South Korea's parliament on Thursday approved increasing next year's budget by a net 17.9 trillion won to 656.6 trillion won ($503.50 billion).

The increase is the smallest in two decades as authorities prioritise fiscal discipline in a U-turn from expansionary expenditure made during the coronavirus pandemic, according to the nation's finance ministry.

By restraining spending, President Yoon Suk Yeol's administration plans to bring the ratio of fiscal deficit to GDP back below 3% from 2025.

The 656.6 trillion won of fiscal expenditure penciled in for next year will widen the deficit-to-GDP to 3.9% from an estimated 2.6% this year. ($1 = 1,304.0700 won) (Reporting by Cynthia Kim Editing by Ed Davies)