South Korea has increased its defense budget for next year to better cope with growing threats from North Korea, the defense ministry said Monday.

The government set the defense budget at 40.34 trillion won ($34 billion) for 2017, up 4.0 percent from 38.8 trillion won a year earlier, the Ministry of National Defense said in a statement.

Of the total, 28.14 trillion won will be spent on operating military forces and facilities, with 12.2 trillion won set aside to bolster combat capabilities, it said.

The annual defense budget exceeded 40 trillion won for the first time ever and accounts for 10 percent of the country's overall budget worth 400.5 trillion won for next year, the ministry said.

Tensions persist on the Korean Peninsula over North Korea's missile and nuclear weapons programs.

The communist state conducted two nuclear tests in January and September, and launched more than 20 missiles this year alone. (Yonhap)