The government adopted the “Guidelines for the preparation of the 2025 Budget Proposal and the Fund Management Plan” at the Cabinet meeting held on March 26. The guidelines include fiscal management principles, investment priorities, directions for fiscal innovation, etc., and each ministry will be required to comply with or apply these guidelines when preparing their 2025 budget proposals. With the adoption of the guidelines, the process of 2025 budget allocation will officially commence.
While establishing a fiscal soundness framework to enhance fiscal responsibility for future generations, the next year’s budget proposal will faithfully reflect on-site voices of Korean people. With that in mind, four key areas will be prioritized for budget planning: 1) Creating an economic innovation ecosystem, 2) Providing robust welfare for vulnerable groups, 3) Enhancing fundamentals in response to future challenges, and 4) Securing a strong national security and building a safe society.
1) Creating an innovative economic ecosystem:
- Invest in upgrading the advanced industry’s infrastructure and talent development
- Reform the research and development (R&D) system and significantly expand investment
- Shore up the growth ladder for small and medium-sized enterprises (SMEs) and reinvigorate
investment in ventures and start-ups
- Foster promising service industries such as K-contents and biotech healthcare
2) Provide robust welfare for vulnerable groups:
- Continue to enhance the national basic living security system
- Provide tailored welfare services to beneficiaries
- Strengthen work incentives and expand self-reliance support for vulnerable populations
- Boost social mobility by assisting small business owners to grow business competitiveness
3) Enhance economic and social fundamentals in response to future challenges:
- Counter demographic shifts such as low birth rates and aging population
- Support the future of young people
- Promote balanced regional development through the creation of regional hubs
- Invest in climate crisis mitigation, including transitioning to carbon-neutral energy
4) Secure a strong national security and build a safe society:
- Nurture advanced military technologies to establish a robust national security
- Secure an economic security by restoring the stability of energy and resource supply chains
- Invest in infrastructure for disaster preparedness
- Step up support for essential and regional healthcare to promote a safe society
To be specific, the budget proposal for the next year will commit to support the following areas:
- Transform the financial investment system to foster innovative and adventurous spirit in all fields of R&D, with a significant expansion of investment primarily focusing on future strategic areas such as AI, advanced biotechnology, quantum technology, and support for promising researchers
- Address low birth rates by reducing the burden of childcare and education expenses as well as promoting a work-life balance
- Empower younger generations by intensively investing in national scholarships, asset building, and expanding opportunities for work experience.
- Create local jobs by stimulating corporate investment in regional hubs, while also significantly improving living conditions such as metropolitan transportation, education, healthcare, and culture
- Buoy up essential medical fields such as critical care, childbirth, and pediatric care, and regional medical services, while actively pursuing the expansion of medical R&D and increasing medical school admissions
With an aim to maximize the effectiveness of fiscal management, the government will sustain innovation measures as follows:
- Pursue the fiscal management focusing on three pillars of fieldwork, tasks, and performance by reflecting demand from project sites; revising a levy system in addition to regulatory innovation; developing and supporting collaborative projects among ministries.
- Re-evaluate project feasibility and bolster benefit fraud detection; consider reducing or abolishing
projects with low feasibility or lagging behind technological advancements by downsizing
discretionary spending by over 10%.
- Achieve an efficient fiscal management through the improvement of delivery system and continuous efforts to diversify investment resources
Each ministry plans to prepare and submit budget requests by the end of May based on the guidelines and to the Ministry of Economy and Finance (MOEF). MOEF will then deliberate on those budget requests to formulate the government budget proposal and go through discussions and consultations with relevant ministries and local governments, as well as gathering public opinions, from June to August. The finalized budget proposal will be submitted to the National Assembly by September 2.
Please refer to the attached files.
