Government finalizes 2025 budget plan
Following the 2.8% increase this year, the austerity fiscal policy is in place
Deficit falls below 3% of GDP for the first time in 6 years
Investing 20 trillion won in essential regional medical care over 5 years
Next year’s government budget has been set at 677.4 trillion won, a 3.2% increase from this year. The government will continue its tight fiscal policy for the second consecutive year by limiting the expenditure growth rate, which was the lowest ever at 2.8% this year, to the low 3% range next year. As the government tightens its belt, next year’s fiscal deficit is expected to fall below 3% for the first time in six years since 2019, at 2.9% of GDP.
On the 27th, the government held a Cabinet meeting and finalized the ‘2025 Budget’ containing these contents. Deputy Prime Minister and Minister of Strategy and Finance Choi Sang-mok said, “The expenditure increase rate (3.2%) in next year’s budget has increased compared to this year (2.8%), but it is difficult to see it as a high level in many ways.” He added, “This is a process of normalizing and strengthening the sustainability of the finances that have deteriorated significantly during the pandemic response.” This means that by reducing the budget increase rate, which was an average of 8.7% during the Moon Jae-in administration, by half or more, efforts will be made to resolve concerns about fiscal soundness, which has turned from a strength of the Korean economy to a risk factor.
The government, which has embarked on a 24 trillion won spending restructuring to secure the necessary funds amid the austerity fiscal policy, has decided to invest 20 trillion won over five years to support medical reform. Next year, it has newly allocated 300 billion won for the cost of resident training to expand essential medical services. The medical budget, which was about 800 billion won this year, will increase by about 2.4 times to 2 trillion won next year.
The research and development (R&D) budget, which suffered a large-scale cut this year, has been set at 29.7 trillion won, recovering to the level before the cut in 2023 (29.3 trillion won). With the goal of becoming one of the top three global powers by 2030, 3.5 trillion won will be invested in three game-changing fields, including artificial intelligence (AI).
Meanwhile, President Yoon Seok-yeol, who presided over the Cabinet meeting that day, pointed out that “the previous government increased the national debt by more than 400 trillion won in five years,” and that “the fiscal burden has increased significantly, making it difficult for the government to work.” From the inauguration of the government in 1948 to 2017, the accumulated national debt was 660 trillion won over 69 years, but under the previous government in just five years, it had increased to 1,076 trillion won. In response, the Democratic Party of Korea argued that the previous government inevitably increased the national debt while responding to the pandemic, and that the current government will also increase the debt by another 360 trillion won by the end of its term in 2027.
Sejong = Reporter Kim Do-hyung [email protected]
Reporter Hwang Hyeong-jun [email protected]
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2024-08-27 20:22:09