Budget growth for next year hits all-time low at 2.8%

The Korean government budget for next year has been set at 656.9 trillion won, an increase of 2.8% from this year. This marks the lowest expenditure growth rate since 2005. In a situation where the tax revenue is expected to record the steepest fall in the nation’s fiscal history, the government plans to reduce the expenditure growth rate significantly compared to this year (5.1%), aiming to decrease the deficit in the nation's livelihood. The budget, secured through a restructuring of expenditures amounting to 23 trillion won, will focus on strengthening support for vulnerable groups such as low-income and disabled individuals, the elderly, and youth, under the category of 'welfare for the disadvantaged.'

On Tuesday, the government held a cabinet meeting and finalized the budget proposal for the year 2024, which contains these measures. "Given the difficult fiscal situation with accumulated national debt of over 1,000 trillion won, the prospect for this year and the next remains uncertain," Deputy Prime Minister and Minister of Strategy and Finance Choo Gyeong-ho said. "The 2.8% expenditure growth rate, the lowest level since fiscal statistics were established in 2005, is the government's carefully considered decision to maintain sound finances." The current administration has reduced the average budget growth rate to 5.1% this year, significantly lower than the years under the Moon Jae-in administration averaging 8.7%.

In order to secure fiscal room amidst a stringent fiscal environment, the government embarked on a restructuring of expenditures worth 23 trillion won. Research and Development (R&D) budgets criticized for forming a 'research cartel' were reduced by 7 trillion won, and subsidy projects whose execution had been considered unfair were cut by 4 trillion won.

With a focus on 'welfare for the disadvantaged,' the government allocated 242.9 trillion won for health, welfare, and employment budgets, a 7.5% increase from the previous year. Based on this budget plan, the basic living allowance for a 4-person household will be adjusted upward by 13.2% (213,000 won), from 1.62 million won to 1.834 million won. Among the criteria of medical care for severely disabled individuals, the item on the obligation as a provider of family will be eliminated.

During the cabinet meeting on Tuesday, President Yoon Suk Yeol emphasized, "Our government firmly rejected the concept of 'fiscal omnipotence' that the previous administrations adhered to and decisively shifted towards sound fiscal policies,” further highlighting, "We will concentrate on three key areas: achieving genuine welfare for the disadvantaged, enhancing the essential functions of the nation such as defense and the rule of law, and securing growth momentum for quality job creation." The budget proposal for the next year will be submitted to the National Assembly on September 1. The National Assembly must deliberate and decide on the budget proposal by the legal deadline of December 2.


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