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South Korea approves $10.5 billion extra budget to boost economy

Staff writer |
South Korea finalized supplementary budget plan for the second half at 11.8 trillion won ($10.5 billion) to boost the economy hit ba drought and the outbreak of Middle East Respiratory Syndrome (MERS).

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A total of 5.6 trillion won was earmarked for the expected lack of tax revenue caused by economic slowdown, and 6.2 trillion won was allocated to counter the negative effect of the MERS outbreak and dry weather by spending more fiscal funds, according to the Ministry of Strategy and Finance.

The extra budget plan was approved at the Cabinet meeting to submit it to the National Assembly for approval on July 6.

The 11.8 trillion won extra budget would be raised mainly by issuing government bonds worth 9.6 trillion won. To minimize the possible negative effect on the bond market, three- and five-year treasuries would be sold as those are less volatile.

The planned sales would increase the country's total treasury issuance this year from 102.7 trillion won to 112.3 trillion won.

The remaining extra budget would be met with the Bank of Korea' s 0.7 trillion won surplus capital and 1.5 trillion won of public funds.

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