Ruling and Opposition Parties Reach Swift Agreement on Budget Bill... Expected to Meet Legal Deadline for the First Time in Five Years (Comprehensive)

[Financial News] The ruling and opposition parties reached a swift agreement on the budget bill for next year on the 2nd. If the bill passes the plenary session as agreed this afternoon, it will mark the first time in five years since 2020 that the budget is processed within the legal deadline.
The floor leaders and deputy floor leaders of the Democratic Party of Korea (DPK) and the People Power Party held a meeting at the National Assembly of the Republic of Korea this morning and agreed to process the 2026 budget bill and related budgetary legislation. The plenary session is scheduled for 4 p.m. today.
According to the agreement, the total budget will be reduced by approximately 4.3 trillion won, excluding the amount transferred due to organizational restructuring, as a result of the National Assembly's budget review. Any increases will be made within the scope of the reductions, ensuring that total expenditures do not exceed the government’s original proposal.
Key national policy projects such as support for the issuance of Local Love Gift Certificates and the National Growth Fund will not face cuts, while some reductions will be made to Artificial Intelligence (AI) support, policy funds, and the Reserve Fund.
Additionally, funding will be increased for the establishment of a disaster recovery system at the National Information Resources Service, the development of the Distributed Power Grid industry, and the AI Mobility Demonstration Project. Support for city gas supply pipelines, National Scholarships, and the Honorary Allowance for Veterans will also see increases.
Lee So-young, a member of the Democratic Party of Korea and ruling party secretary of the Special Committee on Budget and Accounts, told reporters, "It has been five years since we last met the legal deadline of December 2. To address concerns about fiscal soundness, increases were made only within the scope of the reductions, so the total amount does not increase. During the National Assembly review, non-tax revenue was increased, so the fiscal balance of the bill passed by the National Assembly will be better than the government’s original proposal."
Regarding the removal of the '1.9 trillion won reduction for the U.S. trade response program' from the final agreement, which was present in the earlier draft, Lee explained, "Initially, 1.9 trillion won for three institutions was included when the direction was not set before the conclusion of tariff negotiations. Later, as the structure was reorganized according to negotiation results, only a portion needed to be reflected, so the amount was reduced and consolidated into a single item, resulting in a decrease in the total."
The vote on the budget bill is expected to take place around midnight, as additional budget adjustments (sheet work) are required based on the agreement. Lee predicted, "It could take more than 15 hours from now, so the vote will likely be close to midnight. However, if things move quickly, it may be completed before then."
If the budget bill passes today, it will be the first time in five years that the legal deadline is met. According to the Constitution, the National Assembly of the Republic of Korea must approve the budget by December 2, which is 30 days before the start of the fiscal year (January 1). Since the introduction of the National Assembly Advancement Act in 2012, the budget has only been processed within the deadline twice—once in 2014 and again in 2020.
cjk@fnnews.com Choi Jong-geun, Kim Hyung-gu Reporter