[Korea Finance News] South Korean Government Accelerates Budget Execution to Stimulate Domestic Economy Amid Political Turmoil - 29 Dec 2024

https://www.sedaily.com/NewsView/2DIB44VXTT/GC01

재정 조기집행 안간힘…국토 예산 36조 내년 상반기 중 쓴다

29 Dec 2024

 

 

Introduction
As South Korea grapples with the aftermath of the December 3 martial law incident and the suspension of President Yoon Suk-yeol's duties, the government is taking decisive action to bolster the domestic economy. In a recent meeting between the government and the ruling People Power Party, plans were unveiled to expedite budget execution and implement various measures aimed at revitalizing consumption and supporting businesses.

Accelerating Budget Execution in Key Sectors
One of the primary focuses of the government's economic stimulus plan is the early execution of budgets in crucial sectors. Finance Minister Choo Kyung-ho emphasized the unprecedented speed and scale at which funds will be allocated, particularly in the construction and transportation industries.

The Ministry of Land, Infrastructure and Transport has committed to spending over 36 trillion won ($27.5 billion) of its 59 trillion won budget during the first half of the year. This proactive approach aims to support infrastructure projects, create jobs, and stimulate economic activity.

Supporting Small Businesses and Tourism
Recognizing the challenges faced by small businesses and the tourism industry, the government has introduced targeted measures to provide relief and encourage growth. Discount rates for the popular "Onnuri" gift certificates, which can be used at local shops, will be increased from 10% to 15% during the Lunar New Year holiday period. Additionally, the number of participating stores will be expanded from 353 to 550, further benefiting small merchants.

To boost tourism, the government plans to extend temporary visa fee waivers for visitors from China and five other countries. Large-scale events like the "Korea Grand Sale" will also be held earlier in the year to attract tourists and stimulate spending.

Providing Liquidity to Struggling Businesses
The government recognizes the liquidity challenges faced by many small and medium-sized enterprises (SMEs) and has pledged to swiftly allocate over 8 trillion won in policy funds to support them. This early injection of funds aims to alleviate financial pressures and help businesses navigate the current economic landscape.

Moreover, the government will expand the "Yellow Umbrella" mutual aid program, which provides financial assistance to small business owners who have ceased operations. In the first 11 months of this year alone, the program has paid out a record-high 1.3 trillion won, highlighting the severe impact of the pandemic on small businesses.

Potential Need for Supplementary Budget
While the government's proactive measures are commendable, some experts argue that a supplementary budget may be necessary to fully support the domestic economy. Professor Lee Jung-hee from Chung-Ang University suggests that the economic challenges are likely to persist throughout the year, and a supplementary budget would provide the necessary fiscal expansion to address these issues.

Conclusion
As South Korea navigates through political uncertainty and economic headwinds, the government's swift action to stimulate the domestic economy is crucial. By accelerating budget execution, supporting small businesses, and boosting tourism, policymakers aim to mitigate the impact of the current crisis and lay the foundation for recovery.

However, the road ahead remains challenging, and additional measures, such as a supplementary budget, may be required to ensure a sustained economic rebound. As the nation moves forward, close collaboration between the government, businesses, and the public will be essential in weathering the storm and emerging stronger on the other side.