South Korea’s cabinet approved the 2027 budget, with total spending forecast above KRW 820 trillion, up about 12.8% from the current year and marking a record high, according to ETNet.

The government said stronger-than-expected tax revenue will be used to establish a KRW 162.3 trillion Future Response Fund, part of which will support youth aid, growth drivers, local economies and education.

The plan also allocates KRW 21.3 trillion for semiconductors, physical AI and industrial park infrastructure projects.

The administration led by Lee Jae-myung intends to issue nearly KRW 222.8 trillion in bonds next year to finance the spending, a move that could heighten public concern over outlays and push yields higher.