The government has begun finalizing a record 2027 budget of more than 800 trillion won ($579 billion), with concentrated investment planned across five key areas — including three major mega-projects and the expansion of future growth engines. The plan also calls for comprehensive support for youth at each stage of development, measures to address K-shaped polarization, locally led growth initiatives and enhanced public safety spending.
Kwon Chil-seung, policy committee chair of the Democratic Party of Korea, outlined the plans to reporters following a ruling party-government budget consultation for fiscal 2027, held Tuesday at the National Assembly members' office building.
"The Democratic Party and the government have agreed that fiscal policy will play an active role in the 2027 budget, investing strategically for South Korea's great leap forward and transformation," Kwon said. "We will boldly restructure spending and focus investment on strategic areas."
The five priority areas for next year's budget are: AI and the three mega-projects, expansion of future growth engines, comprehensive youth support across developmental stages, addressing K-shaped polarization, and public safety. Kwon added that locally preferential programs — such as child allowances partially introduced in the 2026 budget — would be expanded further so that fiscal policy contributes more to regional growth.
On the AI front, the government plans to establish a semiconductor special account in next year's budget. Rep. Jeong Tae-ho, the ruling party's representative on the National Assembly's budget and accounts special committee, said the account would create an integrated support framework to make South Korea a semiconductor powerhouse.
Jeong said the government would support the development of AI solutions using manufacturing tacit knowledge to help South Korea become one of the top three nations in physical AI, and that it would invest in Korea Electric Power Corporation and the Korea Water Resources Corporation to secure electricity and water supply. He added that support for frontier AI model development would be expanded, including the supply of 10,000 CPUs.
For future growth engine expansion, the government plans to concentrate investment in strategic technologies across the "Next 10 sectors." Key initiatives include research and development for a lunar landing by 2030 and the expansion of self-driving car pilot zones. Electric vehicle subsidies will also be raised to a record high as part of the energy transition.
As part of comprehensive youth support, the government will introduce a university intern-semester program. Jeong said the scheme would grant academic credit for one semester of internship work, giving students a chance to build career experience before graduation. A new "Woori Ai Jarip Fund" will also be established, providing up to 1.2 million won annually per child up to age 18. Support for marriage, childbirth and child-rearing will shift from the existing tax-credit model to direct subsidies and grants, and the child allowance will be restructured and expanded into a basic child benefit.
To ease K-shaped polarization, the government will create a special growth-engine subsidy to support facility investment when anchor companies relocate to regional areas. Jeong said a regional future growth fund would be established to improve living conditions and develop future growth hubs outside major cities.
Next year's budget will also include a new special account for essential regional medical services, and tuition at regional national universities will be fully covered. The government plans to use the record fiscal resources to raise the standard median income and write off long-overdue debts owed by small business owners hit by COVID-19. On public safety, Jeong said the budget includes support for nuclear-fusion submarine development, a pay raise for junior military officers and the creation of a resource security fund to address supply chain risks.
President Lee Jae Myung urged officials to work together so the budget "can serve as a catalyst for the growth of all." Speaking at a Cabinet meeting Tuesday, Lee said the government must "firmly use the expanded fiscal capacity as seeds to harvest greater fruit in the future, shifting to a productive fiscal strategy." He added: "This is not the time to be consumed by managing fiscal figures in front of us. We need the wisdom to turn today's 10,000 won into 100,000 won tomorrow and 1 million won after that."
Lee also called on officials to boldly trim unnecessary spending to ensure sound fiscal management, while keeping the focus on completing the budget with an emphasis on fostering breakthrough growth, easing K-shaped polarization, promoting balanced development, nurturing talent and building a ladder of opportunity for young people.
Meanwhile, the government is expected to draw up next year's budget at a record size of more than 800 trillion won, on the back of projected national tax revenue exceeding 600 trillion won, driven in part by higher corporate tax receipts from the semiconductor boom.
The Ministry of Planning and Budget had earlier proposed at the National Fiscal Strategy Council a total expenditure growth rate of more than 10 percent over this year's base budget of 729.9 trillion won.
A double-digit growth rate in total expenditure would be the first since 2009, when spending rose 10.9 percent amid the global financial crisis.
The super-budget reflects improved tax revenue conditions, including a surge in corporate tax payments driven by the semiconductor boom.
Minister Park Hong-keun had previously said that national tax revenue for next year, under the national fiscal management plan for 2025 to 2029, is projected to exceed the earlier forecast by more than 100 trillion won, reaching "500 trillion won-plus."
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