The South Korean government launched a proposed budget of 677.4 trillion won ($509.71 billion) for the upcoming year, aiming to enhance welfare support for vulnerable populations and stimulate economic growth while maintaining fiscal responsibility.
The 2025 budget, approved by the Cabinet on the same day, reflects a 3.2 percent increase compared to the previous year. This follows a modest budget growth of 2.8 percent, the slowest in nearly two decades, as presented for 2024 by the Ministry of Economy and Finance.
Finance Minister Choi Sang-mok indicated during a press briefing that the government’s responses to the COVID-19 pandemic had significantly compromised fiscal sustainability. He mentioned that the government is now concentrating on normalizing the situation and improving financial stability.
Choi emphasized the government’s commitment to eliminating inefficiencies and overlapping expenditures while increasing funding for welfare programs and initiatives aimed at revitalizing economic growth. He reaffirmed the ongoing efforts toward budget restructuring.
To secure the necessary funding, the government has reduced non-essential expenditures by 24 trillion won, achieving savings of 23 trillion won this year through this restructuring approach.
The proposal also includes an 11.8 percent increase in the budget for research and development (R&D), allocating a record 29.7 trillion won for the coming year.
The country’s projected managed fiscal balance for 2025 anticipates a deficit of 77.7 trillion won, an improvement from the expected shortfall of 91.6 trillion won this year.
This year’s deficit is projected at 3.6 percent of the gross domestic product (GDP), with plans to reduce it to 2.9 percent in 2025.
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