Future Response Fund Set at 162 Trillion Won+α... To Fund 10,000 GPUs and Tuition-Free Regional National Universities [2027 Budget Bill]

Focus on Large-Scale, Tangible Projects

Controversy Over National Assembly Control of the '30% Discretionary Adjustment Right'

The most distinct feature of the 2027 budget bill is the establishment of a "Future Response Fund" amounting to 162.3 trillion won (+α). The 162.3 trillion won was calculated by subtracting the ten-year domestic tax trend line (6.2%) from next year's projected domestic tax revenue—reflecting the excess tax collection beyond the trend. In addition, the fund size is expected to grow further since the increase in this year's domestic tax revenue (from September's additional tax estimate) and the general account surplus will also be added. Of this, 45.4 trillion won will be allocated next year to four main accounts: growth drivers, youth, local governments, and education/talent.

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45.4 Trillion Won Allocated for Projects Next Year…104.4 Trillion Won Reserved as Surplus Funds

The largest allocation is to the growth driver account, with 14.2 trillion won. The government plans to invest 4.7 trillion won intensively to acquire 10,000 top-performance Graphics Processing Units (GPUs) and secure data for developing an independent, national strategic AI model. It will also implement the "AI for Everyone" program, enabling the public to use AI for free, with 250 billion won allocated. Notably, "equity investment-type R&D" will be introduced for the first time into high-difficulty, high-reward research and development projects, allowing the state to acquire equity instead of simply providing subsidies. The government also allocated 300 billion won each to foster an ecosystem for AI Data Centers (AIDC), and for tacit knowledge R&D in manufacturing.

The youth account will see an investment of 13.3 trillion won. The "Marriage, Childbirth, and Childrearing 3-in-1 Package"—which bundles up to 20 million won in childbirth support grants and basic child allowances—will receive 3.8 trillion won. The expanded Youth Future Savings, now available to all young people without income requirements, will get 1.7 trillion won, while 1.4 trillion won will be invested in the supply of universal public rental housing centered on stations.

The local governments account (10.3 trillion won) and the education/talent account (7.6 trillion won) will also receive large-scale funding. For Gwangju Metropolitan City (formed through administrative integration with Jeonnam), 3.5 trillion won from the fund (5 trillion won in total including the Semiconductor Special Account) will be provided, along with 1.5 trillion won for building 90 complex centers for local living convenience infrastructure. For Gwangju, this marks the beginning of the "financial support incentive" program aiming to provide up to 20 trillion won over four years after unification. In education, 200 billion won will be spent on full tuition support for 30 regional national universities (excluding medicine, dentistry, pharmacy, and veterinary programs), and 700 billion won will support future talent growth funds (200–300 billion won per school) for independent research at 21 national universities. The government will spend 500 billion won to provide paid pre-employment work experience to 60,000 students through semester-long internships.

"Swift Execution Without Extra Budgets" vs. "Slush Fund that Circumvents the National Assembly"

Of the total, after subtracting direct project costs (45.4 trillion won) and reductions in new government bond issuances (12.5 trillion won), the remaining 104.4 trillion won will be reserved as surplus funds. The government plans to designate a dedicated surplus fund management institution, aiming to increase asset value beyond the yield of 3-year government bonds (3.838% per year as of August 31). Simultaneously, reducing government bond issuance will help keep national debt at 48.3% of GDP. In essence, this fund is a "store in surplus, spend during tax shortfalls or economic downturns" mechanism.

The government emphasized that "when policy needs arise, flexible response is possible through fund adjustments, without the need for supplementary budgets." However, this flexibility has fueled controversy, with critics calling it a "slush fund" and "permanent supplementary budget," because the fund management plan can be changed and used within a 30% range of major expenditure items without prior National Assembly approval. Furthermore, if recurring expenses such as the marriage/childbirth/childrearing package or free tuition at national universities—typically included in the fund—are maintained and semiconductor tax revenues drop sharply in the future, the general account may have to bear the burden entirely.

Vice Minister of the Ministry of Planning and Budget Cho Yongbeom stated, "The Future Response Fund serves as a fiscal stabilization mechanism—a 'dam'—to overcome the limitations of an annual budget system. We have also strengthened post-facto controls by legally mandating immediate notification to the National Assembly in case of a change in the fund management plan." Park Changhwan, Director General for Budget under the Ministry of Planning, added, "If the 104 trillion won were not put into the fund but transferred to the general account, the spending increase rate for next year would have exceeded 27%. If the entire amount were used for government bond repayment, the annual bond market—worth 222 trillion won—would have collapsed." He emphasized that the fund provides a balanced middle ground to prevent such extreme scenarios.

Reorganized into 69 Funds and 22 Special Accounts, Expanded Local Block Grants to 11.9 Trillion Won

Alongside the Future Response Fund, several special accounts and funds have been established to support key national policy goals. These include the Special Account for Strengthening Competitiveness of the Semiconductor Industry (2.6 trillion won), Special Account for Essential Local Healthcare (1.3 trillion won), Special Account for Regional Balanced Development (Ultrawide Account, 2.8 trillion won), Strategic Export Finance Fund (1.4 trillion won), and Resources Security Fund (1.4 trillion won). With these new additions, the structure has been reorganized into 69 funds and 22 special accounts. This restructuring is aimed at preventing fragmentation and dilution of funding within the general account, ensuring powerful financial support for urgent national tasks like semiconductor infrastructure and local healthcare—a "selection and concentration" strategy. A new Public Interest Whistleblower Reward Fund (300 billion won) was also established to collectively manage whistleblower rewards across 17 ministries.

New policies are also being rolled out to prioritize and boost local-led growth and autonomy. The government has applied the principle of favoring local governments by differentiating state subsidy rates (up to 90%) for 61 national projects on a countrywide scale, such as state scholarships and the "Tomorrow Learning Card" that have a significant effect on attracting population and creating jobs. The scope of block grants autonomously planned by local governments has also been expanded from 10.6 trillion won (121 projects) to 11.9 trillion won (150 projects).

As part of establishing fair fiscal principles, 17 tax expenditure programs—including marriage and birth tax credits (totaling 1.9 trillion won)—are being converted to direct fiscal expenditure. For example, the "marriage tax credit" was meaningless for low-income groups with little or no income tax liability, so it will be replaced with a direct cash "marriage support grant" (166.3 billion won) given to all registered married couples. This measure is intended to ensure the universal benefit is felt more directly by recipients.

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