South Korea’s ruling and main opposition parties on Wednesday agreed to pass the 2024 government budget through the National Assembly, propelling the rival parties into a full-fledged election race, widely expected to serve as a litmus test for the Yoon Suk Yeol administration.

The parliament’s special committee for budget settlement and floor leaders of the ruling People Power Party and the main opposition Democratic Party of Korea announced they agreed on a budget plan with a reduction of 4.2 trillion won ($3.2 billion) from the government's original proposal of 656.9 trillion won, without increasing the national debt and the size of its bond issuance from the government's proposal.

The two sides are planning to pass the budget bill during a full session of the National Assembly on Thursday, 19 days after the legal deadline for its passage.

Among the budgetary items that saw a significant boost was the research and development budget, which will see a net increase of 600 billion won.

"We will alleviate job insecurity among researchers, strengthen research in next-generation original technologies, and provide support for state-of-the-art and high-performance research equipment," the two floor leaders said in a statement.

Additionally, the budget related to the Saemangeum development project will be increased by 300 billion won, aiming to support the smooth operation of companies in the southwestern reclaimed wetland area and attract private investment. Another 300 billion won was earmarked for the government's regional voucher program.

The government's 2024 national budget plan, which called for a 2.8 percent on-year increase in state spending to 656.9 trillion won, was submitted to the parliament in early September. The budget was pending in parliament, as the two sides have failed to narrow differences on budget items totaling some 56.9 trillion won including global research and development projects and special expenses for powerful government agencies.

"Although there were difficulties in the process of agreeing on the budget, with the desperate feeling that we could not postpone the passage any longer, given that we had already passed the legal deadline. Also, considering that people's lives and the country's economy is at stake, we reached the deal through mutual concessions and compromises," said Yun Jae-ok, floor leader of the People Power Party.

Hong Ik-pyo, floor leader of the Democratic Party, apologized for the delay.

"The national budget for next year was very important for the lives of the people and the future of Korea, so it was inevitably delayed due to considerable efforts and consultations," Hong said. "Although (the budget) is somewhat disappointing for the opposition, it is meaningful that the two parties negotiated (for the best outcome)," he added.

The presidential office also welcomed the two parties' budget agreement, saying, "Although the agreement came a bit late, we are glad that the budget has been finalized under the consensus of the ruling and opposition parties." The presidential office also pledged to prepare ensuring that the budget is well executed.

With the budget for the fiscal year of 2024 set to pass in parliament on Thursday, eyes are now on the rival parties as they gear up for the general election campaign.

The opposition party is preparing a bill to introduce special investigations targeting first lady Kim Keon Hee, alongside bribery suspicions surrounding a development project in the Daejang-dong district in Seongnam, south of Seoul. The two were designated as "fast-track bills," which prevents a proposal from pending in the parliament for too long.

The People Power Party is opposed to the provision that allows the main opposition Democratic Party to have full authority on the recommendation of appointing special prosecutors for the investigation team, calling it a politically motivated drive to introduce a special prosecutor ahead of the general election.

Even if the special prosecutor law passes through the National Assembly, President Yoon can veto the bill.

His decision on whether he vetoes the bill or not is expected to exert a considerable influence early on in the general elections next year, according to a political observer.