Cheong Wa Dae: Future Response Fund to support responsible fiscal management and targeted investment

[Financial News] The government will establish a 'Future Response Fund' using additional tax revenue generated by the semiconductor boom to invest in advanced industries and younger generations. The fund is expected to reach 100 trillion to 200 trillion won. Cheong Wa Dae said the fund was created out of the concern that "spending a lot when tax revenue comes in a lot, and not spending when it comes in less, does not seem to be responsible fiscal management."
A Cheong Wa Dae official told reporters at the Chunchugwan Press Center at the Blue House on the day that the plan was intended to move away from the existing fiscal management approach. The government had earlier announced plans to use the extra tax revenue to build the Future Response Fund and invest it in four key areas: youth, growth engines, regional development, and education and talent.
Responding to concerns that the fund could become the government's "personal slush fund," the official explained that the goal was to raise money through the Future Response Fund and invest it where it is needed most in order to manage public finances responsibly.
The government expects a much larger tax intake than originally forecast, driven by the strong semiconductor market. Rather than immediately spending the temporary increase in revenue or using it only to repay government bonds, it plans to set the money aside in a separate fund and channel it into future growth sectors from a medium- to long-term perspective.
On claims that the extra tax revenue should first be used to reduce or repay government bond issuance, Cheong Wa Dae said fiscal stability must also be taken into account. The official said, "There are views that it would be better to reduce government bond issuance with incoming tax revenue. That is not entirely wrong, but if we do that next year, what should we do the year after? We have no certainty that tax revenue will come in this strongly again the year after next."
The official added, "Doing it one year this way and another year that way does not necessarily mean stable national debt management." Citing President Lee Jae-myung's remarks at the State Council of South Korea the previous day, the official said, "If spending 100,000 won today could create 1 million won tomorrow, and if it could bring greater benefits in the future, then it would be appropriate to invest that way. That is why we will create the fund through the Future Response Fund."
The official emphasized that the government needs resources to support future-oriented investments in new industries, mega projects, and the seven areas known as the 7 Seed Projects, as well as to reflect the government's investment direction for the future amid intense national competition. The official also said the fund will actively address issues related to future generations and young people.
The official added that, in connection with reforms to local education grants, the government also needs to secure separate funding for higher education, early childhood education, and lifelong learning. "That is difficult under the current education finance structure, so we plan to place it in the education and talent account of the Future Response Fund and prepare for it there," the official said.

[email protected] Choi Jong-geun Reporter