South Korea unveils record 821 trillion won budget, with debt projected to reach 1,734 trillion won in four years

South Korea’s government is preparing an 820.9 trillion won budget for next year, the largest in the country’s history, as it seeks to revive potential growth that has fallen into the 1% range.

More than 84 trillion won would go to semiconductors, artificial intelligence and other next-generation growth industries. The plan includes 21.3 trillion won for three major projects involving semiconductors, physical AI and AI data centers, as well as broader AI adoption. That investment is more than double this year’s allocation for the area.

The government also plans to create a 2.6 trillion won special semiconductor account and set aside 1.5 trillion won for a semiconductor cluster in the southwestern region. To speed the supply of electricity and water to semiconductor industrial complexes, it will provide 500 billion won each to Korea Electric Power Corporation and Korea Water Resources Corporation, according to the budget details.

The scale of the spending has prompted concern among experts. They say the government may be expanding expenditure too quickly because it holds overly optimistic expectations about the semiconductor cycle. Government debt is expected to rise to 1,734 trillion won in four years, adding another burden to the plan.