The government said it will maintain an "active fiscal stance" next year as well. It also said it will carry out high-intensity spending restructuring, including cutting discretionary expenditure by 15% and mandatory expenditure by 10%, while concentrating the budget on key sectors.
"Mandatory expenditure" refers to uncontrollable expenditure items, such as the basic pension, whose spending scale has already been set by law, and the remainder of total fiscal expenditure after excluding such mandatory expenditure is called "discretionary expenditure."
Im Ki-geun, acting Minister of the Ministry of Planning and Budget (Vice Minister), announced the "2027 budget formulation guidelines" at the Cabinet meeting on the 24th. This is the first set of budget formulation guidelines since the launch of the Lee Jae-myung administration.
First, it decided to maintain an "active fiscal stance." The Vice Minister said, "We will maintain an active fiscal stance to support our economy's great transition and great leap forward and to ensure that the public can feel the results of state affairs," adding that the government will focus investment on four sectors: ▲ shift in the growth paradigm ▲ region-led growth ▲ growth for all ▲ safety and peace.
To realize this active fiscal policy, the government decided to pursue high-intensity spending restructuring in parallel. The Vice Minister said, "We will reexamine all fiscal programs from the ground up," and added, "The savings will be reinvested in each ministry's core tasks." The Ministry of Planning and Budget will cut discretionary expenditure by 15% and mandatory expenditure by 10%, and abolish 10% of programs. Compared with previous administrations, this is effectively the first time that a concrete target has been set for reducing mandatory expenditure, rather than discretionary expenditure.
The government also plans a sweeping overhaul of special accounts and funds. The Vice Minister said, "We will wind down unnecessary funds and create those that are needed," adding, "Special accounts related to regional essential medical services, semiconductors, and unfair transactions will be newly established."
It also plans to allocate the budget under a principle that favors local regions. The Vice Minister said, "The farther a region is from the capital area, the more robustly we will support it," adding, "We will comprehensively consider the level of regional development and the degree of population extinction."
In addition, the Vice Minister said, "To strengthen the beneficiary-pays principle, we will normalize levies such as the departure payment and bring museum and palace admission fees in line with reality," adding, "Corporations and financial companies that benefited from policies such as the Strategic Export Finance Fund and the Inclusive Finance Stabilization Fund will be required to share and recirculate profits."
The "2027 budget bill formulation guidelines" are scheduled for final approval at the Cabinet meeting on the 30th. The Vice Minister said, "The era of cosmetic spending restructuring must end," adding, "Each ministry should, based on these guidelines, compile and submit plans to improve expenditure efficiency and priority investment projects."