South Korea drafts second extra budget as new leader seeks to spur growth
SEOUL, June 19 (Reuters) - South Korea's new administration proposed on Thursday $14.7 billion of extra government spending to support sluggish domestic demand, as President Lee Jae Myung makes economic recovery his top policy agenda.
The supplementary budget plan totalling 30.5 trillion won announced by the finance ministry includes 20.2 trillion won ($14.7 billion) of new spending to spur economic growth and support vulnerable sectors, while it will also make up for 10.3 trillion won from an expected shortfall in tax revenue.
The second extra budget of the year comes two weeks after Lee, who has vowed expansionary fiscal policy, won a snap presidential election on June 3 and less than two months since the first supplementary budget of 13.8 trillion passed in May.
"Economic conditions and difficulties in people's livelihoods are very serious, and this extra budget means government finances will play a little more active role," Vice Finance Minister Lim Ki-keun told a media briefing.
South Korea's central bank last month slashed its economic growth forecast for this year to 0.8% from 1.5%, citing heightened uncertainty over U.S. tariffs, as it lowered interest rates for a fourth time in its current easing cycle and signaled more rate cuts.
Asia's fourth-largest economy unexpectedly contracted in the first quarter amid U.S. President Donald Trump's sweeping tariffs and domestic political turmoil sparked by former President Yoon Suk Yeol's martial law decree in December.
The biggest spending will be Lee's flagship policy of a universal cash handout scheme for consumers, providing 150,000-500,000 won in vouchers to every citizen and totalling 10.3 trillion won.
Lee was one of the first to introduce a cash handout scheme in South Korea when he was mayor of Seongnam City, which was adopted nationwide several times during the COVID-19 pandemic under the previous liberal administration of Moon Jae-in, even as critics questioned the effectiveness of the policy.
Other spending plans include financial support for the construction sector, investment in artificial intelligence as well as small and medium-sized enterprises, and debt restructuring programmes for small businesses.
Out of the combined total of 30.5 trillion won, 19.8 trillion won will be financed by issuing additional treasury bonds, according to the finance ministry.
The second extra budget will raise the country's fiscal deficit to 4.2% of gross domestic product (GDP) this year, up from the previous estimate of 3.3% after the first extra budget, and government debt to 49.0% of GDP, from 48.4%.
The government will submit the proposal to parliament, controlled by the left-leaning ruling Democratic Party, on June 23.
($1 = 1,375.8000 won)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
33 minutes ago
- Reuters
Exclusive: Air India warned for flying Airbus planes with unchecked escape slides
NEW DELHI, June 19 (Reuters) - India's aviation regulator has warned Air India for breaching safety rules after three of its Airbus ( opens new tab planes flew despite being overdue checks on emergency equipment, and for being slow to address the issue, government documents show. The warning notices and an investigation report - both reviewed by Reuters - were not in any way related to last week's crash of an Air India Boeing (BA.N), opens new tab 787-8 plane that killed all but one of the 242 people onboard, and were sent days before that incident. In the report, the Directorate General of Civil Aviation said spot checks in May on three Air India Airbus planes found that they were operated despite mandatory inspections being overdue on the "critical emergency equipment" of escape slides. In one case, the watchdog found that the inspection of an Airbus A320 jet was delayed by more than a month before being carried out on May 15. AirNav Radar data shows that during the delay the plane flew to international destinations such as Dubai, Riyadh and Jeddah. Another case, involving an Airbus A319 used on domestic routes, showed checks were over three months late, while a third showed an inspection was two days late. "The above cases indicate that aircraft were operated with expired or unverified emergency equipment, which is a violation of standard airworthiness and safety requirements," the DGCA report said. Air India "failed to submit timely compliance responses" to deficiencies raised by the DGCA, "further evidencing weak procedural control and oversight," it added. Air India, which was taken over by the Tata Group in 2022 from the government, said in statement that it was "accelerating" verification of all maintenance records, including dates of the escape slides, and would complete the process in the coming days. In one of the cases, Air India said, the issue came to light when an engineer from AI Engineering Services "inadvertently deployed an escape slide during maintenance". The DGCA and Airbus did not respond to Reuters queries. Checks on escape