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 next year's budget at 820.9 trillion won, an increase of 93 trillion won from this year. The total expenditure growth rate compared to this year’s main budget is 12.8% (93 trillion won), marking a record-breaking “super budget.” If approved by the National Assembly as is, this will result in the highest total expenditure growth rate in 18 years, since the 10.6% increase following the global financial crisis in 2009. The government plans to create a Future Response Fund using the 162 trillion won in tax revenue generated from the semiconductor boom, concentrating this funding on fostering new growth engines and alleviating polarization among youth and regional areas.

Yonhap News Agency

The Ministry of Planning and Budget, presided over by President Lee Jaemyung, held a cabinet meeting on the 1st and approved the “2027 budget bill,” which contains these major provisions. This will be the first budget bill in which the Lee Jaemyung administration has overseen the entire budgeting process. The new budget embodies an ultra-expansionary fiscal stance—three times higher than the government’s projected nominal growth rate of 4.6% for next year. Last year, the first budget bill of the Lee administration, the spending scale exceeded the 700 trillion won mark; just a year later, the figure has already surpassed a new milestone.

Despite a strong rebound in growth driven by the semiconductor supercycle, President Lee explained the unprecedented budget for next year as a “virtuous fiscal cycle aimed at boosting growth potential.” He stated, “This budget must serve as a solid stepping stone for Korea to leap forward as a global leader and as a catalyst for visible changes in people’s daily lives. It is essential to adopt a productive fiscal strategy—using increased funds for the future to expand the economic pie and enhance industrial capabilities, which will, in turn, further strengthen fiscal capacity.”

This budget is setting all-time records not only in total expenditure growth (12.8%) but also in the number of budgeted projects (18,800), in restructuring of spending (108 trillion won), and the establishment of a 162.3 trillion won-plus alpha Future Response Fund (a fiscal innovation initiative). Due in part to increases in corporate tax receipts from the semiconductor supercycle, next year’s national tax revenue is expected to soar by more than 40% to 584.4 trillion won compared to this year. The Ministry of Planning and Budget described this as a strategic budget designed to boldly break out of existing frameworks by investing massive tax revenue into a sweeping overhaul of economic and social systems. Minister of Planning Park Honggeun emphasized, “Next year’s budget also brings hope to future generations, as it will complete the repayment of public funds injected during the 1998 financial crisis—finally overcoming the foreign exchange crisis after 30 years.”

The government plans to focus next year’s budget on three major mega-projects, seven key national strategic “seed” technologies for the post-semiconductor era, up to 200 million won in support per young person, development of ten new startup cities, provision of 200,000 new public housing units, and expansion of basic income in rural and fishing communities. In the current high-interest-rate environment, substantial welfare resources will be allocated to support vulnerable groups. The standard median income will be increased by a record 6.7%, and the number of senior jobs will expand from 1.15 million to 1.18 million, providing robust income support for low-income groups and the elderly. By sector, the health, welfare, and employment budget (289 trillion won) now accounts for more than one-third of the total, while the largest increase—29.7%—will be allocated to industry, small and medium-sized enterprises, and energy. However, the increase in the social overhead capital (SOC) budget has been limited to 4.0%, placing greater emphasis on expanding total supply rather than stimulating total demand.

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