South Korea’s government announced Monday that it intends to put together a record-setting budget of more than 800 trillion won — equivalent to approximately $530.97 billion — for the 2027 fiscal year, with the windfall from a thriving AI chip sector helping to make it possible.
Budget Minister Park Hong-keun made the announcement during a national fiscal strategy meeting, explaining that the spending plan would be funded through a combination of increased tax collections and cuts to existing expenditures. The proposed figure represents a significant jump from the current year’s spending plan of 727.9 trillion won, not counting any supplementary budgets.
The government identified three so-called “mega-projects” as top fiscal priorities: investments in semiconductor chips, AI data centers, and physical AI technology. Officials said funding for these initiatives would come largely from a sweeping overhaul of current spending programs rather than depending entirely on new tax revenue.
President Lee Jae Myung pledged that the government would use every tool at its disposal to keep corporate investment plans on track.
“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.
Budget Minister Park added that the government plans to restructure roughly 50 trillion won in spending — double what was done the previous year — by reviewing both discretionary and mandatory expenditures and eliminating programs that have underperformed.
South Korea also announced the creation of a Future Response Fund, a strategic investment vehicle designed to channel tax revenues that exceed long-term projections into four key areas: opportunities for youth, economic growth engines, regional development, and talent cultivation.
(Exchange rate: $1 = 1,506.69 won)
