SEOUL: South Korea’s Parliament has approved a 31.8 trillion won or about US$23.3bil extra budget as new President Lee Jae Myung seeks to revive an economy struggling with weak consumption and mounting trade risks from US tariffs.
The figure is up from the 30.5 trillion won initially proposed by the government, with more money allocated for cash coupon handouts, the Finance Ministry said.
Of the overall figure, 10.3 trillion won is set aside to cover revenue shortfalls for this year’s existing budget, as taxation income fell due to weak corporate performance and subdued consumer spending.
The opposition party boycotted last Friday’s vote over policy differences.
The stimulus package is the first since Lee took office last month after winning a snap vote with a pledge to boost economic growth.
It’s also the second supplementary budget this year after a 13.8 trillion won budget was approved by Parliament in May.
The passage comes just days ahead of a July 9 deadline for trade negotiations with the United States.
President Donald Trump has said that his administration may begin sending out letters to trading partners as soon this Friday setting unilateral tariff rates.
South Korea’s Trade Minister Yeo Han-koo travelled to the United States over the weekend for a last-minute bid to extend the deadline.
“It’s still not clear to each side what the other side wants,” Lee said at a press conference in Seoul last Thursday, adding that the negotiations have not been easy so far.
Without an agreement or an extension, across-the-board reciprocal tariffs on exports to the United States will rise to 25% from 10%.
South Korea, a key US ally and major exporter of cars, semiconductors, and batteries, has seen its companies and its economy caught in the cross hairs of Trump’s tariff campaign. — Bloomberg
