(MENAFN) President Lee Jae Myung rolled out his inaugural fiscal blueprint Tuesday, proposing a massive 728 trillion won ($505 billion) expenditure package for 2026—representing an 8.1% surge over current spending levels.

Military outlays will climb to 66.3 trillion won ($46 billion), reflecting an 8.2% year-over-year jump, as Seoul pursues modernization of legacy arsenals into advanced warfare systems and pushes toward autonomous defense capabilities, South Korean media reported.

"Relying on external forces for our defense is a matter that hurts national pride," Lee stated, committing to reclaim wartime operational authority from Washington before his presidential mandate expires in 2030.

Seoul will funnel 10.1 trillion won ($7 billion) into accelerating artificial intelligence transformation initiatives, targeting placement among the globe's three dominant AI nations.

Addressing lawmakers during the budget presentation, Lee emphasized bolstering military independence while maintaining diplomatic channels aimed at restarting dialogue with Pyongyang.

South Korea seeks to forge a "smart and strong" armed forces through AI integration, the president explained.

"We will significantly strengthen our national defense capabilities and make sure to realize our hope for self-reliant defense," he declared, noting that "our people's pride will be undermined if South Korea continues to rely on foreign nations for its defense."

The president highlighted diplomatic breakthroughs with Washington, stating: "Progress in consultations on the supply of nuclear fuel for nuclear-powered submarines has strengthened the foundation for self-reliant defense."

Lee secured approval from US President Donald Trump last week for Seoul to construct nuclear-powered submarines after requesting access to reactor fuel technology.

The president characterized a recent tariff agreement with the United States as having reduced economic volatility.

Discussing his inaugural talks with Chinese President Xi Jinping during last week's Asia-Pacific Economic Cooperation (APEC) summit, Lee said both nations had "fully restored" diplomatic ties and committed to functioning as "strategic cooperative partners" pursuing "pragmatism and mutual benefit."

Seoul and Beijing extended their bilateral currency swap mechanism for an additional five-year period, preserving the ceiling at 70 trillion won ($48.6 billion), while inking six memorandums of understanding covering economic collaboration and joint transnational crime-fighting measures.

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