Seoul: The South Korean government has announced a landmark budget proposal for 2027, calling for record spending of 821 trillion won (US$595 billion) to tackle significant structural challenges including the country's low birthrate and regional decline while maintaining momentum in the artificial intelligence (AI) sector.
According to Yonhap News Agency, the proposal was unveiled by the Ministry of Planning and Budget during a Cabinet meeting. The budget reflects a 12.8 percent increase from the 728 trillion won budgeted for this year, marking the highest growth rate on record. Budget Minister Park Hong-geun emphasized the strategic nature of this fiscal plan, designed to yield tangible results aligned with the administration's policy agenda and to serve as a blueprint for South Korea's future amidst intensifying global competition in AI.
A significant feature of the 2027 budget is the establishment of the Future Fund, financed separately with "windfall revenue" from the ongoing global semiconductor boom. The fund, set to total 162.3 trillion won, aims to strategically invest substantial tax revenue into productive areas, thereby improving the efficiency of fiscal management. Minister Park outlined plans to allocate 45.4 trillion won from the Future Fund in the upcoming year towards youth, growth engines, regional economies, and education.
Additionally, the government plans to restructure approximately 108 trillion won in spending by eliminating inefficient projects. This includes reviewing all state-funded initiatives to ensure the budget is directed to areas of necessity. Notably, 21.3 trillion won will be allocated to AI projects in 2027, nearly double the current year's allocation, to support major initiatives involving semiconductors, physical AI, and AI data centers.
Beyond semiconductors, 62.8 trillion won will be directed towards securing new growth engines such as nuclear fusion, small modular reactors (SMRs), quantum technology, aerospace, and advanced biotechnology. The budget also emphasizes support for young people, with 43.3 trillion won earmarked for education, employment, entrepreneurship, and other life-stage areas.
To address regional disparities, the government will allocate 117.1 trillion won, representing a 36.6 percent increase from this year. Additional allocations include a 29.7 percent increase in spending on industry, small and medium-sized enterprises, and energy, totaling 41.2 trillion won, and a 20.4 percent increase for culture, sports, and tourism, amounting to 11.6 trillion won. Research and development will receive 39.5 trillion won, while education spending will rise to 110.7 trillion won.
Total revenue for 2027 is projected to reach 880.8 trillion won, driven by the sustained global chip industry boom, with national debt expected to rise to 1,519.8 trillion won. The government plans to gradually slow spending growth from 2028 onwards as a virtuous economic cycle takes hold. Minister Park underscored the dual objectives of promoting economic growth and fiscal soundness in the 2027 budget, affirming South Korea's vision of becoming an "irreplaceable Republic of Korea."