The Opening Salvo of Next Year’s Budget Battle... Special Committee Begins Settlement Audit of Last Year’s Budget

Special Committee to Begin Plenary Session on August 25
Ruling and Opposition Parties Clash Over Fiscal Policy
Yoon Suk Yeol Administration’s Budget Execution Under Scrutiny

The opening salvo of next year's budget battle has begun. Starting on the 25th, the National Assembly Special Committee on Budget and Accounts will convene plenary sessions to begin reviewing the settlement of last year's (2024) budget. The results of this settlement review will serve as the guiding principle for next year's (2026) budget deliberations. For this reason, the opposition party has announced a major offensive, viewing this as the starting point for next year's review. The Democratic Party of Korea, now the ruling party following the change in administration, plans to highlight the shortcomings of the previous government, focusing on issues such as the tax revenue shortfall and cuts to research and development (R&D) budgets under the Yoon Suk-yeol administration.

Han Jeongae, Policy Committee Chair of the Democratic Party of Korea, is holding a press briefing on the 2024 fiscal year settlement audit at the National Assembly in Yeouido, Seoul on the 24th. Photo by Yonhap News

The Special Committee on Budget and Accounts will hold a plenary session on this day to begin reviewing the settlement of last year's budget. With this year's June 3 presidential election resulting in a change of power, a fierce debate is expected over the direction of fiscal management, as this marks the last budget execution by the Yoon Suk-yeol administration. Issues identified during the settlement review may also be reflected in next year's budget deliberations in the National Assembly. However, since this settlement review will continue even after the regular session of the National Assembly, the final results are unlikely to be reflected in the budget proposal submitted by the government to the National Assembly. Although Article 128-2 of the National Assembly Act stipulates that the settlement must be completed before the regular session, this rule could not be observed again this year due to political scheduling delays.

The Democratic Party of Korea has already raised issues regarding the tax revenue shortfall and reductions in the R&D budget during the settlement review. Previously, the party's Policy Committee pointed out problems with the efforts of the fiscal authorities and the Board of Audit and Inspection, which reviewed the government's settlement, to address the tax revenue shortfall. In addition, the party criticized the previous administration's measures to address the shortfall, such as the management of government funds and the non-execution of local allocation taxes and grants. The government’s decision to withhold local allocation taxes and local education grants due to insufficient tax revenue has led to financial difficulties for local governments and educational institutions. The party also highlighted the problems caused by the 5 trillion won reduction in the R&D budget.

In contrast, the People Power Party plans to focus its criticism on the fiscal expenditure policies of the Lee Jaemyung administration, emphasizing the increasing trend in the debt-to-GDP ratio. According to the previously released direction for fiscal review by the People Power Party's Policy Committee, "Despite the fiscal crisis, the Lee Jaemyung administration is solely focused on populist spending such as regional gift certificates, livelihood coupons, and various forms of direct cash support," adding, "This settlement review should serve as a starting point for establishing the efficiency and sustainability of future fiscal execution." In this context, the People Power Party has decided to select 100 major problematic projects to address issues such as budget waste, violations of legal regulations, and the implementation of the National Assembly's review and recommendations.

The Special Committee on Budget and Accounts plans to hold plenary sessions until the 1st of next month, after which it will operate a settlement subcommittee to review the details in depth.

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