Overview

• The finance ministry set 2026 spending at 728 trillion won, up 8.1% in the first full-year budget under President Lee Jae Myung that shifts decisively toward fiscal expansion.
• AI funding jumps to 10.1 trillion won from 3.3 trillion won, including purchases of 150,000 GPUs and talent programs, while R&D rises a record 19.3% to 35.3 trillion won.
• To fund priorities, the government cut 27 trillion won by scrapping roughly 1,300 low-performing or unnecessary projects and redirecting resources.
• The defense ministry seeks 66.29 trillion won for 2026, an 8.2% rise to support KF-21 fighter development, robots and drones, and higher entry-level officer pay.
• The ministry projects a 4.0% of GDP fiscal deficit and a 51.6% debt ratio next year, and plans 232 trillion won in treasury bond issuance to finance the gap.