SEOUL, July 4 (Reuters) – South Korea’s legislative body has greenlit a supplementary budget of 31.8 trillion won ($23.3 billion), backing President Lee Jae Myung’s initiative to strengthen an economy facing challenges from trade disputes and weak consumer demand.
This approved spending plan exceeds the 30.5 trillion won initially proposed by the government. The Finance Ministry announced that a cabinet meeting will take place on Saturday to formalize the updated budget.
President Lee assumed leadership of an economy experiencing declining demand following months of national instability caused by former leader Yoon Suk Yeol’s unsuccessful martial law declaration in December.
The economy unexpectedly shrank during the first quarter amid U.S. President Donald Trump’s extensive tariff policies and is projected to grow only 0.8% this year, according to the Bank of Korea.
As a result of this budget decision, South Korea’s government debt is expected to increase to 49.1% of gross domestic product from the previous 48.4%, while the fiscal deficit will rise to 4.2% from 3.3%. This is because 21.1 trillion won of the total budget will be covered through additional bond issuances.
($1 = 1,362.3000 won)
Reporting by Jack Kim, Cynthia Kim, Jihoon Lee. Editing by Jane Merriman
— news from Reuters