The Ministry of Planning and Budget is set to initiate financial reforms that link national future strategies with fiscal management. The aim is to connect finances with long-term strategies to address structural crises such as the AI transformation and demographic changes, while also increasing investments in future industries and the youth generation.
On July 15, the ministry announced these plans during the '2026 Second Half Work Report' held at the Blue House.
The ministry highlighted key achievements from the first half of the year, including speed, paradigm shifts, and normalization. In response to increased uncertainties from the Middle East conflict, it prepared and processed a supplementary budget of 26.2 trillion won in just 29 days, the fastest in 20 years. Additionally, 85% of the 10.5 trillion won budget earmarked for rapid execution was spent within three months of the budget's approval.
In the second half of the year, the ministry plans to further integrate national future strategies with fiscal management. It aims to collaboratively establish a vision for South Korea by 2045, the centenary of liberation, with input from the public and youth. The national fiscal management plan will be organically linked with sector-specific basic plans and annual budgets to enhance policy implementation.
The ministry will focus on five key tasks: AI transformation, reducing inequality, addressing regional decline, responding to demographic changes, and overcoming climate crises. It will also propose 'Ten Core Tasks for the Great Transformation of South Korea,' which includes reforms in labor, education, and pensions.
To secure future growth drivers, the ministry will accelerate large-scale investments centered on three major projects: semiconductors, physical AI, and AI data centers. It plans to establish a future response fund that will utilize additional tax revenue expected from the semiconductor boom to invest in the youth, growth drivers, local areas, and talent.
Structural reforms aimed at improving fiscal health will also be pursued. The ministry plans to reduce discretionary spending by about 15% and streamline unnecessary projects, while also seeking to cut mandatory expenditures, such as local education financial grants and basic pensions, by around 10% through institutional improvements.
The ministry will enhance performance-based fiscal management by refining the fiscal project performance management system and preparing a '2027-2031 Performance Management Basic Plan' by December. It will strengthen the principle of cost-sharing for public services and explore ways to share outcomes with companies that receive policy support.
Reflecting the results of the previous day's fiscal strategy meeting, the ministry will set expenditure limits for each department and shift from a fund distribution-centered execution management system to one focused on actual execution. Additionally, it plans to actively incorporate opinions from the National Assembly, political parties, and the public during the budget preparation process, and establish a 'Everyone's Finance' platform to provide integrated information on central, local, and educational finances, thereby enhancing fiscal transparency.
Minister Park Hong-keun stated, "We will pave the way for proactive fiscal policies following the compass of our long-term strategy. The future strategy will lead to actionable policies and investments, ensuring that finances are managed with a long-term perspective."
On July 15, the ministry announced these plans during the '2026 Second Half Work Report' held at the Blue House.
The ministry highlighted key achievements from the first half of the year, including speed, paradigm shifts, and normalization. In response to increased uncertainties from the Middle East conflict, it prepared and processed a supplementary budget of 26.2 trillion won in just 29 days, the fastest in 20 years. Additionally, 85% of the 10.5 trillion won budget earmarked for rapid execution was spent within three months of the budget's approval.
In the second half of the year, the ministry plans to further integrate national future strategies with fiscal management. It aims to collaboratively establish a vision for South Korea by 2045, the centenary of liberation, with input from the public and youth. The national fiscal management plan will be organically linked with sector-specific basic plans and annual budgets to enhance policy implementation.
The ministry will focus on five key tasks: AI transformation, reducing inequality, addressing regional decline, responding to demographic changes, and overcoming climate crises. It will also propose 'Ten Core Tasks for the Great Transformation of South Korea,' which includes reforms in labor, education, and pensions.
To secure future growth drivers, the ministry will accelerate large-scale investments centered on three major projects: semiconductors, physical AI, and AI data centers. It plans to establish a future response fund that will utilize additional tax revenue expected from the semiconductor boom to invest in the youth, growth drivers, local areas, and talent.
Structural reforms aimed at improving fiscal health will also be pursued. The ministry plans to reduce discretionary spending by about 15% and streamline unnecessary projects, while also seeking to cut mandatory expenditures, such as local education financial grants and basic pensions, by around 10% through institutional improvements.
The ministry will enhance performance-based fiscal management by refining the fiscal project performance management system and preparing a '2027-2031 Performance Management Basic Plan' by December. It will strengthen the principle of cost-sharing for public services and explore ways to share outcomes with companies that receive policy support.
Reflecting the results of the previous day's fiscal strategy meeting, the ministry will set expenditure limits for each department and shift from a fund distribution-centered execution management system to one focused on actual execution. Additionally, it plans to actively incorporate opinions from the National Assembly, political parties, and the public during the budget preparation process, and establish a 'Everyone's Finance' platform to provide integrated information on central, local, and educational finances, thereby enhancing fiscal transparency.
Minister Park Hong-keun stated, "We will pave the way for proactive fiscal policies following the compass of our long-term strategy. The future strategy will lead to actionable policies and investments, ensuring that finances are managed with a long-term perspective."
* This article has been translated by AI.
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