This paper suggests the mid-tern and long-term direction of fiscal policy inKorea recognizing that the new Korean government is likely to pursue fiscalpolicy carelessly in the future. Up to now the Korean government’s fiscal policieshave been successful in performing a variety of policy measures to solve thenational policy agenda. The Korean government’s fiscal policy has been based onthe balanced budget so that she has been able to maintain fiscal healthiness.However, volatile changes in economic and fiscal environment such as rapidaging and low fertility rate, a decrease in potential economic growth rate, andincome polarization make the Korean government keep fiscal healthiness. Tosolve these problems we should consider the future generation as well as currentgeneration in setting up the direction of fiscal policy in the future. The currentgeneration should pursue the structural reform in government expenditurespending and tax reform focusing on tax increase such as Value-Added Taxincrease.