Park Hongkeun Entrusts 50 Trillion Won National Budget Restructuring to Private Ombudsmen

Ministry of Planning and Budget Establishes Private-Led Spending Efficiency Track

Experts and Civic Groups to Review This Year’s 728 Trillion Won Budget

Validation of Each Ministry’s Restructuring Plans for Next Year Also Entrusted

Previously Announced “15% Discretionary, 10% Mandatory Spending Reduction”

The Ministry of Planning and Budget, which has announced a high-intensity spending restructuring worth 50 trillion won this year, is looking for solutions outside of government ministries. Departing from the usual practice of fiscal authorities leading the process, the ministry has decided to grant the private sector substantial budget oversight authority to achieve spending efficiency with no exceptions. Previously, President Lee Jaemyung instructed, "Strengthen the role of the private sector in budget formulation."

On May 6, the Ministry of Planning announced plans to commission private experts and civic groups to evaluate, inspect, and analyze this year’s budget and suggest ways to improve spending efficiency. The ministry will also entrust them with verifying the validity of the 2027 spending restructuring plans that each government agency must submit by the end of this month. This essentially means introducing a private-sector ombudsman system into the budget formulation process, which was previously led by government ministries and fiscal authorities. All outcomes will be reflected in the formulation of next year’s budget proposal. A ministry official explained, “We have already commissioned a research project to review and analyze the government budget in order to establish a private-led spending efficiency track. We plan to gather and reflect opinions across the board, without distinguishing between mandatory and discretionary spending.”

At the end of March, the ministry released the guidelines for the 2027 budget proposal, announcing a spending restructuring of 50 trillion won, targeting a 15% cut in discretionary spending and a 10% cut in mandatory spending. This is nearly double the 27 trillion won planned for this year.

In Korea, mandatory spending such as the National Pension Fund is rising rapidly due to low birth rates and an aging population, while urgent funding is also needed to escape low growth, making bold adjustments inevitable. Accordingly, the ministry plans to use private-sector ombudsmen to implement restructuring with no exceptions, beyond traditional budget cuts, project sunsets, or name changes.

This move follows up on President Lee’s directive from August last year, when he held a "National Fiscal Savings Meeting" and ordered a review of introducing an ombudsman system into budget formulation. At the time, President Lee stated, “Because public officials are involved in these tasks, they tend to believe what they are doing is always right and necessary, so they rarely change things on their own. In the end, outside intervention is required. We should also consider supporting civic groups to enable ongoing reviews of the budget bill. The savings achieved will far exceed the amount of budget support provided.”

Through this research, the ministry plans to develop at least five proposals for spending efficiency across economic, social, and other sectors. These proposals must include input from sector-specific private experts and civic groups, as well as details such as the background for the initiatives, related projects, and the potential amount of budget savings. A ministry official commented, “This is a massive task, as it involves thoroughly reviewing this year’s 728 trillion won budget. We plan to share interim and final results during the process and, if necessary, set up a task force (TF).” Meanwhile, Minister of Planning and Budget Park Hongkeun recently stated at a press briefing, “We will do our best to ensure that the reduction targets for discretionary and mandatory spending do not fizzle out. I understand restructuring is a difficult and thankless job, but I will accept that role and actively persuade others.”

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