The South Korean government proposed to create 11 trillion won ($9.7 billion) in supplementary budget and have state funds and public institutions spend more than 17 trillion won to inject a total of 28 trillion won to bolster the economy in the second half.

The second-half extra budget plan passed the cabinet meeting Friday and will be submitted for legislative approval on Monday.

The government proposed a supplementary budget in a mega-scale of more than 10 trillion for the second consecutive year as the economy remained stubbornly sluggish with uncertainties added by restructuring in the shipbuilding sector at home and on the external front following the British decision to leave the European Union.

But unlike the previous year, the 11 trillion won supplementary budget won’t come from new debt issue, but from a surplus of 9.8 trillion won in this year’s revenues from tax code revision. The extra budget will be spent to aid corporate restructuring, create jobs, and help bolster local economies and government finances.

State banks Export-Import Bank of Korea will receive 1 trillion won in new funds and Korea Development Bank 400 billion won so that they have enough ammunition to bail out troubled shipbuilding sector.

Funds also would be earmarked as subsidies for people who have lost jobs in the process of shipbuilding restructuring, jobs catered for young people, small exporters in their overseas ventures, and other weaker parts of the economy.

The government separately would increase state fund spending by 3.3 trillion won, have utility companies to up investment by 1.3 trillion, increase trade and other policy financing by 12.4 trillion won.

The government estimates the increased spending would aid next year growth by 0.1-0.2 percentage points. It also predicted the extra fiscal expansion would create 68,000 jobs.

By Kim Gyu-sik

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]