Ruling Party and Government Finalize '800 Trillion+ Alpha' Super Budget for Next Year: "Active Fiscal Policy, Focused Investment in AI and More"

Full Support for Three Major Megaprojects and Elevation to a Top Three AI Powerhouse

Integrated Support System to Be Established through Special Semiconductor Account

Record-High Electric Vehicle Subsidies to Drive Energy Transition

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The ruling party and the government have entered final discussions on the formulation of the 2027 budget proposal, which is expected to reach a record-high scale in the 800 trillion won range. Authorities announced they have reached consensus on concentrating increased national tax revenue—driven by the semiconductor boom—into strategic investments in areas such as artificial intelligence (AI), aerospace, and biotechnology.

Chilseung Kwon, policy chief of the Democratic Party, met with reporters after the party-government budget conference held at the National Assembly on the 25th, stating, “The Democratic Party and the government have agreed that the 2027 budget proposal will take an active fiscal role, including strategic investments for Korea’s great leap forward and transformational change.”

There are five main focus areas for next year’s budget proposal. First, full-scale support is planned for the three major mega projects and for Korea’s ambition to become one of the top three global powers in AI. The investment will also intensify support to reinforce future growth engines such as the aerospace and biotechnology industries. Additional areas of heavy investment will be ▲expanding step-by-step support for youth growth, ▲addressing K-shaped polarization and promoting inclusive growth, ▲and enhancing public safety.

Taehho Jeong, Democratic Party assemblyman and ruling party secretary of the National Assembly’s Special Committee on Budget and Accounts, stated, “To strengthen our position in the global semiconductor industry, we will create a special account for semiconductors and establish an integrated support system.” He continued, “To become one of the top three countries in Physical AI, we will develop and support AI solutions that leverage manufacturing tacit knowledge.” It has also reportedly been agreed that, to secure enough water for the three major mega projects, the government will invest in Korea Electric Power Corporation and Korea Water Resources Corporation.

Assemblyman Jeong added, “In terms of expanding future growth engines, we will focus intensive investment on 10 Next fields. This includes research and development (R&D) related to a 2030 moon landing, as well as expanding pilot support for autonomous vehicles in the mobility sector.” The measures also outline a record-high expansion of subsidies for electric vehicles as part of an energy transition, and an expanded loan program for the growth of startups and venture businesses.

For addressing K-shaped polarization, a special growth engine support fund will be newly established. The government plans to provide significant support for facility investment when anchor companies relocate to local regions. The plan also includes establishing local growth subsidies to create regional growth bases. Additionally, to fill gaps in essential medical services in the provinces, a special regional healthcare fund will be set up.

Democratic Party floor leader Byeongdo Han also emphasized, “We must focus our fiscal capacity on securing leadership in future industries,” and stressed the need to bolster region-led growth to ensure successful projects translate into industrial and employment gains for the local economy. He further remarked, “2027 will mark 30 years since the financial crisis, and it is a significant year as the government will finish repaying its share of the public funds injected at the time. As Korea graduates from the IMF program, the people’s government will bring closure to the last legacy of the foreign exchange crisis.”

The Ministry of Economy and Budget signaled an 800 trillion won budget in its National Fiscal Strategy Meeting last month, with next year’s total expenditure growth rate projected to exceed 10% compared to this year’s main budget of 729.9 trillion won.

This content was produced with the assistance of AI translation services.