President Lee Jae-myung Unveils South Korea's Most Aggressive Fiscal Spending Plan on Record

The expansionary fiscal policy is primarily fueled by a windfall of tax revenue from the semiconductor industry, specifically from companies like Samsung Electronics and SK Hynix. The administration announced that total tax revenue is expected to rise significantly, with corporate tax receipts alone projected to more than double. This revenue surge is intended to help reduce the national debt-to-GDP ratio from an estimated 51.6% this year to 48.3% in 2027. To manage this, the government plans to establish a Future Response Fund, which will receive 162.3 trillion won of excess tax revenue. Of this, 45.4 trillion won will be used for immediate spending on youth welfare, growth engines, and specialized education, while the remainder will be held in reserve. Key spending priorities include next-generation semiconductor infrastructure, with 21.3 trillion won allocated for industrial water systems, power grids, and logistics networks. Additionally, the government earmarked 2.6 trillion won for a special semiconductor budget and 3.4 trillion won for a nuclear-powered submarine programme and other strategic weapons.