On September 1, reports emerged indicating that South Korea is set to substantially boost government spending in the upcoming year. The funds will be directed towards an artificial intelligence investment initiative, with the unexpected increase in tax revenue from the semiconductor sector being earmarked for a newly established fund. On Tuesday, South Korea's Ministry of Planning and Finance announced that the government has proposed a fiscal expenditure scale of 820.9 trillion won for 2027, marking a 12.8% rise from this year's budget. This growth rate represents an all-time high, outpacing the 10.6% increase seen in 2009 and the 9.1% rise in 2020.
At the heart of this plan lies the creation of a 'Future Response Fund.' The government intends to allocate tax revenue that surpasses the long-term fiscal revenue trend levels to this fund, rather than utilizing it entirely for annual expenditures. It is anticipated that 162.3 trillion won will be channeled into the fund, primarily mirroring the extent to which domestic tax revenue is expected to exceed the trend level observed over the past decade.