The rival parties signaled a clash ahead of the review of Lee Jae-myung's first budget bill, totaling 728 trillion won. The Democratic Party of Korea argued that expansionary fiscal policy is essential to revive the economy, which slumped under the Yoon Suk-yeol administration. The People Power Party, by contrast, criticized the government for increasing national debt through "cash handout-style" policies that have no medium- to long-term stimulus effect.
The National Assembly Budget Office held a "2026 budget bill forum" at the National Assembly Members' Office Building on the afternoon of the 3rd. Attending the forum were Han Byung-do, chair of the National Assembly Special Committee on Budget & Accounts from the Democratic Party of Korea, ruling-party secretary Lee So-young of the Democratic Party, and opposition-party secretary Park Hyeong-su of the People Power Party.
The government submitted to the National Assembly next year's budget bill with total expenditure of 728 trillion won. The bill is 8.1% larger than this year's main budget (673.3 trillion won). It is also 3.5% higher than the figure after the second supplementary budget (703.3 trillion won) formulated following the June 3 presidential election that brought the Lee Jae-myung administration to power. Specifically, ▲ a technology-led ultra-innovation economy, 72 trillion won ▲ growth for all and a society with strong fundamentals, 175 trillion won ▲ public safety and diplomacy/defense centered on the national interest, 30 trillion won, drove the expansionary fiscal stance.
The ruling and opposition secretaries of the Special Committee on Budget & Accounts took different positions on the government's expansionary fiscal stance. Lawmaker Lee So-young said that with this year's economic growth forecast at about 0.9% and next year's at about 1.8%, Korea should pursue a recovery even if it means increasing expenditure. Lawmaker Park Hyeong-su, however, cited the recent case of international credit rating agency Standard & Poor's (S&P) downgrading France by one notch and countered that fiscal soundness cannot be ignored.
Lee particularly stressed that expansionary fiscal policy is inevitable to restore national competitiveness that was damaged under the Yoon Suk-yeol administration. While acknowledging the bill is already the largest ever, Lee also left open the possibility of increasing allocations during the review process if needed.
Lee said, "Looking back at the state of Korea's economy over the three years of the Yoon Suk-yeol administration before the new government took office, it fell into such a blind rut that one wonders how it could have come to this," adding, "Over the three years, the tax revenue shortfall reached as much as 100 trillion won, and in the response process, a method of cutting earmarked tax sent down to local governments was used, passing the pain directly on to the public."
Lee went on, "To restore what collapsed (under the Yoon Suk-yeol administration) and set right what has become disordered will inevitably require greater energy," adding, "We will actively identify areas that need to be added in the government plan—such as local extinction, the climate crisis, the demographic crisis, and budgets for vulnerable groups—and reflect them in increases."
Park noted that among non-key-currency countries, Korea has a high liability growth rate, and said policies like local love gift certificates, which are "cash handouts," should be avoided. Park also stressed the need to review whether the 150 trillion won National Growth Fund envisioned by the government overlaps with existing policy funds.
Park criticized, "The funding source for the expansionary fiscal policy is a 109.9 trillion won deficit government bonds issuance. Countries that have abandoned fiscal soundness are facing difficulties," adding, "President Lee said the absolute size of liabilities is not important and that there is no problem because the debt ratio is just over 50%, but that is an extremely dangerous idea. We must ponder the fundamental question of how long we will keep injecting fiscal resources to continue issuing local currency."
Park continued, "The People Power Party will review the 2026 budget bill from the perspective of reducing total expenditure, restructuring new projects, boldly cutting inefficient projects, easing tax burdens and restoring private investment, and securing the sustainability of public finance," adding, "We will seek to eliminate cash handout projects that add to national debt and a tax-hike bomb, and to reduce the ratio of government bonds issuance."
Starting with a public hearing on the budget bill at the Special Committee on Budget & Accounts on the 5th, the National Assembly will enter a full-fledged review schedule. Comprehensive policy inquiries targeting each government ministry will be held on the 6th to 7th. Reviews of economic ministries will take place on the 10th to 11th, and of non-economic ministries on the 12th to 13th. The budget adjustment subcommittee, which reviews increases and cuts to the bill, will begin on the 17th, and the bill will be finalized after the full committee and a plenary session of the National Assembly. The statutory deadline for handling the budget bill at the National Assembly plenary session is Dec. 2.