[Budget in Focus] Future Response Fund Tops Next Year's Budget Review... "What's the Controversy?"

Ruling Party Backs Future Investment vs. Opposition Calls for Debt Reduction
Slush Fund Controversy... "Budget Committee's Biggest Issue"

The "Future Response Fund," established amid an unprecedented tax revenue boom, has emerged as the biggest issue in the review of next year's budget. The government and ruling party argue that the fund is needed to invest in the future and stabilize public finances. Opposition parties, including the People Power Party, have criticized the issuance of government bonds and emphasized that the debt should be paid down first.

On the 11th, Rep. Jung Tae-ho, the Democratic Party of Korea's coordinator on the National Assembly's Budget and Accounts Special Committee, described the mood on Minty07, the party's official YouTube channel, saying, "Usually, when we go into a committee meeting, we spend the whole day arguing about the Future Response Fund." The fund is clearly the main topic in the 820.9 trillion won budget review. The Future Response Fund was established at a scale of 162.3 trillion won, using this year's excess tax revenue and additional tax revenue, meaning tax revenue from next year onward that exceeds long-term forecasts, among other sources.

The ruling and opposition parties first clashed over whether the Future Response Fund was needed. Regarding the fund, Jung said, "The key issue is how to use the additional tax revenue generated during the three-year semiconductor supercycle," adding, "Investment in the future is most important." He continued, "We need to prepare a fiscal safety net in anticipation of lower tax revenue three years from now." The People Power Party and other opposition parties have stepped up calls to use additional tax revenue to repay debt, citing rising government bond yields. Meanwhile, independent Rep. Han Dong-hoon argued at a committee meeting, "The Future Response Fund is like a heavily indebted worker putting a bonus they can't keep receiving into a separate account instead of using it to pay down debt, while continuing to borrow for living expenses through a high-interest overdraft account." Jung said, "There can be a discussion" on the matter. In response to opposition demands, the government could pursue sounder fiscal management by repaying government bonds or reducing their issuance.

Concerns that the fund is a slush fund are also a major issue. The Future Response Fund can serve both to finance projects and as a fiscal reserve, and has 45.4 trillion won available for project spending. The government classifies it as a financial fund, allowing it to make changes on its own within a 30% limit, higher than the 20% limit for project funds. This has prompted criticism that the arrangement bypasses the National Assembly's budget review authority.

Rep. Na Kyung-won of the People Power Party criticized the fund, saying, "There is a principle that the National Assembly must review the entire budget, but they have created a way around the Assembly," and asking, "Do they see it as a money machine that allows the president to spend a lot until the general election?"

In response to the slush fund criticism, Minister of Planning and Budget Park Hong-geun explained at a plenary committee meeting, "Even if the fund makes changes on its own within the 30% limit, it cannot revive projects cut during the National Assembly's review or arbitrarily add major items."

The ruling party also called for additional measures. Democratic Party lawmaker Lee Yeon-hee urged the government to "make quarterly disclosures of operating returns and execution results, as well as external evaluations and reports to the National Assembly, routine and mandatory, to dispel the opposition's concerns." Jung also said, "Because the issue concerns the National Assembly's review authority, the government can engage in dialogue with the Assembly."

Meanwhile, the Budget and Accounts Special Committee began a two-day, ministry-by-ministry review of the 2027 government budget proposal for non-economic ministries on this day. The People Power Party plans to focus on the appropriateness of budget allocations, identifying the Presidential Security Service's and the Serious Crime Investigation Agency's special activity funds as major targets for cuts. The ruling and opposition parties continued their dispute over the Future Response Fund, which emerged as a key issue during the economic ministries' review on the 9th and 10th, during the review of non-economic ministries on this day as well.

The parties are sharply divided, in particular, over whether to use the Future Response Fund to expand funding for firefighting. The Democratic Party says the fund should be used first for essential, urgent investment in firefighting, while the People Power Party argues that firefighting-related spending should be included in the regular budget to ensure the continuity and stability of fiscal support.

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