South Korea plans to introduce a record national budget exceeding 800 trillion won ($531 billion) for the 2027 fiscal year, with the government aiming to strengthen investment in artificial intelligence and semiconductor technologies while relying on stronger tax revenues and spending reforms to finance the increase.
The announcement was made on Monday during a national fiscal strategy meeting, where Budget Minister Park Hong-keun outlined the government’s spending priorities. The proposed budget represents a significant increase from this year’s planned expenditure of 727.9 trillion won, excluding supplementary budgets.
Officials said the expanded budget would be supported by rising tax revenues, particularly from South Korea’s rapidly growing artificial intelligence chip industry, alongside a broad restructuring of existing government spending.
The government identified three major investment priorities for the coming fiscal year: semiconductor manufacturing, AI data centres and physical AI technologies. These projects are expected to receive the highest level of fiscal support as Seoul seeks to strengthen the country’s position in the global technology race.
Rather than depending solely on additional tax income, the government said it would redirect funding from lower-priority programmes to finance the new initiatives. Authorities plan to review both discretionary and mandatory spending while eliminating programmes that have failed to meet performance expectations.
President Lee Jae Myung said the government would use every available policy tool to ensure planned corporate investments move forward without delay.
“Additional tax revenue coming at this time is a precious resource to be used at a golden time when global AI dominance will be determined,” Lee said during the meeting.
Budget Minister Park said the government intends to restructure approximately 50 trillion won in public spending, double the amount reviewed in the previous year. The effort is designed to improve fiscal efficiency while creating room for strategic investments without placing excessive pressure on public finances.
As part of its long-term economic strategy, the government also announced plans to establish a Future Response Fund. The new investment vehicle will receive tax revenues that exceed long-term trends and direct them toward four priority areas: supporting young people, developing future growth industries, promoting regional development and expanding investment in talent.
The administration views the fund as a way to prepare the country for emerging economic challenges while strengthening industries expected to drive future growth.
South Korea has been increasing support for advanced technologies as countries compete to secure leadership in artificial intelligence and semiconductor production. Government officials believe sustained public investment, combined with private-sector participation, will help maintain the country’s competitiveness in key technology sectors while supporting long-term economic expansion.
The proposed budget will be submitted for legislative review as part of the government’s preparations for the 2027 fiscal year.
