South Korea says it will pay 866 million U.S. dollars to the United States this year to keep American troops on the Korean peninsula.
The Foreign Ministry says the allies struck a deal Saturday to share the cost of stationing 28,500 U.S. troops in the South.
"The outcome ensures a stable condition for U.S. troops stationed in Korea and is a fair sum to be paid by the Korean government. We reached what we think is a figure that is acceptable to the National Assembly and the people."
The two sides settled for a 5.8 percent increase, which is up 47 million dollars from last year's Special Measures Agreement.
The increased rate has worried some who say defense costs may exceed one trillion won, or 940 million dollars by 2017.
Under the deal, effective through 2018, the annual rate of increase in Seoul's share will be tallied with the application of the Consumer Price Index, but will not exceed more than four percent.
Washington has also agreed to enhance transparency in how it uses Seoul's money.
It will send reports to the Korean government detailing where the money is being spent.
The new contract will also improve the welfare and well-being of Koreans working for the U.S. military in Korea.
Seoul's foreign ministry says the new deal was a good deal for the country as Washington had been pushing for nearly 895 million dollars.
While the ruling Saenuri party welcomes the outcome, the main opposition Democratic Party is not impressed.
It says the deal was poorly executed in a sign the deal might not face an easy ride in parliament where it still needs to be approved.
Shin Se-min, Arirang News.