South Korea's National Assembly passed the 2026 budget of 727.9 trillion won on Tuesday, achieving the first on-time approval in five years. Ruling and opposition parties reached a last-minute agreement to keep the government's proposed total spending intact while reallocating funds. The budget emphasizes increased spending to support the economy and national defense.
The ruling Democratic Party and main opposition People Power Party agreed on Tuesday morning to maintain key budget items from President Lee Jae Myung's administration, including the local gift certificate program, at proposed levels. They scaled back 4.3 trillion won from artificial intelligence programs, policy funds, and other items, reallocating the amount to areas like establishing a disaster-recovery system after a state data center fire, fostering the distributed power grid industry, and expanding national scholarships. The total budget remained unchanged at 727.9 trillion won ($498 billion).
The unification ministry's budget rose 20.9 percent to 1.24 trillion won, with the inter-Korean cooperation fund reaching 1.002 trillion won ($681.4 million)—the first time in three years it has exceeded 1 trillion won—as part of efforts to revive dormant inter-Korean exchanges and projects. A project to build a 'center for peaceful coexistence on the Korean Peninsula' in Seoul received 12.3 billion won for next year, with a total of 39.6 billion won invested through 2030. Additionally, 480 million won was allocated for developing a DMZ tourist zone, aiming to turn it into an inter-Korean cooperative area. President Lee Jae Myung renewed peace overtures on Tuesday by proposing to restore communication channels with North Korea as a starting point for coexistence, though Pyongyang has remained unresponsive to Seoul's dialogue proposals.
The foreign ministry's budget was set at 3.615 trillion won ($2.46 billion), a 15.5 percent decline from this year's 4.28 trillion won, driven by reduced official development assistance (ODA) to 2.18 trillion won. Humanitarian assistance nearly halved to 335.5 billion won, international organization dues fell to 681.8 billion won from 826.2 billion won, and the Korea International Cooperation Agency budget dropped to 1.14 trillion won from 1.29 trillion won. The basic budget for overseas diplomatic missions increased slightly to 152.1 billion won from 148.9 billion won to better address incidents involving Korean nationals. The budget also includes funds to support Korean companies investing in the United States, around 660 million won for promoting Korea-China relations, and 250 million won to prepare for hosting the Group of 20 forum in 2028.
The parties had wrangled over the budget for weeks, with the opposition seeking cuts to the local gift certificate program and others, but reached agreement just before the deadline. This marks the first on-time passage since 2020.
