Gov’t proposes 3.2% increase in 2025 budget

Courtesy of Yonhap News

By Kim Jung-hwan, Woo Je-yoon, and Yoon Yeon-hae

The South Korean government on Tuesday proposed a tight budget plan for next year, aiming to restrain spending amid rising national debt and concerns about tax revenue shortfalls.

On Tuesday, the government held a Cabinet meeting presided over by President Yoon Suk Yeol and decided to increase next year’s spending by 3.2 percent from this year.

The government’s total expenditure in 2025 will be 677.4 trillion won, an increase of 20.8 trillion won on-year.

While the 3.2 percent increase is the fourth lowest since fiscal statistics were first standardized in 2005, it is slightly higher than this year‘s 2.8 percent growth.

However, it is still lower than the current economic growth rate of 4.5 percent projected by the government for next year.

Yoon noted that sound fiscal management has been the fundamental principle guiding his government’s three budget plans. He added that his government has carried out a total of 24 trillion won in spending restructuring by re-evaluating the validity and effectiveness of all fiscal projects.

The core of the proposed budget is to improve the economic structure through support for research and development (R&D) in advanced industries, while significantly increasing government spending on welfare for the vulnerable.

The government plans to raise the standard median income, a benchmark for welfare programs, to the highest level ever (6.42 percent), and provide up to 300,000 won annually in delivery and shipping costs to small business owners.

It will also increase the upper limit of parental leave benefits from 1.5 million won to 2.5 million won per month, expand the number of jobs for seniors to a record 1.1 million, and offer 1.5 million young people national scholarships.

The R&D budget, which focuses on three strategic technologies - artificial intelligence (AI), biotechnology, and quantum technology – has been set at a record 29.7 trillion won.

Once the government’s budget proposal is submitted to the National Assembly on September 2, it will undergo reviews for reductions and increases by the standing committee and the Special Committee on Budget and Accounts before being finalized in December.