162 Trillion-Won Future Response Fund May Escape Parliamentary Control; 30% Increase at Issue

[Financial News] Parliamentary discussions are set to begin in earnest on an amendment to the National Finance Act aimed at establishing the government’s 162 trillion-won Future Response Fund. The ruling and opposition parties are expected to clash sharply over how far the law should define the National Assembly’s control over the fund.
According to Financial News reporting on the 2nd, the ruling and opposition parties have clearly differing positions on the amendment to the National Finance Act for establishing the Future Response Fund, which the Ministry of Planning and Budget announced for legislation last month. A key issue is an autonomy provision that would allow the Future Response Fund to change spending amounts for major items by up to 30% without submitting a revised fund management plan to the National Assembly. The provision is directly linked to the National Assembly’s inherent authority to control the government budget.
The government appears to have classified the Future Response Fund as a financial fund. Funds currently established in South Korea are broadly divided into two categories: financial funds and project funds. Financial funds generally allow autonomous modifications of up to 30%, while project funds allow changes of up to 20%. In other words, financial funds have greater autonomy than project funds.
The ruling Democratic Party of Korea maintains that the Future Response Fund’s autonomy is not significantly different from that of other existing funds. In effect, the party appears to support the autonomy provision prepared by the government. A Democratic Party official explained, "Under the current system, financial funds are allowed to make autonomous modifications within a 30% limit. The discretion afforded to other funds has traditionally been operated in the same way, and the Future Response Fund was modeled on that 30% standard."
The official added, "This is a matter of consistency in the standards. The time has come for the government to explain whether the Future Response Fund has the same nature as a financial fund," while noting, "This is not an issue that requires that much consideration."
Another Democratic Party official stated, "It will be adjusted during the review of the amendment," but added, "In general, 20% to 30% autonomy already exists for other funds as well."
The analysis is that the government and ruling party are emphasizing autonomy rather than placing the Future Response Fund under National Assembly control because the fund is designed to enable swift action. Given the characteristics of rapidly changing future industries such as artificial intelligence (AI) and semiconductors, as well as the nationwide crisis of regional depopulation, the fund must retain sufficient autonomy to allow rapid execution and agile government responses.
By contrast, the People Power Party opposes not only the 30% autonomy provision in the amendment to the National Finance Act for establishing the Future Response Fund, but also the creation of the fund itself. It criticizes the provision as a workaround that effectively bypasses the National Assembly’s inherent authority to control the budget. The party also points out that the fund’s purpose itself is unclear.
A PPP official said, "The items to be used when tax revenue remains are already stipulated under the National Finance Act. The surplus is to be distributed to local governments or used to repay government bonds. However, the Future Response Fund would create a second set of accounts with an unclear purpose, and on top of that, the government intends to simplify the procedures."
The official continued, "The Democratic Party has staked everything on establishing the Future Response Fund. It is trying to set up another budget purse worth about 162 trillion won. Even in the case of a supplementary budget, passing 1 trillion won requires a government policy speech, approval by the standing committee and the Special Committee on Budget and Accounts, and passage by the plenary session. But wouldn’t the Future Response Fund effectively allow them to bypass those steps?"
In fact, South Korea’s national debt is expected to approach 1,700 trillion won by 2030. Fiscal spending is also projected to reach 1,000 trillion won that year. As a result, some argue that excess tax revenue should first be used to repay government bonds rather than serve as a source of funding for domestic investment. Based on this analysis, the PPP is expected to argue against establishing the fund during the upcoming review of the amendment.
[email protected] Kim Hyeong-gu Reporter