The Democratic Party of Korea and the government held their first party-government consultation for next year's budget on the 26th, reaffirming "active fiscal management" as the official stance. Amid concerns over economic slowdown and sluggish employment, they have determined that it is unavoidable to formulate an expansionary budget to secure future growth engines and restore people's livelihoods.
Kim Byung-ki, the Democratic Party's floor leader, stated during the party-government consultation that "the budget is an investment in enhancing the potential and capacity of the people," adding that "the three pillars of an innovative economy, balanced growth, and a robust society must be included in the budget for next year." He emphasized that "past mistakes must not be repeated. Mistakes like cuts to research and development (R&D) or revenue shortfalls must be eliminated," noting that "the president has also stressed that the R&D budget for 2026 is the largest ever. Future investments should remain steadfast."
Han Jeong-ae, the policy chief, highlighted the need for an active fiscal policy while mentioning growth and employment projections. He noted, "The government forecasts a growth rate of 1.8% next year, and the increase in the number of employed is expected to be limited to 110,000 people next year," adding that "there are serious concerns about whether growth will occur without employment." He also stated, "The previous government emphasized sound finances in budget formulation, but this government should ensure that finances actively serve the people in line with its philosophy that the nation belongs to the people." He emphasized the need for in-depth discussions on active fiscal management during today's budget discussions between the Democratic Party and the government.
He continued to emphasize focused investments in the AI industry. The policy chief remarked, "The National Planning Committee announced AI, bio, cultural contents, defense, and renewable energy as strategic growth initiatives for Korea. Among them, the emphasis was placed on becoming a leading nation in AI and strong fundamental science and technology to drive an innovative economy worldwide," adding that "the government will also expand fiscal investment in enhancing GPU supplies and technology developments that utilize AI."
In particular, he mentioned, "AI should actively explain various government regulations and permits in people's daily lives, not only serving as a future growth driver but also providing tangible benefits to the people's lives." He expressed hope that next year's budget would reflect AI industries that the public can feel.
He also emphasized that "measures to reduce the financial burden on households in tough economic times and contribute to the sales growth of small business owners should be actively considered and incorporated," stressing that the budget for supporting vulnerable groups should be expanded. He further highlighted the need to increase the budget for purchasing equipment to respond to large fires and for projects focused on preventing industrial accidents and ensuring public safety.
The government has identified performance-based investments and securing future growth engines as the key directions for next year's budget.
Deputy Prime Minister Kyoo Yun-cheol stated that "the 2026 budget is focused on efficiently cutting unnecessary expenditures while boldly concentrating investments on necessary tasks to drive recovery and growth," adding that "the finances should act as a catalyst to stabilize people's livelihoods and reinvigorate the economy, utilizing available resources to the fullest while securing medium- to long-term growth engines through a paradigm shift towards ultra-innovation leading economy. Through this, we aim to establish a virtuous cycle that ultimately leads to sustainable finances."
He also outlined concentrated investment plans, including: focusing on 'physical AI lead projects' to become a top three power in AI, the largest support for R&D to seize future growth engines, and focused investments in K-culture global expansion and the establishment of RE100 complex as part of energy transition.
Additionally, he presented plans for focused investments in various areas, including: tailored support across generations to address low birth rates and aging, expanding support for low-income populations and people with disabilities, increasing investment in disaster safety industries, and improved living conditions for military personnel along with the introduction of advanced weapons.