Over KRW 162 Trillion Future Fund: "Moon and Yoon Administrations' Tax Revenue Roller Coaster a Cautionary Lesson" vs. "General Election Slush Fund"

At the Budget and Accounts Committee's Comprehensive Policy Review

As the budget season begins, during which the National Assembly reviews and approves the government’s budget for next year, the ruling and opposition parties clashed sharply over the creation of a KRW 162.3 trillion Future Response Fund. The government and ruling party argued that the fund would serve as a fiscal safety net against extreme revenue volatility, while the opposition countered by warning that it could become a “KRW 162 trillion slush fund for the general election.”

Prime Minister Han Seongsuk delivers opening remarks at a comprehensive policy hearing on next year's budget at the National Assembly on Nov. 4, 2026. Photo by Yoon Dongju.

"The Future Fund is political...a KRW 162 trillion slush fund"

Minister of Planning and Budget Park Hong-geun said on Nov. 4 at the National Assembly Budget and Accounts Committee’s “Comprehensive Policy Review on the 2027 Budget Bill and Related Matters”, "Of the KRW 162.3 trillion in total excess tax revenue, only KRW 45.4 trillion, or 28%, will actually be spent," adding, "The intention is to use the rest to shore up fiscal soundness." Minister Park explained that the remaining 72% of the funds, including KRW 104 trillion accumulated as reserve funds and KRW 12.5 trillion from reduced new government bond issuance, would not be spent but used to manage national debt and serve as a fiscal safety net against future tax revenue shortfalls.

Minister Park reiterated that the fund was designed to shield the economy from macroeconomic shocks. He said that if the KRW 162 trillion were not placed in the fund and were instead spent entirely in the current year’s budget, the growth rate of fiscal spending would surge abnormally, massive liquidity would be injected into the market and generate severe inflationary pressure, and the economy would subsequently suffer a devastating macroeconomic shock akin to a vertical plunge. "We designed it to expand aggregate supply, laying the foundation for potential growth over the medium term, while minimizing stimulus to aggregate demand and providing support for people’s livelihoods by clearly targeting vulnerable groups," he said.

The opposition, meanwhile, intensified its criticism, characterizing the fund as politically motivated. Na Kyung-won, a People Power Party lawmaker, said, "The government says it will create a ‘Future Ruin Fund’ and set aside KRW 104 trillion," adding, "It is borrowing in the name of the people to create a KRW 162 trillion slush fund for President Lee Jae-myung’s general election campaign." Critics also argued that the fund was designed to allow up to 30% of project spending to be changed without National Assembly approval, circumventing the legislature’s budget review authority.

In response to the opposition’s “slush fund” accusation, Minister Park countered that the fund had been designed to give the National Assembly full control over the budget while allowing a flexible response to crises. "Like other funds under the general account, the Future Response Fund is subject to the full oversight of the National Assembly," he said. "The fund management plan is submitted to the National Assembly for review and approval. However, since the system is designed to operate flexibly [to respond to unexpected situations such as tax revenue volatility], it will be operated within the limits [approved by the National Assembly]."

Addressing the structure of borrowing money to accumulate KRW 104 trillion in reserve funds, he countered, "If someone earning KRW 100 million a year takes out a KRW 50 million loan, they pay about KRW 110,000 a month in interest, while another person with the same annual salary who borrows KRW 100 million pays around KRW 170,000 a month." He added, "We are in that much better a position, so the idea is to use that capacity for investment and focus on strengthening our growth potential."

"The Moon and Yoon administrations’ tax revenue roller coaster is a lesson" 

Minister Park also stressed that the fund was being created with past administrations’ experience of extreme tax revenue volatility as a cautionary lesson. The Moon Jae-in administration saw a massive KRW 131.6 trillion in excess tax revenue, but the Yoon Suk Yeol administration soon faced the opposite crisis, with a KRW 97.5 trillion tax revenue shortfall. His point was that if all surplus revenue is spent immediately when tax receipts are high, the government will have no choice but to borrow heavily again when tax revenues hit a cliff. 

Ruling party lawmakers also defended the proposal as a “future-focused budget” to prepare the next engines of growth. Ahn Do-geol, a Democratic Party of Korea lawmaker, said, "Since the Lee Jae-myung administration took office, the Korean economy has moved beyond a simple recovery. It is making a great comeback." He added, "Setting aside some of the fiscal capacity for the future is a response to changes in the fiscal environment, including tax revenue volatility."

The government has drawn up next year’s budget at KRW 820.9 trillion, up 12.8% from this year. The opposition pointed out that KRW 104.4 trillion in reserve funds for the Future Response Fund is excluded from total spending and, when included, next year’s actual budget would reach KRW 925.3 trillion, up KRW 197 trillion (27.1%) from this year. In addition to the Future Response Fund, the opposition plans to classify as nonessential spending and seek cuts to KRW 4.7 trillion for frontier-level artificial intelligence (AI), KRW 1.7 trillion for the Youth Future Savings Account, and KRW 1.4497 trillion for a project to stabilize oil prices.

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