Business Owners, Extension of Youth Monthly Rent Support

Support for low-income citizens and socially vulnerable groups will also be strengthened. To alleviate the interest burden on small business owners, 300 billion won worth of partial loan interest will be waived for vulnerable borrowers, and through a budget of 252 billion won, temporary support will be provided to small business owners for part of the increase in electricity bills.

To reduce the housing burden on youth, 69 billion won was increased to extend the special youth monthly rent support (200,000 won per month, up to one year), which was scheduled to end this year, for an additional year. For youth participating in work experience programs in other regions, a new stay support allowance (200,000 won per month for three months) will be provided. An additional 5.7 billion won will be invested to expand the target for the jeonse deposit return guarantee fee support from low-income youth to all low-income groups.

The public transportation fare refund support project (K-Pass), newly established in the government proposal, will be implemented earlier (from July to May), and the refund requirement will be relaxed from 21 rides per month to 15 rides or more. To increase the disability pension supplementary benefit by 10,000 won for the first time since 2013, 26.9 billion won was increased. The support limit for commuting expenses for workers with severe disabilities will also be raised from 50,000 won to 70,000 won per month.

8 Trillion Won for Contingency Fund, Cuts in Defense Sector

On the other hand, the contingency fund and budgets in defense and education sectors were reduced. The largest cut was in the contingency fund, which was reduced by 800 billion won compared to the government proposal. The contingency fund is used to cover sudden budget shortfalls. In the planning and finance sector, the budget for debt support for small business owners and self-employed persons was cut by 430 billion won, and the budget for youth leap account contributions was cut by 130 billion won. The education sector's grant budget was reduced by 545.6 billion won, and the health insurance subscriber support budget in the health and welfare sector was cut by 262.5 billion won. The defense sector cuts include 230 billion won related to the Air Force's next-generation fighter (F-X) second phase project and 50 billion won for the Korean next-generation destroyer budget.

Next year's national debt is expected to increase to 1,195.8 trillion won. This is 61.4 trillion won more than the year-end national debt size (1,134.4 trillion won) projected in this year's main budget. The national debt-to-GDP ratio will rise from 50.4% this year to 51.0%. The deficit in the managed fiscal balance is expected to increase by 33.4 trillion won to 91.6 trillion won compared to the previous year (-58.2 trillion won). The managed fiscal balance ratio to GDP is -3.9%, which is expected to exceed the government's 'fiscal rule' upper limit (deficit ratio within 3% of GDP).

This content was produced with the assistance of AI translation services.