The administration of Lee Jae-myung has reduced the official development assistance (ODA) budget, which had surged during the term of Yoon Suk-yeol, by 1.2 trillion won. The budget for the Education Office's regular grants has also been cut by 410.3 billion won. These are projects that have faced criticism for being excessively allocated despite tight national finances.
The Ministry of Economy and Finance announced the '2026 Budget Plan' on the 29th, which contains this information. The government decided to save a record high of 27 trillion won and reinvest it into core projects, restructuring not only simple projects but also managing operational expenses and mandatory spending.
◇ ODA budget cut by 1.2 trillion won increased during Yoon's administration
The most notable change is the reduction of the ODA budget. The ODA budget, which was 4 trillion won in 2023, expanded to around 6 trillion won by the end of the Yoon Suk-yeol administration. The Ministry of Economy and Finance has reduced this year's ODA budget from 6.6 trillion won to 5.4 trillion won for next year.
Humanitarian aid and contributions to international organizations, which were temporarily increased due to COVID-19 and the war in Ukraine, were reduced by 51% and 26%, respectively. As a result, while most sectors such as health, welfare, education, and environment saw increases, the budget for diplomacy and unification decreased by 9.1% compared to the previous year.
A Ministry of Economy and Finance official noted, 'We have reduced funding for projects that exhibited poor execution performance or were inadequately prepared after a thorough investigation with the Ministry of Foreign Affairs,' adding, 'Major countries like the U.S. and Europe are also reducing their ODA budgets by about 10% to 20%.'
The budget for housing purchase and jeonse loans by the Ministry of Land, Infrastructure and Transport is being cut by 3.7555 trillion won, reflecting a decrease in demand due to lending regulations.
The government also plans to reduce financial support for zombie and sound corporations by about 700 billion won. It aims to eliminate companies that are to be phased out from the market while encouraging financially sound companies to use private financing.
In the research and development (R&D) budget, 500 billion won will be cut from small entrustment projects, which will be converted into national mission-type large projects to enhance efficiency.
◇ A cut of about 1.8 trillion won in mandatory spending… reductions in education grants and imported rice budget
The government is also restructuring operational expenses. By minimizing official trips, converting meetings and training to remote formats, and reducing expenses for annual events and promotions, it aims to save about 50 billion won.
It plans to cut about 1.8 trillion won even from mandatory spending. While restructuring the distribution of education tax to increase investment in higher education and early childhood care, the regular grant for education offices has been reduced by 410.3 billion won.
The budget for the imported rice program by the Ministry of Agriculture, Food and Rural Affairs will also decrease from 592.2 billion won to 548.2 billion won. The imported rice program involves Korea importing 408,700 tons of rice annually from the U.S., China, and Thailand. The Ministry of Economy and Finance stated, 'We plan to utilize container transportation instead of bulk carriers and import rice for liquor production to achieve savings.'
The expenses for the Korea Coal Corporation due to early mine closures were reduced by 118.6 billion won. Budget related to re-employment activities for repeat recipients of unemployment benefits has also decreased by 200 billion won due to enhanced verification.
Proposals received through the national participation platform have also been reflected in a reduction of 180 billion won. Adjustments to participation allowances for university job plus centers will strengthen employment support, and the budget for purchasing physical books for military reading has been reduced. Considering the wage increases for soldiers, the monthly support for self-development costs, which was about 10,000 won, has also been abolished.