Updated : 2025-08-29 18:54:50 KST
The Lee Jae Myung administration has approved a budget plan worth well over seven-hundred-trillion won for next year and it's betting big on research and development. Our economics correspondent Kim Do-yeon has details. The South Korean government on Friday approved the budget proposal for 2026, a spending plan worth 728 trillion won or 524 billion U.S. dollars. This is the first budget proposal for President Lee Jae Myung, with a theme of recovery and growth, and it's also the first budget proposal to surpass 700 trillion won.
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This marks a sharp 8-point-1 percent increase compared to last year's main budget—a significant jump from the 2-point-5 and 2-point-8 percent growth rates seen in the two previous years. The government says it's focusing on performance-based financing, restructuring spending to invest more in what works. "For next year's budget, the government has focused on performance-based fiscal management by drastically cutting what's unnecessary and boldly investing in what must be done."
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In fact, 27 trillion won was cut from restructuring inefficient projects and administrative costs from before. And much of that has been focused on artificial intelligence as the government makes efforts to focus on making the nation top three in the industry. That's most clear in the R&D budget, which will jump a record 19-point-3 percent from last year. Among the 12 main budget categories, this is the biggest hike. On top of R&D, the government will purchase 15-thousand GPUs to build out the nation's AI infrastructure.
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Also notable is 2-point-1 trillion won or around 1-point-5 billion dollars that's been proposed to help industries hit by U.S. tariffs, including support for shipbuilding. Direct monetary support for citizens will also grow. Most notably, a new pilot program for residents in rural areas will give 240-thousand people in select counties 150-thousand won per month. But all this spending, inevitably, leads to more debt. The nation's debt-to-GDP ratio, which had remained under 50 percent, will surpass that mark next year at 51-point-6 percent.
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By 2029, the government expects that figure to reach 58 percent. President Lee, however, said this is not the time to tighten the belt. The budget proposal now heads to the National Assembly for a review and passing as a bill; the ruling Democratic Party's majority makes its passage highly likely. A final vote is constitutionally required by early December, with the bill expected to pass largely reflecting the administration's original vision before the end of the year. Kim Do-yeon, Arirang News.
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https://m.arirang.com/news/view?id=286710