South Korea Plans Record 821 Trillion Won Budget for Next Year

South Korea’s proposed spending will rise to a record 820.9 trillion won next year, as the government uses an expected semiconductor-driven tax windfall to finance a broad expansion of public investment.

The cabinet approved the 2027 budget on Sept. 1 at a meeting chaired by President Lee Jae-myung. Total spending will increase by 93 trillion won, or 12.8%, from this year’s 727.9 trillion won budget. That marks the biggest annual increase on record and takes spending above 800 trillion won for the first time.

The government expects national tax revenue to reach 584.4 trillion won next year, up 49.8% from the 390.2 trillion won estimate in this year’s initial budget. It plans to direct 21.3 trillion won to three major semiconductor-related projects and artificial intelligence, nearly double this year’s allocation. Another 62.8 trillion won will support small modular reactors, advanced biotechnology, aerospace, aviation and renewable energy.

The plan also allocates 43.3 trillion won for youth employment, marriage, childbirth and child-rearing. Regional growth and support for vulnerable groups will receive 117.1 trillion won. Rather than spend all additional semiconductor-related revenue, the government will create a 162.3 trillion won Future Response Fund. It will invest 45.4 trillion won next year in youth, growth industries, regional development, education and talent, and use 12.5 trillion won to reduce new government bond issuance.

The government projects total spending will exceed 1,000 trillion won in 2030. Mandatory spending, led by pensions and health care amid low birth rates and an aging population, is expected to account for 53.5% of total expenditure. National debt is forecast at 1,519.8 trillion won next year and 1,734.1 trillion won in 2030, while the debt-to-GDP ratio is projected at 48.3% next year and 49% in 2030.