By Sama Marwan,
The South Korean government revealed details of its proposed supplementary budget of 12 trillion won ($8.59 billion) on Friday, stating that it will support key industries amid growing trade uncertainty caused by the escalation of the U.S. tariff crisis.
The government has proposed an additional budget of 12.2 trillion won, which includes 3.2 trillion won allocated for disaster prevention and recovery efforts following the worst wildfires in the country’s modern history.
According to the South Korean news agency Yonhap, the proposed supplementary budget also includes 4.4 trillion won to alleviate trade risks and support advanced industries, and 4.3 trillion won to ease the burden on people’s living costs, according to the Ministry of Finance.
Initially, the government had proposed a supplementary budget of 10 trillion won to address what it described as “the most urgent issues,” including recovery efforts following a series of wildfires that devastated southeastern regions, but it later increased the expected budget.
This is the first supplementary budget proposal since May 2022, when the country implemented a supplementary budget of 62 trillion won to assist small traders affected by the COVID-19 pandemic.
The proposal also comes amid a growing global trade war triggered by the U.S. tariff plan, which includes reciprocal 25% tariffs on South Korea.
Lee Chang-Young, Governor of the Bank of Korea, earlier stated that if the 12 trillion won supplementary budget is implemented, it will boost the country’s economic growth rate by 0.1 percentage points this year.
Regarding disaster response, the government plans to spend 1.4 trillion won on supporting the reconstruction of areas affected by the massive wildfires.
It has also allocated 1.7 trillion won to enhance the country’s disaster response capabilities by purchasing 6 new helicopters for firefighting and 30 AI-powered surveillance cameras to improve the early detection of fire outbreaks.
Another 200 billion won will be used to improve airport safety and outdated sewage facilities to prevent landslide accidents.
For industrial support, the government aims to invest 1.8 trillion won to provide financial aid to companies expected to be impacted by U.S. tariffs, and 200 billion won to stabilize the supply chain of critical minerals.
Approximately 1.8 trillion won will also be allocated for the innovation of a domestic AI system by securing 10,000 advanced Graphics Processing Units (GPUs) by 2025, supporting the development of world-class large language models, and nurturing talent in this field. Additionally, 500 billion won will be allocated to enhance the competitiveness of semiconductors and other strategic industries.
To support people’s livelihoods amid an economic slowdown, the government plans to spend an additional 2.6 trillion won to ease financial burdens on small businesses, and 1.6 trillion won to help small stores expand their sales.
The government intends to submit the supplementary budget bill to the National Assembly on Tuesday.
The Ministry of Finance stated that the government plans to finance 4.1 trillion won of the expected supplementary budget using available resources, including reserve funds, while the remaining 8.1 trillion won will be raised through the issuance of government bonds.
With the budget plan, national debt is expected to rise by 6 trillion won to 127.9 trillion won, representing 48.4% of the national GDP, according to the ministry.
