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 the final stage of discussions in drafting the 2027 budget proposal, which will reach a record-high scale of around 800 trillion won. The party and government have reached a consensus to focus investments of the increased national tax revenues from the semiconductor boom into strategic sectors such as artificial intelligence (AI), aerospace, and bio industries.

Kwon Chil-seung, Policy Committee Chair of the Democratic Party of Korea, met with reporters after a party-government consultation on the budget held at the National Assembly on the 25th and said, "The Democratic Party and the government have agreed that the 2027 budget proposal will involve proactive fiscal roles, including making strategic investments for South Korea’s leap forward and transformation."

The key focus areas of next year's budget proposal are fivefold. First, there will be full-scale support for the three major mega-projects and for establishing Korea as one of the top three global AI powers. Increased support will also go toward the expansion of future growth engines including the aerospace and bio industries. Additional areas of focused investment include: ▲ expanded step-by-step support for youth development ▲ support for inclusive growth in response to K-shaped polarization ▲ reinforcement of national safety.

Jung Tae-ho, the Democratic Party’s member and the ruling party secretary of the National Assembly Special Committee on Budget and Accounts, said, "To establish Korea as a semiconductor powerhouse, we will create a special semiconductor account to form a unified support system," adding, "To become one of the top three countries in physical AI, the budget includes provisions for developing and supporting AI solutions leveraging manufacturing tacit knowledge." It was also revealed that the government will provide capital to Korea Electric Power Corporation and Korea Water Resources Corporation to secure water supply for the three mega-projects.

Assemblyman Jung added, "Regarding the expansion of future growth engines, intensive investments will be directed into ten ‘Next’ sectors. This includes research and development (R&D) related to lunar landing planned for 2030 and the expanded trial support of autonomous vehicles in the mobility sector." The budget also includes an unprecedented increase in subsidies for electric vehicles to drive the energy transition and expanded growth loans for startups and venture businesses.

In response to K-shaped polarization, a special growth engine subsidy will be established. The government plans to provide substantial support for facility investments when anchor companies move to regional areas. A separate regional future growth support fund will also be introduced to foster new growth hubs in local areas. To address shortages in essential regional healthcare, a special regional essential healthcare account will be created.

Floor Leader Han Byung-do of the Democratic Party also emphasized, "We must concentrate fiscal capacity to secure leadership in future industries," adding, "Efforts must be made to empower region-led growth so that results translate into local industries and jobs." Furthermore, Floor Leader Han noted, "2027 marks the 30th anniversary of the foreign exchange crisis and is a meaningful year as the government will complete the repayments of its share of public funds injected at that time," adding, "After graduating from the IMF program, the People’s Sovereignty Government will finally bring closure to the last legacy of the foreign exchange crisis."

The Ministry of Strategy and Budget indicated at last month’s National Fiscal Strategy Meeting that the total national expenditure for next year would increase by over 10% compared to this year’s main budget (729.9 trillion won), signaling a budget of around 800 trillion won.

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