Next Year’s Budget Soars to 821 Trillion Won, Biggest Increase Ever... 162 Trillion Won Future Fund from Semiconductor Tax Revenue [2027 Budget Bill]

The government has set the budget for next year at 820.9 trillion won, an increase of 93 trillion won compared to this year. The total expenditure growth rate, at 12.8% (93 trillion won) compared to the original budget for this year, marks a record-breaking "super budget." If passed by the National Assembly as is, this would be the highest increase in total government spending since 2009 (10.6%), which was immediately after the global financial crisis, representing the highest rate in 18 years. The government plans to utilize tax revenue, increased to over 162 trillion won thanks to a boom in the semiconductor sector, to establish a Future Response Fund. This fund will be primarily invested in creating future engines of growth and addressing polarization, particularly among young people and local regions.

Yonhap News Agency

The Ministry of Planning and Budget held a Cabinet meeting on the 1st, presided over by President Lee Jaemyung, to approve this "2027 budget proposal." The upcoming budget is the first for which the Lee administration oversaw the entire budgeting process, signifying a full commitment to an ultra-expansionary fiscal policy that is three times the government's projected real growth rate for next year (4.6%). In its first budget last year, the Lee administration set the total budget in the 700 trillion won range, but just one year later, the leading digit of total government expenditure has once again increased.

Regarding the decision to propose an ultra-super budget next year, even amid a robust economic rebound driven by the unprecedented semiconductor boom, President Lee described it as a "virtuous cycle of fiscal spending to boost growth potential." He asserted, "This budget must serve as a solid stepping stone propelling Korea into a position of unrivaled technological leadership and as a priming force that brings tangible improvements to people's lives. A productive virtuous cycle fiscal strategy is crucial—using increased future resources to grow the economic pie, upgrade industrial capabilities, and thereby expand fiscal capacity once again."

This budget proposal is not only a record in terms of expenditure growth rate (12.8%), but also in the number of budget projects (18,800), the scale of spending reallocation (108 trillion won), as well as the establishment of a Future Response Fund amounting to 162.3 trillion won plus α (representing fiscal innovation). Due to factors like increased corporate tax receipts thanks to the semiconductor supercycle, next year’s national tax revenue is forecast to soar by more than 40% compared to this year, reaching 584.4 trillion won. The Ministry of Planning and Budget explained that this is a strategic budget plan intended to boldly transcend existing frameworks by investing massive tax revenues in an extensive overhaul of Korea's economic and social systems. Park Hongkeun, Minister of the Ministry of Planning and Budget, emphasized, "Next year’s budget also offers hope for future generations, as we will complete repayment of the public funds injected in 1998, finally overcoming the foreign currency crisis after 30 years."

The government will concentrate next year’s budget on major projects, including three mega projects, seven post-semiconductor national core technology seed policies, youth support of up to 200 million won per person, development of ten leading startup cities, the provision of 200,000 public housing units, and expansion of basic income in rural and fishing communities. In response to high interest rates, a large portion of welfare resources will be used to support vulnerable groups. The median standard income will be raised by a record 6.7%, and the number of senior citizen jobs will be expanded from 1.15 million to 1.18 million to meaningfully support the income of low-income groups and seniors. By sector, the health, welfare, and employment budget (289 trillion won) will account for more than one-third of the total, with the largest increase allocated to the industry, SMEs, and energy sectors—a 29.7% rise. However, the growth in the social overhead capital (SOC) budget will be limited to 4.0%, putting emphasis on expanding total supply rather than stimulating total demand.

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