The Office of Planning and Budget and the Ministry of Finance and Economy on 21 held a “meeting to review overall conditions for drafting the 2027 budget” at the Government Complex Sejong. Ahead of work on the 2027 budget proposal, bureau and division directors in charge of budget, taxation, the national treasury and macroeconomic policy met to review domestic and global economic trends and fiscal conditions as uncertainty widens, including from the Middle East war, and to explore the direction of fiscal management for 2027.
Participants focused on how external risks such as the Middle East war could affect trade, prices, corporate management and household livelihoods. They shared the view that energy shocks, including high oil prices, could continue to weigh on the economy into next year, underscoring the need for a sustained fiscal role. They also agreed on the importance of sustainable, active fiscal policy to respond to structural issues including AI-driven industrial shifts, demographic change, regional decline, polarization and carbon neutrality.
They then reviewed revenue conditions for next year, focusing on trends in major tax bases such as corporate performance, asset markets and private consumption. With uncertainty rising, they agreed that more precise revenue forecasting is essential and said they would make active use of the revenue forecasting committee established this year to maintain close communication.
Officials also discussed strengthening links between budget drafting and the year-end settlement process to improve accountability and effectiveness in fiscal management. Under the current structure, the settlement process for the previous year is completed after September, when the government finishes drafting its budget proposal, making it difficult to feed back findings on underperforming or poorly executed programs into budget preparation. They agreed to hold in-depth discussions on ways to strengthen this feedback loop, including shortening the settlement timeline so that institutional improvements and execution problems identified during settlement can be systematically reflected during budget drafting.
They reaffirmed the need for close coordination between the two ministries across budget, tax, treasury and macroeconomic policy. Park Chang-hwan, the Office of Planning and Budget’s director general for budget review and coordination, said, “When economic uncertainty is high, revenue and spending, countercyclical responses and support for structural reform must work together, so a standing cooperation system is more important than anything.”
Going forward, the Office of Planning and Budget and the Ministry of Finance and Economy plan to share views frequently on the economic outlook and revenue conditions and to continue close coordination in key policy processes, including drafting the 2027 budget proposal and preparing the medium-term fiscal management plan.
* This article has been translated by AI.
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