Editorials
Spending tops 800 trillion won as new fund raises concerns
Lee Jae Myung’s record spending plan and proposed future-response fund aim to boost growth, but economists warn the scale could fuel inflation and asset prices.
President Lee Jae Myung speaks during the 2026 National Fiscal Strategy Meeting at the presidential office in Cheong Wa Dae on July 13.
JOINT PRESS CORPS
At a meeting on national fiscal strategy on Monday, President Lee Jae Myung outlined three principles for next year’s budget: creating a new future-response fund to support youth, regional development and education; ensuring timely investment in three major projects centered on semiconductors, physical AI and AI data centers; and pursuing “growth for all” so that no citizen is left behind.
The government’s total spending next year is expected to exceed 800 trillion won ($580 billion), an increase of more than 10 percent from this year and the largest budget in the country’s history. The figure far surpasses this year’s spending growth rate of 8.1 percent.
On top of that, tax revenue that exceeds long-term trends will be set aside in the future-response fund. With national tax revenue next year projected to surpass the government’s original forecast of 412 trillion won and exceed 500 trillion won, driven largely by a boom in the semiconductor industry, the new fund itself could approach 100 trillion won.
In principle, it is encouraging that the government intends to use the additional tax revenue generated by semiconductors not for direct cash handouts but as seed money for future investment. Even so, concerns remain about the unprecedented scale of fiscal expansion.
Inflationary pressures are already being felt by households. Consumer prices in June rose 3.2 percent from a year earlier, increasing the burden on ordinary citizens. Additional government spending risks further destabilizing prices.
There is also reason to worry about the impact on asset markets. An influx of liquidity ultimately tends to drive up real estate prices. Massive corporate investments intended to promote balanced regional development have already been announced under the Lee administration. A 150 trillion won national growth fund is also expected to begin full-scale operations soon, while policymakers must manage the country’s record current-account surplus.
Even without additional government spending, large amounts of money are already entering the economy. Under such circumstances, it is not unreasonable to ask whether fiscal policy is becoming excessively expansionary.
Park Hong-keun, minister of planning and budget, said the future-response fund would reflect a broad range of opinions, from advocates of aggressive investment to those who argue that fiscal safeguards are needed.
The government would do well to recognize that preserving sufficient fiscal capacity for future generations and for the next administration is itself an important investment in the future. Preparing for tomorrow does not necessarily mean spending every available won today.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
