South Korea Unveils 820 Trillion-Won ‘Super Budget’ to Lift Potential Growth on Semiconductor Boom

South Korea’s government has put forward an 820.9 trillion-won budget for 2027, the largest increase in spending on record. The proposal raises spending by 12.8%, or 93 trillion won, as the Lee Jae-myung government continues its policy of active fiscal support.

The government says a semiconductor supercycle has created an opportunity to invest heavily in future growth. It forecasts total revenue of 880.8 trillion won, up 30.4% from this year’s budget, with national tax revenue expected to rise by almost 50% to 584.4 trillion won as corporate and income tax receipts benefit from the semiconductor boom.

The larger revenue projection would improve several fiscal indicators. The consolidated fiscal balance is forecast to show a 59.9 trillion-won surplus. The managed fiscal deficit, which excludes social security funds, is projected at 3.1 trillion won, equivalent to 0.1% of gross domestic product. The debt-to-GDP ratio is expected to fall from 51.6% to 48.3%, even as total national debt rises by 106 trillion won to 1,519.8 trillion won.

Rather than use most of the additional tax revenue to repay debt, the government plans to establish a future-response fund. It will draw on 162.3 trillion won in revenue above the recent domestic-tax trend, investing 45.4 trillion won in youth, growth industries, regional development, education and talent. About 104.4 trillion won will remain as reserve funds for revenue volatility or shortfalls.

The main investment targets include semiconductors, physical AI and AI data centers. Related funding will nearly double to 21.3 trillion won. The plan also includes 43.3 trillion won in support for young people, expanded access to youth savings accounts, public housing and assistance for marriage, childbirth and child care. Regional development and support for vulnerable groups would receive 33 trillion won. The government will submit the proposal to parliament, which is expected to finalize it in early December.

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The government sought to find a balance between reducing national debt as much as possible and managing the government bond market stably.