The Unification Ministry has proposed raising next year’s inter-Korean cooperation fund above 1 trillion won, reversing years of cuts, in line with the Lee Jae Myung administration’s overarching goal of “peaceful coexistence” between the two Koreas.
The ministry’s proposed budget, released Friday, also restores spending on inter-Korean dialogue to levels last seen under the Moon Jae-in administration, amid the Lee administration’s initiative to resume long-stalled talks with Pyongyang.
The Unification Ministry said its proposed budget for fiscal year 2026 amounts to about 1.24 trillion won ($891.7 million), up 20.2 percent from the 2025 total of roughly 1.03 trillion won, and will be submitted to the National Assembly for approval.
Next year’s ministry budget consists of 235.3 billion won in general spending and 1.003 trillion won from the Inter-Korean Cooperation Fund.
The 2026 budget “substantively reflects projects designed to steadily advance the new administration’s national and strategic tasks, including restoring inter-Korean dialogue and promoting mutually beneficial exchanges and cooperation, expanding and institutionalizing public participation in North Korea and unification policies, and realizing a peace-driven economy on the Korean Peninsula,” according to the ministry.
Budget for inter-Korean talks restored
Within the ministry’s general spending, the budget for preparations and operations of inter-Korean dialogue has increased to 600 million won in 2026, a 175 percent rise from 200 million won in 2025.
The Unification Ministry said it “has earmarked the funds necessary to restore inter-Korean communication channels and to pursue the resumption, regularization and institutionalization of inter-Korean dialogue.”
“In short, these funds should be seen as covering expenses for inter-Korean meetings, whether at the summit, high-level or working-level. They also cover the costs required to support such meetings,” a senior Unification Ministry official said, speaking on condition of anonymity.
This increase brings the budget back to levels seen during the Moon Jae-in administration (2017–2022), when inter-Korean talks were invigorated in the early years of his term.
The inter-Korean dialogue budget stood at 1.4 billion won in 2020, 700 million won in both 2021 and 2022, but then nosedived to 300 million won in 2023 and 2024, and further to 200 million won in 2025.
Preparations for inter-Korean dialogue, exchanges
The Inter-Korean Cooperation Fund has been set at 1.0025 trillion won for 2026, an increase of 201.7 billion won, or 25.2 percent, from 800.8 billion won in 2025.
Within the fund, project expenses — excluding operating costs — will rise to 1.003 trillion won in 2026. This represents a 25.3 percent increase from 798.1 billion won in 2025 and brings project spending above the 1 trillion won threshold for the first time in three years.
Project expenses under the fund stood at 1.2431 trillion won in 2021, 1.2690 trillion won in 2022, 1.2101 trillion won in 2023, 872.2 billion won in 2024 and 798.1 billion won in 2025.
“The scale has been significantly expanded to strengthen the fiscal foundation in preparation for the resumption of inter-Korean dialogue and the revitalization of exchanges and cooperation between the two Koreas,” the Unification Ministry said.
“In particular, more funds have been allocated to projects aimed at improving livelihoods and building sector-specific foundations for economic cooperation that support a peace-driven economy and shared growth on the Korean Peninsula.”
Grant aid for economic cooperation budget surges
By sector, the biggest portion of project expenses under the Inter-Korean Cooperation Fund is allocated to resolving humanitarian issues, including nutrition assistance for vulnerable groups in North Korea, totaling 681 billion won, or 68.1 percent of the fund.
The budget for inter-Korean economic cooperation comes next, with 303.7 billion won, accounting for 30.4 percent of the total.
Among this, grant-based support for inter-Korean economic cooperation has more than doubled in the 2026 budget, rising 115.4 percent to 221.1 billion won from 102.65 billion won in 2025.
South Korea had provided grant-based support to establish infrastructure in North Korea, such as roads and railways, which are essential for the North’s economic development, with the goal of fostering inter-Korean economic cooperation.
“This category covers projects that can be pursued through agreements between the governments of the two Koreas. In the past, funds mainly went toward building infrastructure such as railways and roads,” an unnamed Unification Ministry official said of grant-based inter-Korean economic cooperation projects.
“If inter-Korean dialogue resumes and expands in the future, the most basic requirement will be infrastructure. This budget should be seen as funding those essential needs.”
When asked about the feasibility of pushing ahead with South–North cooperation projects in the current absence of inter-Korean exchanges, the official responded: “The budget reflects our strong determination to restore inter-Korean relations and to build a foundation for peace and coexistence on the Korean Peninsula.”
"It cannot simply be written off as hollow," the official added.
dagyumji@heraldcorp.com
