South Korea announces $15bn in additional budget

The South Korean Cabinet Tuesday endorsed $15.4 billion in additional budget outlays for this year to spur the economy. The extra allocation plan by the new government of President Park Geun-hye would be in addition to the $321 billion annual budget for 2013. It is expected to be submitted to the National Assembly Thursday for approval. "The economy is now going through a low-growth period by expanding less than 1 percent for nearly two years, making it tough for our people to earn a living and hurting the overall economic vitality," South Korean Finance Minister Hyun Oh-seok said at a news conference. He said the new plan is designed to ensure the economy regains its growth momentum. In the additional budget, $10.6 billon would go to make up the estimated revenue shortfalls resulting from the slow economic recovery and to finance scrapped plans to sell stakes in banks this year, the Finance Ministry said. The rest would go mostly for creating about 40,000 jobs. The government expects its job creation effort would encourage the private sector to take similar steps, a report by the Yonhap news agency said. The additional outlay is expected to be financed through $14 billion worth of bonds and the tax surplus from last year and other resources. "It could be inevitable to see our fiscal status worsen temporarily due to the extra budget but I believe it is more important to normalize economic growth through such stimulus measures and eventually lay the foundation for stronger fiscal health in the long term," Hyun was quoted as saying. South Korea's economy grew 2 percent in 2012, the slowest rate in three years. For this year, projections have been revised to 2.3 percent from the earlier 3 percent. The government expects the supplementary budget to bring up the growth rate by about 0.3 percent.