Record High 8.2% Increase in Defense Budget
Largest Rise Since 2019 as Lee Jaemyung Responds to U.S. Alliance Demands
Next year's defense budget has been set at approximately 66.3 trillion won, an 8.2% increase compared to this year. This marks the highest growth rate in defense spending in about seven years. This move is seen as a response to President Lee Jaemyung's formal announcement of a significant increase in the defense budget, amid calls from the United States for South Korea to make greater contributions in the security sector as part of the "modernization of the South Korea-U.S. alliance."
According to the government's "2026 budget proposal" released on August 29, next year's defense budget will amount to 66.2947 trillion won, an 8.2% increase from this year. The growth rate of the defense budget is 0.1 percentage points higher than the overall budget expenditure increase rate (8.1%). If the government proposal passes the National Assembly, the defense budget growth rate will surpass the total expenditure growth rate for the third consecutive year.
Next year's defense budget increase is the highest since 2019 (8.2%) during the Moon Jaein administration. The operating expenses for military power have been set at 46.1203 trillion won, a 6.26% increase, while the defense capability improvement budget has been set at 20.1744 trillion won, a double-digit increase of 13.04%.
The operating expenses include improvements in the treatment of junior officers, such as an additional pay raise for junior officers (up to a 6.6% increase), expansion of eligibility for short-term service incentives and bonuses, and the introduction of a new "Tomorrow Preparation Savings" program for long-term service members. The meal allowance per day will be raised by 1,000 won to 14,000 won. In addition, the number of personnel receiving artificial intelligence (AI) education will be expanded to all service members (470,000 people), and the number of educational drones will be increased from the current 300 to 11,000.
In the area of defense capability improvement, the Ministry of National Defense plans to increase the budget for the development and mass production of the KF-21, South Korea's latest fighter jet, from 1.3 trillion won to 2.4 trillion won. This includes the development of new dedicated missiles and engines. Additionally, 63.6 billion won will be invested in research on next-generation stealth fighter jets, leveraging the expertise gained from the KF-21 project. The ministry will also expand investments in AI, drones, and robots to prepare for future warfare and will initiate research and development of physical drones and robots utilizing advanced civilian technologies. Furthermore, 500 billion won will be invested in discovering, nurturing, and supporting the overseas expansion of defense startups with advanced technologies.
As a result, the defense budget will account for 2.42% of the nation's gross domestic product (GDP), up from 2.32% this year. The second administration of U.S. President Donald Trump, which continues to pursue an "America First" policy, is demanding that allied and friendly nations increase their direct and indirect defense budgets to as much as 5% of GDP.
Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol stated, "I believe that defense spending exceeding total expenditure growth can continue without difficulty," adding, "By increasing the defense budget itself and enhancing the productivity of the defense sector through research and development, we can also boost the potential growth rate of our economy, so we will focus on these aspects as well."
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