The South Korean government will spend 45.4 trillion won ($33 billion) of the 162.3 trillion won Future Response Fund to be launched next year on programs in four areas: young adults, growth engines, regional development, and education and talent. Another 12.5 trillion won will be used to reduce new government bond issuance, while the remaining 104.4 trillion won will be set aside as reserves against swings in tax revenue. The fund is built from tax revenue that exceeds the 10-year trend line for domestic taxes, or 6.2%, and this year's excess revenue will also be added to the fund's reserves.
Broken down by item, the youth account is structured around life stages, covering employment and startups, asset building and housing, and marriage and childbirth. The government will put 1.7 trillion won into a youth future savings plan that has no income requirement so that all young adults can enroll, and will allocate 400 billion won for first-job support and 1 trillion won for startup commercialization.
Universal public rental housing will receive 1.4 trillion won, and a package supporting marriage, childbirth and child-rearing will receive 3.8 trillion won. The youth culture and arts pass will also be expanded to be issued annually to those aged 19 to 34, raising its budget to 800 billion won.
The growth engine account will receive 14.2 trillion won to support development of frontier-class artificial intelligence and self-driving technology. Excluding reserves, actual program spending for the regional account and the education and talent account comes to 10.3 trillion won and 7.6 trillion won, respectively.
Critics say the sharp increase in cash and contribution-based support, such as the youth future savings plan and marriage and childbirth payments, risks turning the fiscal expansion into handouts. Concerns have also been raised that the fund could be used as a slush fund, since spending on its main line items can be shifted by up to 30% without additional approval from the National Assembly.
