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Eighteen years on, Budget Office must not become a populist tool

Published: 09 Sep. 2025, 09:19

Interior Minister Yoon Ho-jung and Democratic Party Policy Committee Chair Han Jeong-ae announce the results of the third high-level party-government consultation and the government reorganization plan at the Government Complex Seoul in Jongno District, Seoul, on Sept. 7. [YONHAP]

The Budget Office is set to return after 18 years. Under a government reorganization plan confirmed on Saturday, the Ministry of Economy and Finance will be divided into the Ministry of Finance and Economy and the Budget Office, effective January. The two ministries were first merged in 2008 under the Lee Myung-bak administration.

The new Budget Office, a minister-level body under the prime minister, will oversee the drafting and allocation of budgets, responses to legislative review, execution management and performance evaluations. It will also manage government funds, ensure fiscal soundness and develop national strategies. The Ministry of Finance and Economy will assume responsibility for taxation, finance, economic policy and treasury functions.

Officials argue that separating budget and policy functions will increase efficiency by breaking up what has become an oversized ministry. Interior Minister Yoon Ho-jung said the change will separate “economic policy, coordination, and revenue and expenditure functions that have been excessively concentrated” in the ministry. But critics warn that behind the rationale of efficiency lies an intent to strengthen the government’s ability to mobilize fiscal resources for its own agenda.

The Ministry of Economy and Finance has long been seen as a check on expansive fiscal policy, drawing criticism from advocates of greater spending. Tensions have often surfaced when the ministry pushed back on policies requiring large financial outlays. During his campaign, President Lee Jae Myung even considered transferring budget authority directly to the presidential office, saying the ministry acted like “a king” over other agencies.

Moving the Budget Office under the prime minister could allow tighter coordination of government priorities and strengthen momentum behind flagship projects. Yet risks remain. Greater presidential influence over budget drafting could weaken the role of professional bureaucrats as a balancing force. The danger is that fiscal resources could be diverted to politically motivated projects, especially as elections approach.

According to a debt management plan submitted to the National Assembly, national debt is projected to rise by 487 trillion won ($350 billion) over the next four years. With tax revenues falling short for three consecutive years, the government has nonetheless proposed a record budget of 728 trillion won for 2026. Splitting revenue and expenditure between two agencies raises the risk of misaligned fiscal management.

If the government aims to boost potential growth through more efficient spending, it must be paired with measures to safeguard fiscal soundness. The Budget Office should not become a conduit for unchecked expansionary spending. Parliament and fiscal authorities must strengthen oversight to ensure that the principle of sound finance is upheld.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.