South Korea’s new administration proposed $14.7 billion in additional spending on Thursday to boost weak domestic demand, as President Lee Jae Myung pushes economic recovery as his top priority.
The supplementary budget, totaling 30.5 trillion won ($22 billion), includes 20.2 trillion won ($14.7 billion) in new spending aimed at stimulating growth and supporting vulnerable sectors, according to the finance ministry. It also covers a 10.3 trillion won ($7.4 billion) shortfall in tax revenue.
This second extra budget follows a 13.8 trillion won ($9.9 billion) package passed in May and comes just weeks after Lee’s victory in the 3 June snap presidential election. "The economic downturn is very serious, and it is time for the government to play a role," Lee said.
The Bank of Korea recently cut its 2025 growth forecast to 0.8% from 1.5%, citing uncertainty over U.S. tariffs, and lowered interest rates for the fourth time in the current easing cycle.
A key feature of the new budget is a universal cash handout program worth 10.3 trillion won ($7.4 billion), providing 150,000-500,000 won in vouchers to every citizen. About 84% of recipients will receive 250,000 won (roughly $180).
Additional funds will support the construction sector, artificial intelligence investment, SMEs, and debt restructuring programs for small businesses.
The budget will be partly financed by issuing 19.8 trillion won ($14.3 billion) in new treasury bonds, raising the fiscal deficit to 4.2% of GDP and government debt to 49.0% of GDP.
The government plans to submit the proposal to parliament, led by the ruling Democratic Party, on 23 June.
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