1.3 Trillion Won Added by National Assembly Approval
A supplementary budget bill totaling 31.8 trillion won passed the National Assembly's plenary session on July 4. This comes just 30 days after the launch of the new administration and 11 days after the government submitted the supplementary budget proposal to the National Assembly. The government aims to begin distributing nationwide consumption coupons for stabilizing people's livelihoods starting this month and to complete additional distributions around the Chuseok holiday.
According to the Ministry of Economy and Finance, the supplementary budget approved by the National Assembly on this day amounts to 31.8 trillion won, an increase of 1.3 trillion won compared to the original government proposal of 30.5 trillion won. The increase includes an additional 2.4 trillion won for national funding of livelihood recovery consumption coupons, while 1.1 trillion won was cut through a review and reduction of certain project expenditures.
The expanded supplementary budget will be financed through additional issuance of government bonds, among other measures. As a result of the increased issuance of deficit-financing bonds, the managed fiscal deficit is expected to rise from 110.4 trillion won to 111.6 trillion won. National debt will increase from 1,300.6 trillion won to 1,301.9 trillion won.The national debt-to-GDP ratio will rise by 1 percentage point to 49.1%.
In terms of specific projects, the passed supplementary budget increases both the national subsidy rate and the amount provided for livelihood recovery consumption coupons compared to the original proposal. The Ministry of Economy and Finance explained, "The national subsidy rate for local governments has been raised to a maximum of 90%."
All residents of non-metropolitan and population-declining areas will receive an additional 30,000 won in support compared to the original government plan. As a result, residents of non-metropolitan areas will receive consumption coupons ranging from 180,000 to 530,000 won per person, while those in population-declining areas will receive between 200,000 and 550,000 won per person.
Im Gi Geun, Second Vice Minister of the Ministry of Economy and Finance, is responding to lawmakers' questions at the 2nd plenary session of the 426th National Assembly (extraordinary session) Budget and Accounts Special Committee held at the National Assembly on July 1, 2025. Photo by Kim Hyunmin
Investment in new industries such as artificial intelligence (AI) and climate response has also been increased. An additional 42.6 billion won will be allocated for the design and demonstration of leading physical AI models, and 6 billion won will be invested in high-voltage transmission technology to accelerate the construction of the West Coast Energy Expressway. Furthermore, 4.7 billion won will be added to support the installation of Internet of Things (IoT) measurement devices at small-scale air emission businesses, aiming to reduce fine dust and alleviate the burden on small businesses.
Special activity funds for four agencies?the Presidential Office, Ministry of Justice, Board of Audit and Inspection, and National Police Agency?have been set at 10.5 billion won. This partially restores the special activity funds that had been completely cut under the previous administration, led by the then-opposition Democratic Party of Korea.
To stabilize the supply of domestically produced soybeans, 102.1 billion won will be allocated to support the additional stockpiling of 20,000 tons within this year. The number of export companies eligible for overseas market development support will be increased from 70 to 92, and 4 billion won in low-interest operating funds will be provided to ease management burdens.
The government will hold a Cabinet meeting on the morning of July 5 to approve the supplementary budget. The Ministry of Economy and Finance stated, "Immediately after the Cabinet meeting, the Ministry of the Interior and Safety, Ministry of Economy and Finance, Ministry of Health and Welfare, and other relevant agencies will jointly announce detailed plans for distributing the livelihood recovery consumption coupons going forward."
The plan is to provide the first round of livelihood recovery consumption coupons to all citizens within this month, and after the relevant task force preparations, to distribute an additional 100,000 won to the remaining 90% of the population within two months. For the local gift certificates, the plan is to increase the discount rate starting with the September issuance, following a demand survey by local governments next month. For the high-efficiency home appliance purchase rebate, applications will be accepted early next month, with payments to begin at the end of next month.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
