The Yoon administration's austerity-oriented budget proposal for next year raises concerns that it could hinder President Lee's campaign promises (South Korea)

South Korea's budget plan for next year is expected to be submitted to President Lee Jae-myung after being compiled based on the policies of the Yoon Seok-yeol administration, rather than the national philosophy of the new administration.
There are also concerns that if things continue as they are, the budget plan will remain a "half-baked" one.
The budget proposal is expected to be revised through various measures, but since each ministry and agency has already prepared the framework for the budget proposal, it may be difficult to make major revisions.
Experts say that with only a short time left until the September 2nd deadline for submitting the budget to the National Assembly, government ministries and agencies are working to implement the current administration's fiscal policy.
They all agreed that the budget should properly reflect the government's vision and philosophy. In a situation where the government's fiscal policy has shifted from austerity to expansionary, if things continue as they are, some of the projects of the Lee Jae-myung administration next year will be subject to the budget.
According to a government official on the 14th, each ministry and agency will prepare budgets in accordance with the Yoon administration's budget guidelines at the end of May.
The budget plan was submitted to the Ministry of Planning and Finance without any amendments. Considering the schedule for collecting opinions from the public and submitting the plan to the Diet, it was necessary to start preparing the budget before the new administration was inaugurated.
However, the problem is that the direction of fiscal policy is completely opposite between the Yoon administration and the new administration.
The "Guidelines for Drafting Public Fiscal Plans" are guidelines that emphasize fiscal sustainability, with a core content of reducing all discretionary expenditures by 10% or more and strictly controlling mandatory expenditures.
The government implemented expenditure restructuring adjustments worth 24 trillion won in 2023, its first year after launch, 23 trillion won in 2024, and another 24 trillion won this year, and is aiming for cuts in the 20 trillion won range again next year.
Meanwhile, President Lee Jae-myung has consistently emphasized expansionary fiscal management. In his policy speech to the National Assembly on the 26th of last month, he said, "It is irresponsible for the government to sit back and do nothing in the midst of the economic crisis and insist on austerity measures.
"We will remain a passive bystander," he said. At a press conference on the 3rd of this month, he also emphasized that "now is a time when a proactive and bold role for public finances is more important than ever."
However, the Ministry of Planning and Finance has indicated that it has no plans to distribute revised guidelines for drafting the budget.
The reason for this is that even if revised guidelines were issued immediately, there is only about a week left until the National Fiscal Strategy Conference, and there is not enough physical time for each ministry and agency to revise and adjust its budget.
Another reason cited is that the National Planning Committee, which is responsible for the basic design of national policy, has yet to present specific national policy issues or the scale of the budget.
In response, the National Planning Committee argued that the Ministry of Strategy and Finance was reluctant to submit documents.
They claim that the direction of national policy issues could not be decided swiftly due to the uncooperativeness of the Ministry of Strategy and Finance.
The Ministry of Strategy and Finance usually receives budget requests from each ministry and agency and then works with the relevant ministries and agencies and local governments between June and August to finalize the budget.
The government will hold a meeting to discuss the budget, incorporating public opinion, and submit the budget to the Diet by September 2. However, experts say that this type of consultation method could lead to changes in the budget for large-scale projects.
However, some have pointed out that minor projects may be carried out according to the previous administration's guidelines, which could result in policy inconsistencies.
For example, the Yoon administration has cut the research and development (R&D) budget and welfare-related expenses, among other major national projects.
This means that even if an increase is possible for the above-mentioned projects, the previous administration's cut policy for other minor projects may remain unchanged.
Song Jeong-pil, a senior researcher at the National Household Finance Research Institute, said, "It was created on the premise of sound finances.
"The budget requests submitted by each ministry and agency do not reflect the Lee Jae-myung administration's campaign promises, policies and principles," he said. "The revised guidelines include the current administration's national policy agenda, such as economic recovery through expansionary fiscal policy.
"Even if the budget bill is revised later, only major national policy issues will be revised, and the government will have no choice but to follow the previous administration's policies on minor projects," he added.