South Korea approves extra budget to help businesses

The country’s parliament has passed a larger-than-planned first extra budget of this year amid the biggest outbreak of the pandemic to date.
By: | February 25, 2022

The 16.9 trillion won (US$14.2 billion) budget, approved by parliament recently, is targeted to compensate losses to businesses affected by some of the strictest restrictions since the pandemic erupted, as cases rose from thousands to over 100,000 a day.

The government had initially proposed a 14 trillion won (US$11.7 billion) plan. No additional bonds will be issued other than the initially planned 11.3 trillion won (US$9.5 billion) due to considerations for markets and credit ratings, said the Finance Ministry in a statement.

More than 90% of the funds will be used to provide payments to small-scale merchants and micro businesses, while the remainder will go to support medical efforts to deal with the pandemic.

The latest extra budget is the seventh since the pandemic began as President Moon Jae-in’s spending measures pushed up the country’s debt-to-GDP ratio to 50.1% from 36% when he was elected in 2017. Moon will step down in May after a presidential election early next month.

READ: South Korean companies call for business tax incentives

The extra budgets have been vital in shoring up growth through the pandemic, helping the economy to expand 4% last year. Private spending has also remained resilient amid multiple waves of the virus, with consumers turning to online shopping amid a COVID-19 environment, according to Bloomberg.