[2025 Budget Proposal] 24 Trillion Won Spending Diet... Government Tightening Belt for Third Consecutive Year

Continuing Structural Restructuring with 20 Trillion Won Expenditure for 3 Consecutive Years

Choi Sang-mok, Deputy Prime Minister for Economy and Minister of Economy and Finance, is speaking at the party-government consultation meeting on the 2025 budget held at the National Assembly on the 20th. Photo by Kim Hyun-min kimhyun81@

The government’s '2025 Budget Proposal,' reflecting a sound fiscal policy, was accompanied by a high-intensity expenditure restructuring amounting to 24 trillion won. This marks the third consecutive year of budget restructuring in the 20 trillion won range under the Yoon Suk-yeol administration.

According to the Ministry of Economy and Finance on the 27th, the scale of expenditure restructuring carried out during the formulation of the '2025 Budget Proposal' reached 24 trillion won.

The Yoon Suk-yeol administration has implemented budget restructuring in the 20 trillion won range for three consecutive years, including the first year of the term (24 trillion won), last year (23 trillion won), and this year. In contrast, the scale of budget restructuring under previous administrations was between 10 trillion and 12 trillion won annually.

Since the budget formulation process for 2023, the government has re-examined all discretionary spending projects from scratch and has been mandatorily reducing expenditures by at least 10%. While restructuring efforts targeted 120 trillion won of discretionary spending over the past two years, next year’s expenditure restructuring will focus heavily on cutting discretionary spending along with targeting rigid expenses.

Yoo Byung-seo, Budget General Review Officer at the Ministry of Economy and Finance, stated, "Since a significant portion of the 2023?2024 budget restructuring has already been carried out, there is limited scope for further large-scale restructuring. Therefore, each ministry voluntarily agreed to reduce expenditures on rigid costs and other areas."

Detailed restructuring specifics were not disclosed. However, the government reduced about 3 trillion won from the Korea Land and Housing Corporation (LH)’s new purchase rental housing project. Considering the project duration of three years, the budget was saved by distributing payments over the period. Similar project orders were consolidated by the government, and management was integrated. Routine annual maintenance was halted, and budget adjustments were made slightly where tax expenditure support was high, thereby saving resources.

The government explained that expenditures were cut by minimizing fiscal leakages and waste across the board and enhancing the efficiency of fiscal projects through expanded inter-ministerial collaboration. The Ministry of Economy and Finance stated, "We focused on improving project effectiveness through support system reform, changes in execution methods, and prioritization of investments."

The resources secured in this way will be concentrated in four major areas: strengthening welfare for vulnerable groups such as the elderly, disabled, and at-risk children; spreading economic vitality through research and development (R&D) support; improving future resilience by expanding essential medical services and restoring regional healthcare; and national defense, public safety, and natural disaster response.

The government’s belt-tightening measures come amid many spending demands and rapidly increasing national debt. The national debt-to-GDP ratio, which was in the 30% range until 2019, exceeded 50% last year due to the COVID-19 pandemic. With continued issuance of deficit-financing government bonds to cover tax revenue shortfalls, national debt is expected to reach 1,277 trillion won by the end of next year.

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