Partisan clash looms over Lee’s 2026 budget amid increasing deficit

Prime Minister Kim Min-seok delivers his speech during the first plenary session of the National Assembly’s Special Committee on Budget and Accounts in Seoul, Aug. 25. Korea Times photo by Koh Young-kwon

The National Assembly’s Special Committee on Budget and Accounts will hold a public hearing on Wednesday, marking the start of parliamentary scrutiny of the Lee Jae Myung administration’s first budget proposal, officials said Sunday.

The government has proposed a 728 trillion won ($509 billion) budget for next year, up 8 percent from this year, with both ruling and opposition lawmakers agreeing that spending directly related to people’s livelihoods should be prioritized.

However, disputes are expected over Lee’s flagship initiatives, including local gift certificates and the so-called National Growth Fund, a government-led public-private initiative for strategic economic growth, as well as over the broader issue of expansionary fiscal policy.

This raises uncertainty over whether the budget can be passed by the legal deadline of Dec. 2.

The ruling Democratic Party of Korea (DPK) is committed to passing the government’s first budget under the Lee administration, aiming to strongly support the president's initiatives, such as the transition toward artificial intelligence.

The party is prioritizing research and development (R&D) funding, which had been significantly reduced under the previous Yoon Suk Yeol administration. The proposed R&D budget represents an unprecedented 19.3 percent increase.

The ruling party is also expected to defend its decision regarding the budget for the local gift certificate program. The government’s draft budget includes support for issuing 24 trillion won in local gift certificates and plans to increase central government subsidy rates for each region. The main opposition People Power Party (PPP) is likely to push for reductions.

“As this is the first budget under the Lee administration, our aim is to approve it in line with the government’s policy direction,” a DPK official said. “We also intend to preserve funding for programs like the local gift certificates, which the opposition may try to cut.”

The PPP, for its part, is set to conduct a thorough review of the budget, targeting major cuts while sharply criticizing the government’s expansionary fiscal policy.

The party is expected to single out what it considers populist spending, particularly cash-based programs such as consumption vouchers, citing next year’s planned deficit bond issuance of around 110 trillion won — the largest in the nation's history — as a key concern.

Regarding the Korea-U.S. tariff negotiations, the main opposition party has signaled that it will closely scrutinize how the country’s pledge to invest $350 billion into the U.S. will be financed.

The party has expressed concerns that public funds, including the National Pension Service, could be used, and plans to focus on questioning the sources of the funding and the risk management measures in place.

“We will thoroughly review the budget to eliminate any duplicate or unnecessary items and make decisive cuts where appropriate,” a PPP official said.