South Korea to Fund 15-20 Trillion Won Supplementary Budget With Excess Tax Revenue
South Korea plans to accelerate the preparation of a supplementary budget and fund it with excess tax revenue, avoiding new government bond issuance. Officials expect the package to total about 15 to 20 trillion won and aim to submit it to the National Assembly as early as this month, ahead of the June 3 local elections.
Lim Gi-geun, the acting deputy minister of the Planning and Budget Office, chaired a morning briefing at the Government Complex in Jongno, Seoul, to review the Middle East situation and its potential impact on the economy. The meeting, attended by 13 related ministries, was a follow-up to President Lee Jae-myung’s demand the previous day to push the supplementary budget forward swiftly.
The proposed spending plan is organized around three targets: first, easing logistics and fuel costs in response to high global oil prices; second, stabilizing livelihoods for ordinary people, small businesses, and farmers; and third, providing support for export companies directly affected by external shocks.
President Lee Jae-myung used a separate senior aides’ meeting to push for rapid budget action and to expand the use of regional currency vouchers. He argued that distributing funds via local currency can deliver a double effect by supporting small merchants and stimulating local economies.
Local currency programs are expected to be a prominent element of the package. Officials said they will move quickly to draft the supplementary budget and submit it to the National Assembly, while engaging with national research institutes and other bodies to refine policy measures for effective relief.
The government is banking on higher corporate tax receipts driven by a strong semiconductor sector. Last year, SK Hynix reported an operating profit of 47.2 trillion won, contributing to expectations of larger corporate tax revenue and helping fund the planned measures without new debt issuance.
Financing the package with excess tax revenue, rather than issuing more bonds, is intended to minimize potential effects on government bond and foreign exchange markets. The approach matters for international investors and global markets, given Korea’s significant role in advanced manufacturing and its key position in regional supply chains for semiconductors and technology.
If enacted, the supplementary budget could accelerate fiscal support before the local elections and influence the broader economic environment in the Asia-Pacific region. The government says it will prioritize speed to deliver relief to households and businesses as soon as possible, while coordinating with policy researchers on effective implementation.