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An unprecedented defense budget shortfall: Is the military being marginalized?

Published: 22 Jan. 2026, 00:03

Lee Chul-jae

The author is head of the Institute for Military and Security Affairs and senior defense reporter at the JoongAng Ilbo.

A 10-story building at 22 Itaewon-ro in Yongsan District, central Seoul, stands sealed and silent. This is the former Ministry of National Defense complex, once known as the presidential office. Since the presidential office moved back to the Blue House on Dec. 29 last year, the old building has taken on a desolate air.

The Defense Ministry vacated the complex in 2022 after handing it over to the Yoon Suk Yeol administration and relocated to a neighboring building previously used solely by the Joint Chiefs of Staff. The ministry had assumed it would reclaim the original complex once the presidential office moved out. Instead, it continues to wait indefinitely.

This photo shows the Ministry of National Defense complex in Yongsan District, central Seoul, on April 6, 2022. On that day, the Cabinet approved an initial 36 billion won ($24.5 million) in reserve funds to support then President-elect Yoon Suk Yeol’s plan to relocate the presidential office to the Defense Ministry compound. The complex served as the presidential office throughout the Yoon administration. [NEWS1]

At first, officials believed the delay was procedural. The Finance Ministry, which manages state-owned property, needed time to approve the move. Recently, however, that optimism has faded. A government source said the issue is under broader review, adding that several ministries are interested in the site. Meanwhile, the 23.86 billion won ($16.24 million) budget allocated for the Defense Ministry's relocation was entirely cut by the National Assembly last year. Defense officials now bitterly mutter that the ministry has little standing after being associated with an attempted coup.

The frustration also reflects officials' shock following an unprecedented defense budget shortfall in late 2025. Warning signs appeared on Dec. 3 last year, when the 2026 defense budget was finalized at 65.86 trillion won, down from the government’s original proposal of 66.29 trillion won. The government had pledged an 8.2 percent increase over 2025 to lay the groundwork for the transfer of wartime operational control. That figure would have marked the largest rise since 2019. In the end, the increase was just 7.5 percent, below the overall budget growth rate of 8.1 percent. Defense officials privately remarked that it was fortunate the cuts were not deeper.

The crisis erupted a few weeks later on Dec. 26. According to the office of Rep. Lim Jong-deuk of the People Power Party, the Finance Ministry called the Defense Ministry at approximately 3:40 p.m. that day, saying that the treasury lacked funds and that payments scheduled for Dec. 29 and 30 would be delayed until the 31st. No official document was sent. By Dec. 31, 668.3 billion won in urgent payments was covered, but 451.7 billion won remained unpaid. A subsequent review put the final unexecuted amount at 500.2 billion won.

The defense budget is divided between force operation costs, which are handled by the Defense Ministry, and force improvement costs, which are overseen by the Defense Acquisition Program Administration (DAPA). DAPA received a similar call only on Dec. 31 and was short 803.6 billion won. As of the final day of the fiscal year, unexecuted funds at the Defense Ministry and DAPA totaled 1.3 trillion won.

The fallout was immediate. About 15,000 soldiers nearing discharge did not receive government matching funds for what is known in Korean as the “Tomorrow Preparation Savings Program,” which doubles the savings of enlisted personnel. Officers did not receive December allowances. Payments for mass production of the KF-21 Boramae fighter, amounting to 14.66 billion won, and 6.07 billion won in research and development funds for upgrades were frozen. Defense suppliers also failed to receive December payments, jeopardizing their annual targets. Small business owners near military bases felt the strain.

Most troubling was the realization within the defense establishment that funds might not be guaranteed. Even during the 1997 Asian financial crisis and 2024 martial law turmoil, defense budgets had been executed without interruption. The Finance Ministry said some funds are routinely carried into January and insisted the situation was not exceptional. On Jan. 9, the government made emergency payments of 768.5 billion won to the Defense Ministry and 803.6 billion won to DAPA.

The phoenix flag symbolizing the presidential office is lowered in front of the presidential office complex in Yongsan District, central Seoul, at midnight on Dec. 29, 2025. On the same day, the presidential office relocated to the Blue House. [JOINT PRESS CORPS]

In some cases, unused funds were written off and spending deferred to the 2026 budget. Such practices reduce efficiency and invite questionable reallocations later.

Against this backdrop, another blow landed on Dec. 18, 2025, during a presidential briefing. DAPA Minister Lee Yong-cheol proposed upgrading DAPA from an agency to a ministry-level body and moving it from the Defense Ministry to the prime minister’s office as a new “National Defense Resources and Industry Ministry.” Lee said the defense industry is a strategic sector requiring new governance. Some interpreted this as reflecting guidance from President Lee Jae Myung. Defense Minister Ahn Gyu-back said he had not been consulted.

DAPA argues the reorganization would better manage defense exports and align research with industry. Critics worry it could sideline the core mission of supplying the military. DAPA insists the defense minister's oversight would remain.

Taken together, these developments have fueled a sense within the Defense Ministry and the armed forces that they are being sidelined. That perception may be exaggerated. If so, the government must demonstrate it clearly. The starting point is a thorough accounting of the budget shortfall. The Finance Ministry holds the upper hand, leaving defense agencies cautious. The National Assembly must determine why the shortfall occurred and what reforms are needed. If it cannot, the matter should be referred to the Board of Audit and Inspection. Only then can the country ensure that the institutions guarding national security remain steady.

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.