South Korean Government Proposes 30.5 Trillion KRW Supplementary Budget — Plans to Distribute Up to 500,000 KRW in Consumption Coupons per Person
The South Korean government has proposed a 30.5 trillion KRW second supplementary budget aimed at revitalizing the economy, easing the financial burden on citizens, and addressing an anticipated revenue shortfall. The proposal will be submitted to the National Assembly on June 23 following Cabinet approval.
At a briefing on June 19, Presidential Office Spokesperson Kang Yoo-jung stated, “A total of 20.2 trillion KRW will be allocated for economic stimulus and public welfare, while 10.3 trillion KRW will address projected tax revenue shortfalls.”
15.2 Trillion KRW to Boost Domestic Spending and Investment
The government plans to invest 15.2 trillion KRW to stimulate consumption and investment. As a core measure, consumption coupons worth 150,000 to 500,000 KRW per person will be distributed nationwide, providing an estimated 13 trillion KRW in increased spending power.
To further encourage local spending, the issuance of local gift certificates will be expanded to 29 trillion KRW, the largest amount to date, with the discount rate for consumers raised from 10% to 15%.
Additional measures include subsidies for high-efficiency home appliance purchases, and 7.8 million discount coupons for sectors like lodging, cinema, and sports.
The budget also allocates 2.7 trillion KRW to the construction sector, with 1.4 trillion KRW for infrastructure (railways, ports) and 5.4 trillion KRW in liquidity support for the real estate PF market.
In emerging industries, such as AI, K-culture, and biotechnology, 1.3 trillion KRW will support startups and SMEs through expanded government-backed funds and low-interest loans. An additional 200 billion KRW will go toward advancing AI transformation across six key industries.
5 Trillion KRW for Social Welfare and Debt Relief
To support vulnerable groups and stabilize livelihoods, 5 trillion KRW will be directed to public welfare initiatives. A “Special Debt Adjustment Package” worth 1.4 trillion KRW will aid over 1.4 million financially distressed borrowers, including the cancellation of long-overdue debts and expanded eligibility for debt forgiveness programs.
For small business owners in financial hardship despite making regular repayments, installment plans and interest relief will be available.
The government will also inject 1.6 trillion KRW to strengthen the employment safety net, expanding unemployment benefits to an additional 190,000 people and the employment support program to 55,000 individuals.
Other measures include emergency welfare for over 20,000 households and the supply of 3,000 additional public rental housing units for young adults and newlyweds. Financial support will also be provided for food processors to purchase raw agricultural materials, helping stabilize consumer prices.
Funding Strategy: Spending Restructuring, Minimal New Debt
To minimize the burden on taxpayers, the government will fund the budget through spending restructuring (5.3 trillion KRW), use of available funds from national financial institutions (5.5 trillion KRW), and new government bonds totaling 19.8 trillion KRW.
Despite these efforts, the fiscal deficit is expected to rise from 3.3% to 4.2% of GDP, with a slight increase in the national debt-to-GDP ratio.
Legislative Items Also Approved
Alongside the budget, the Cabinet approved 39 agenda items, including:
- Amendments to the Modern Cultural Heritage Act to strengthen heritage management
- Revisions to the School Land Acquisition Act allowing exemptions in areas with low student populations
- Updates to the Science and Engineering Support Act for postdoctoral researcher guidelines
- A partial amendment to the National Pension Act, expanding credit for military service periods
Additionally, temporary lifting of resale restrictions on public housing lots was approved to facilitate more flexible housing supply.
[Editor Miso]
