100 Trillion Won Future Response Fund to Operate Intensively for 3–4 Years... Blue House: “Not a Permanent Fund or a Slush Fund”

Utilizing Excess Tax Revenue for Future Investment and Fiscal Stability

Managing National Debt by Reducing Bond Issuance Next Year

Focusing on Youth, Regional Development, Education and Talent, and New Industries

Detailed Plans to Be

The government plans to operate the 100 trillion won Future Response Fund, which will be created using excess and additional tax revenue resulting from the semiconductor boom, not as a permanent fiscal spending tool. Instead, the fund will serve as a fiscal stabilization platform for making concentrated investments in future growth sectors over the next three to four years. While excess and additional tax revenues will be accumulated in the fund, the government also intends to reduce the scale of government bond issuance next year, thereby also managing national debt. The idea is to avoid either spending all surplus revenue during prosperous years or using it solely for debt repayment, and instead to achieve both objectives: investing in the future and ensuring fiscal stability.

President Lee Jae-myung is speaking at the Cabinet meeting held at the Blue House on the 25th. 2026.8.25 Yonhap News Agency.

According to a Blue House official who spoke with reporters on the 26th, "We do not consider the Future Response Fund to be a permanent fund," and added, "It is not structured for additional tax revenue to be permanently accumulated, so we will likely establish and allocate projects with a time horizon of around 3 to 4 years and pursue effective results in that way." Projects that require a continuing source of funds, such as welfare budgets, will rely on the general accounting, while the fund will be used for areas where concentrated investment over a certain period can yield tangible outcomes. The official also explained, "The Future Response Fund is intended to organize initiatives primarily in areas which our administration prioritizes and can execute within a limited timeframe."

The reason the government has brought up the Future Response Fund is because of the sharp fluctuations in tax revenue that have repeatedly occurred in recent years. The administration believes that the traditional approach—expanding spending through supplementary budgets when more taxes are collected than expected due to factors like the semiconductor boom, and then cutting spending when tax revenue falls due to an economic downturn—makes stable fiscal management difficult. The official noted that during the major tax revenue shortfall of 2023-2024, under President Yoon Suk Yeol’s administration, the government’s spending cuts further slowed the economy, resulting in a further decrease in tax revenue.

The official also referenced the semiconductor boom of 2017-2018 and the increase in tax revenue during the COVID-19 period, stating, “Tax revenue that comes in as part of a cycle can quickly disappear. There is a concern over whether it is responsible fiscal management to spend more when revenue is high and spend less when it's low.” He cited again that during the large-scale tax shortfall of 2023-2024, the government’s spending cuts resulted in an economic slowdown, which then led to further declines in tax revenue.

Accordingly, the government plans not to spend the increased tax revenue all at once, but to accumulate part of it in the Future Response Fund and use it as a buffer to smooth out fluctuations in both the economy and tax revenue. The official stated, “When tax revenue flows in abundantly, we set it aside so that when it is low, we can transfer from the fund,” explaining that the Future Response Fund will also serve as a ‘fiscal stabilization fund.’

The administration has distanced itself from proposals to utilize excess and additional tax revenue aggressively only for reducing national debt. However, the official stressed that creating the Future Response Fund does not mean passive management of national debt. Rather, part of the excess and additional tax revenue will also be used to reduce the issuance of new government bonds. “It’s not that there is no plan at all for national debt sustainability,” the official said, “We already reduced some government bonds in the supplementary budget, and next year, we also intend to further decrease government bond issuance to some extent.”

Four Key Segments: Youth, Non-Metropolitan Regions, Education & Talent, and Future Growth Industries… “Expanding the Foundation for Growth”

On the 20th, Kim Minjae, Vice Minister of the Ministry of the Interior and Safety, and Choi Eunok, Vice Minister of the Ministry of Education, attended a closed ruling party and government discussion on the Future Response Fund held at the National Assembly Members' Office Building. 2026.8.20 Yonhap News Agency

The Future Response Fund will be operated around four main pillars: youth, non-metropolitan regions, education and talent, and future growth industries. Targets include locally driven growth, securing advanced technology gaps, investment in future innovative industries, and mega-projects, all promoted by the government. The official said, “With fierce competition among nations, it is crucial to secure resources for investing in new industries that will prepare us for the future while maintaining an edge in advanced technology. The government intends to answer proactively for the future and younger generations through the Future Response Fund.”

The official clarified that this is not an attempt to inflate the fiscal scale by moving existing general accounting projects en masse into the fund. While it is possible to allocate funding for both new and expanded existing projects, the plan is to select them based on whether they require concentrated investment within the 3-4 year span and align with the fund’s objectives. The resources that are not used immediately will not simply be held in cash. “The fund should be managed to generate returns higher than government bond interest,” the official continued, “for it to be justifiable to hold assets in the fund, and the Ministry of Strategy and Budget is preparing a specific operational plan.”

Regarding the “slush fund” controversy: "Subject to National Assembly Review"

The administration also took an active stance to clarify concerns that the fund could amount to a government “slush fund.” “This is not money that can be spent at will without approval from the National Assembly,” said the official, “From the moment the fund is created to the process of spending it, everything is subject to deliberation and oversight by the National Assembly.”

The government’s proposal sets the limit for changes in the Future Response Fund’s operational plan at 30%, which is 20 percentage points higher than the typical 10% for business-purpose funds. The official explained, “This is because the Future Response Fund has characteristics of both business-purpose funds and account-specific funds,” but added, “Nothing is set in stone and this can be decided through discussions at the National Assembly.”

Meanwhile, the government plans to release details on allocation by sector for the Future Response Fund and its specific project plans on September 1, together with next year’s budget proposal. The official said, “This represents a major shift in Korea’s fiscal history,” and explained, “The purpose of the Future Response Fund is to create a tool that allows us to manage national debt while seizing the growth opportunities before us and fulfilling key policy tasks.”

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