SEOUL, Mar 23 – South Korea\’s government and ruling party agreed Monday on an extra budget worth 20.5 billion dollars to pull the economy back from the brink of recession, officials said.
The agreement was announced after a meeting of top government and Grand National Party (GNP) officials, including Prime Minister Han Seung-Soo and GNP chairman Park Hee-Tae.
"The government and the GNP shared a consensus on exerting greater fiscal efforts to help create more job opportunities, stabilise public livelihood and speed up economic recovery," GNP spokesman Yoon Sang-Hyun said afterwards.
"The volume of the supplementary budget will eventually be set at around 29 trillion won later this week."
The government is due to formally announce the supplementary budget on Tuesday before sending it to parliament for approval, hopefully next month.
Yoon, quoted by Yonhap news agency, said the extra budget aims to lift economic growth by 1.5 to 2.0 percentage points, to create about 550,000 new jobs and to offer tax cuts of about 11 trillion won.
South Korea\’s export-driven economy has been hard hit by the global slump. It shrank 5.6 percent quarter-on-quarter in October-December, its steepest fall since the East Asian financial crisis of 1998.
Finance Minister Yoon Jeung-Hyun has said the economy will likely contract two percent this year and lose 200,000 jobs, while many private researchers expect an even steeper downturn.
The government last week announced plans to spend 4.9 trillion won of the extra budget to create the 550,000 new jobs.
In addition, trillions of won will be spent to support small- and medium-sized exporters and self-employed individuals, strengthen social safety nets and invest in future-oriented business projects, the GNP official said.
The extra budget, if approved, would represent about 10 percent of the original 2009 budget of some 284.5 trillion won. GNP chief Park has said it will be funded mostly by the issuance of state bonds.