Budget committee endorses $9.75 billion additional funding for consumer-focused program
In the heart of South Korea, Mangwon Market in Mapo District, western Seoul, bustled with shoppers on the afternoon of June 19, as the country grapples with the economic implications of the "super supplementary budget" proposed by President Lee Jae-myung's administration.
The supplementary budget, worth approximately 30.5 trillion won (around $22 billion), is one of the biggest extra budgets in recent years and is aimed at reviving the economy, which has experienced near-zero growth for four consecutive quarters due to external factors such as U.S. tariffs and global trade tensions.
The budget includes 20.2 trillion won for new spending aimed at economic stimulus, including cash handouts to all citizens via consumption coupons ranging from 150,000 to 520,000 won per person. The government also plans to allocate 5 trillion won for debt relief for microbusiness owners, job seeker financial support, consumer price stabilization, and aid to vulnerable groups. An additional 10.3 trillion won is planned to compensate for an expected shortfall in tax revenue.
However, the supplementary budget raises concerns about fiscal discipline, debt sustainability, and the need for political unity to navigate potential economic and social risks. The central government’s debt-to-GDP ratio is projected at 49.0%, along with a fiscal deficit of 110.4 trillion won (excluding social security funds). The budget is mainly financed by issuing government bonds worth 19.8 trillion won, which points towards a significant increase in public debt.
President Lee is pushing for swift parliamentary approval but faces political challenges. The National Assembly's Public Administration and Security Committee, which discussed the budget on April 28 in Yeouido, western Seoul, is seeking bipartisan consensus on this extraordinary fiscal measure, while opposition parties have expressed concerns over the size, timing, and efficacy of such a large spending package.
On June 19, the National Assembly's Public Administration and Security Committee approved part of the supplementary budget plan worth 13.2 trillion won as a step toward boosting domestic consumption, indicating ongoing legislative scrutiny and negotiation.
The supplementary budget is part of efforts to support the economy during the COVID-19 pandemic, but the article does not discuss the current state of the economy or the effectiveness of the budget. The exact details of the nationwide cash payout in the upcoming budget are still undisclosed.
This complex balance of urgent economic stimulus and prudent fiscal management underlies the debate in the National Assembly and among policymakers. The "super supplementary budget" reflects an urgent government response to South Korea’s stalled economic growth and external shocks, focusing on stimulating consumption and supporting vulnerable populations. However, it raises concerns about fiscal discipline, debt sustainability, and the need for political unity to navigate potential economic and social risks.
- The "super supplementary budget," valued at approximately $22 billion, is a significant measure aimed by President Lee Jae-myung's administration to revive the economy, which has experienced near-zero growth due to political factors like U.S. tariffs and global trade tensions.
- The budget, one of the biggest in recent years, includes 20.2 trillion won for economic stimulus, such as cash handouts to citizens and debt relief for microbusiness owners, with an additional 10.3 trillion won planned to cover a shortfall in tax revenue.
- The budget raises concerns about fiscal discipline, debt sustainability, and the need for political unity, as the central government’s debt-to-GDP ratio is projected at 49.0%, and the budget is mainly financed by issuing government bonds, leading to a significant increase in public debt.
- The supplementary budget faces political challenges, as the National Assembly's Public Administration and Security Committee is seeking bipartisan consensus while opposition parties have expressed concerns over the size, timing, and efficacy of the large spending package.
