Publication

Does Korea's Fiscal System Have a Way to Roll Back Increased Spending?

A follow-up to Issue Brief 2026-40. In the long-term fiscal projection, mandatory spending rises from 51.7% of total spending in 2025 to 64.8% in 2055 (calculated value). The brief examines four kinds of devices for rolling back increased spending. A financing plan must be attached only to government bills (831 of 25,858 bills in the 21st National Assembly); PAYGO and a fiscal rule have not been enacted; and the Future Response Fund bill sets no expiry date and no criteria for selecting programs, accumulating or using funds. The fund's 2027 program spending of 45.3626 trillion won includes 2.9272 trillion won for the Basic Child Allowance. Comparing the US statutory PAYGO record with Norway's and Chile's fund withdrawal rules, it proposes an offsetting-financing rule, a principle against placing statutory mandatory spending in the fund, an annual cap on fund program spending, and an expiry date with program-level sunsets.