Democratic Party: "820.9 Trillion Won Budget for Next Year Is an Investment in the Future... Not Out of Step with Monetary Policy"

"Democratic Party: National Debt Will Rise Next Year, but Debt Ratio Will Fall"

The Democratic Party has characterized next year's budget, totaling 820.9 trillion won, as "the largest fiscal investment in South Korea's history, undertaken for the country’s growth and the future of its people."

On September 1st, Kwon Chilseung, Policy Planning Committee Chair, and Chung Taeho, Chief Coordinator of the Budget Settlement Policy Committee (and Democratic Party secretary at the National Assembly Special Committee on Budget and Accounts), issued a statement assessing next year's budget, which marks a 12.8% increase compared to this year’s main budget. They described the 2027 budget as “a bold investment for South Korea’s great transformation and leap forward, as well as for the people’s hopes.” On the rationale for expansionary fiscal policy amidst ongoing economic growth, they explained, “The 2027 budget is not simply about maintaining the recovery trend; it focuses on bolstering the country’s economic resilience by driving up potential growth, and aims to address structural polarization by widely sharing the fruits of growth.”

Specifically, regarding the key projects in next year's budget, they announced: “For the three major mega-projects, all-out support for AI, and strengthening engines for future growth, a total of 84 trillion won will be invested—up 35% from 62 trillion won in this year’s budget. In addition, investments responding to structural polarization—including comprehensive support for each stage of youth growth, growth led by local governments, and support for small business owners and farmers as well as public stability—will increase 41% from 114 trillion won this year to 160 trillion won next year.”

Hyun-Do Han, Floor Leader of the Democratic Party of Korea, and Chil-Seung Kwon, newly appointed Chairman of the Policy Planning Committee, are attending the policy coordination meeting held at the National Assembly on August 20, 2026. Photo by Hyunmin Kim

They also pointed out that the tax revenue base will be strengthened. The Democratic Party stated, "Next year's national tax revenue is expected to be 584.4 trillion won, an increase of 194.2 trillion won from this year's main budget of 390.2 trillion won, led by improvements in corporate and income tax collections thanks to the strong semiconductor sector." While government bond debt is set to rise, the lawmakers noted the fiscal situation will actually improve compared to the size of the economy. They elaborated, “Although government debt will increase by 106 trillion won from this year to reach 1,520 trillion won, the debt-to-GDP ratio will fall to 48.3%—well below this year’s main budget level of 51.6%—due to economic growth.”

Regarding criticism that the budget runs counter to the current monetary tightening, such as base interest rate hikes, they argued, “Because next year’s budget focuses investment on reviving potential growth, inflationary factors are minimal, so it cannot fairly be deemed out of sync. Fiscal policy is actually cushioning the impact on people’s livelihoods during this period of interest rate hikes, so expansionary fiscal policy and monetary tightening are playing complementary roles.”

This content was produced with the assistance of AI translation services.