162 Trillion-Won Future Fund Sparks Clash: "Moon and Yoon Administrations a Cautionary Tale" vs. "General Election Slush Fund" (Roundup)

As the National Assembly begins its budget season to review and approve the government's budget for next year, the ruling and opposition parties clashed sharply over the creation of a Future Response Fund worth 162.3 trillion won. The government and ruling party argued that the fund would serve as a fiscal safety net against extreme tax revenue volatility, while the opposition countered by warning that it could become a "162 trillion-won slush fund for the general election."

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

"The Future Response Fund is political... a 162 trillion-won slush fund"

On Nov. 4, Minister of Planning and Budget Park Honggeun said at the National Assembly Special Committee on Budget and Accounts' "Comprehensive Policy Inquiry on the 2027 Budget Proposal and Other Matters" that "of the total 162.3 trillion won in excess tax revenue, only 45.4 trillion won, or 28%, will actually be spent." He added that "the rest is intended to be used to address fiscal soundness." Minister Park explained that the remaining 72% of the funds, including 104 trillion won to be set aside as reserve funds and a 12.5 trillion won reduction in new government bond issuance, would not be spent but would instead be used to manage national debt and serve as a fiscal buffer 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 government did not establish the fund and spent all 162.3 trillion won through the current-year budget, the growth rate of fiscal spending would surge to an abnormal level, flooding the market with massive liquidity and creating intense inflationary pressure. It would also expose the economy to a devastating macroeconomic shock comparable to a vertical drop later on. "The fund is designed to expand aggregate supply, laying the groundwork for a rebound in potential growth over the medium term, while minimizing stimulus to aggregate demand by clearly targeting support to vulnerable groups and helping people with their livelihoods," Minister Park said.

The opposition criticized the fund more forcefully, characterizing it as politically motivated. Na Kyungwon of the People Power Party said, "The government says it will create a Future Ruin Fund and set aside 104 trillion won," adding, "It is taking on debt in the people's name to create a 162 trillion-won slush fund for President Lee Jaemyung's general election campaign." Critics also argued that the fund was designed to allow up to 30% of its project spending to be changed without National Assembly approval, bypassing the Assembly's budget review authority.

In response to the opposition's "slush fund" characterization, Minister Park countered that the fund was designed to ensure the National Assembly retained full control over the budget while enabling a flexible response to crises. "Like other funds under the general account, the Future Response Fund is subject to all forms of National Assembly oversight," he said. "The fund management plan will be submitted to the National Assembly for review and approval. However, since the system is designed to allow flexible operation (to respond to unexpected situations such as tax revenue volatility), it will be managed within the scope approved by the National Assembly."

Regarding the plan to borrow money and set aside 104 trillion won in reserve funds, he countered, "If someone earning 100 million won a year takes out a 50 million-won loan, they pay about 110,000 won in interest per month. Another person with the same annual salary who borrows 100 million won pays about 170,000 won a month." He added, "We are in a sufficiently sound position, so we should use that capacity to invest and focus on building growth potential."

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"A cautionary lesson from the Moon and Yoon administrations' tax revenue swings"

Minister Park also stressed that the new fund was informed by the experience of past administrations that faced extreme tax revenue volatility. The Moon Jaein administration saw a massive 131.6 trillion won in excess tax revenue, but the Yoon Sukyeol administration soon faced the opposite crisis: a 97.5 trillion won 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 take on massive debt again when tax revenue hits a cliff.

Ruling party lawmakers also defended the fund as a "future-oriented budget" to prepare growth engines for the future. Ahn Dogeol of the Democratic Party of Korea voiced support, saying, "Since the Lee Jaemyung administration took office, the South Korean economy has moved beyond a simple recovery. It is seeing a great rebound." He added, "Setting aside some of our fiscal capacity for the future is a response to changes in the fiscal environment, including tax revenue volatility."

The government has set next year's budget at 820.9 trillion won, up 12.8% from this year. The opposition argued that 104.4 trillion won in reserve funds for the Future Response Fund is hidden from the total expenditure figure and that, including this amount, next year's actual budget would reach 925.3 trillion won, an increase of 197 trillion won (27.1%) from this year. In addition to the Future Response Fund, the opposition plans to classify as nonessential and seek cuts to 4.7 trillion won in funding for frontier-level artificial intelligence (AI), 1.7 trillion won for the Youth Future Savings Account, and 1.4497 trillion won for a project to support oil price stabilization.

With the opposition strongly resisting the creation of the Future Response Fund and threatening extensive budget cuts, passage by the statutory deadline is expected to face difficulties. Budget review hearings, which began in earnest with a public hearing on Oct. 30, will continue with a comprehensive policy inquiry through Nov. 5, followed by reviews by ministry category for economic ministries on Nov. 9-10 and non-economic ministries on Nov. 11-12. The budget will receive its final approval after review of increases and cuts by the Budget Adjustment Subcommittee, which begins on Nov. 16, and a plenary session. The statutory deadline for passage by the National Assembly plenary session is Dec. 2.  

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