Group 1 - The South Korean government approved a budget of 728 trillion won for the fiscal year 2026, marking an 8.1% increase from the previous year, which is significantly higher than the 2.5% increase this year, setting a record high for total budget expenditure [1] - The budget reflects a shift from a "tight" fiscal policy under the previous administration to an "expansionary" approach, focusing on stimulating growth through investments in artificial intelligence (AI) and research and development [1] - The R&D budget will increase from 29.6 trillion won to 35.3 trillion won, a 19.3% rise, the largest ever, aimed at accelerating innovation in six key sectors: AI, biotechnology, cultural content, defense, energy, and manufacturing [1] Group 2 - The defense budget will rise from 61.25 trillion won to 66.3 trillion won, with a focus on improving personnel welfare and developing advanced weapons such as next-generation stealth fighters, AI, drones, and robots, marking the first time the defense budget has increased by over 5 trillion won in a single year [1] - The budget for industrial policy will expand by 14.7% to 32.3 trillion won to support exporters affected by tariffs, while cultural industry spending will grow by 8.8% to 9.6 trillion won [2] - To finance the budget, the government plans to cut around 1,300 projects, freeing up 27 trillion won, but most of the new spending will rely on large-scale borrowing, pushing national debt to over 1,400 trillion won, which will account for 51.6% of GDP [2] Group 3 - The government aims to stimulate the economy through expansionary fiscal policies, which are expected to lead to a rebound in tax revenues, creating a virtuous cycle of "financing through finance" [3] - The budget will be submitted to the National Assembly for review in early September, with final approval expected in December [3]