South Korea on September 1 proposed a record 821 trillion won (US$596.9 billion) budget for 2027, up 12.8% from 2026, as President Lee Jae-myung’s government raises spending to strengthen the country’s position in semiconductors and AI.

The budget ministry said tax revenue would rise 40.7% to 584.4 trillion won (US$427 billion) in 2027, while corporate tax receipts would more than double to 216.7 trillion won (US$158 billion).

The increase is tied to a semiconductor windfall as Samsung Electronics and SK hynix benefit from strong demand for AI-related chips.

That would help lower South Korea’s debt-to-GDP ratio to 48.3% from an estimated 51.6% this year.

The proposal sets aside 21.3 trillion won (US$15.5 billion) for water systems, power grids, and logistics networks that support chipmaking infrastructure nationwide.

It also allocates 2.6 trillion won (US$1.9 billion) for a special semiconductor budget, and 3.4 trillion won (US$2.48 billion) for a nuclear-powered submarine program and other strategic weapons.

The government also said total bond sales would fall to 222.8 trillion won (US$163 billion) from 225.7 trillion won (US$165 billion) in this year’s budget.

The proposal still requires approval from the National Assembly, South Korea’s parliament.

🔗 Source: Reuters