slides are "a very serious issue. In case of accident, if they don't open, it can lead to serious injuries," said Vibhuti Singh, a former legal expert at the government's Aircraft Accident Investigation Bureau. The DGCA said in its report that the certificates of airworthiness for aircraft that miss mandatory checks were "deemed suspended". The warning notices and the report were sent by Animesh Garg, a deputy director of airworthiness in the Indian government, to Air India CEO Campbell Wilson as well as the airline's continuing airworthiness manager, quality manager and head of planning, the documents showed. An Indian aviation lawyer said such breaches typically attract monetary and civil penalties on both individual executives and the airline. Wilson told Reuters last year that global parts shortages were affecting most airlines, but the problem was "more acute" for Air India as its "product is obviously a lot more dated", with many planes not refreshed since they were delivered in 2010-2011. The Indian regulator, like many abroad, often fines airlines for compliance lapses. India's junior aviation minister in February told parliament that authorities had warned or fined airlines in 23 instances for safety violations last year. Around half of them - 12 - involved Air India and Air India Express, including in one case for "unauthorised entry into cockpit". The biggest fine was $127,000 on Air India for "insufficient oxygen on board" during a flight to San Francisco. Last week's crash, the causes of which are still being investigated, will further challenge Air India's attempts to rebuild its image, after years of criticism from travellers for poor service. Air India's Chairman N. Chandrasekaran on Monday told staff the crash should be a catalyst to build a safer airline, urging employees to stay resolute amid any criticism. In its report, the DGCA also said several Air India aircraft checked by officials had outdated registration paperwork. Air India told Reuters all but one aircraft complied with such requirements and this "poses no impact" to safety. The DGCA investigation report pulled up the airline for what it described as "inadequate internal oversight." "Despite prior notifications and identified deficiencies, the organization's internal quality and planning departments failed to implement effective corrective action, indicating systemic control failure," it said.
Reuters
an hour ago
- Reuters
Xiaomi unit wins land tender in Beijing for EV manufacturing
BEIJING, June 19 (Reuters) - A Xiaomi unit has won a tender to buy a plot of land in Beijing close to its existing car factory for 635 million yuan ($88 million), which it plans to use for a smart connected car and components project, a city regulator said on Thursday. The win for a 50-year lease to the 485,134 square metre-large plot of land was announced by Beijing's municipal planning and natural resources commission. The land plot is close to the second phase of Xiaomi's EV factory. Xiaomi Jingxi Technology, winner of the tender on Thursday, secured the second phase that covers an area of 531,130 square metres for 842 million yuan in July 2024. The project reached its final stage in April. The tender win would make Xiaomi one of the few automakers in China approved to expand capacity while the majority of the sector is grappling with overcapacity. Xiaomi said its new YU7 sports utility vehicle is getting more attention than the SU7 sedan and on its app, buyers have to wait up to 51 weeks to pick their Xiaomi cars as the company ramps up output. Xiaomi, the world's third-largest smartphone maker, launched the SU7 sedan last year and has outsold Tesla's (TSLA.O), opens new tab Model 3 on a monthly basis since December. The SU7's success is seen expediting the company's EV bid despite intense competition in the world's largest auto market. Xiaomi raised its target for EV deliveries this year to 350,000 from 300,000 earlier this year. The company had planned an annual output of 300,000 vehicles in its EV factory to be built in two phases. It will take orders for the YU7 at the end of June, CEO Lei Jun said on Wednesday. The YU7's release was earlier set for July. ($1 = 7.1869 Chinese yuan renminbi)
Daily Mail
an hour ago
- Daily Mail
How Kim Jong Un left North Koreans to die of COVID: Citizens left to 'fend for themselves', imprisoned for years if they defied lockdown rules and sent to labour camps for not wearing masks
More than two years after the world was blighted by the outbreak of Covid-19, North Korea finally declared it had recorded its very first case of the virus. In reality, North Koreans had been suffering the effects of Covid since 2020 like everyone else, often without access to basic medicine and food, according to a new report by the Center for Strategic and International Studies (CSIS). They were also reportedly punished for reporting Covid symptoms, sent to labour camps for not wearing masks or breaking quarantine and in some cases sentenced to years in prison for violating lockdown rules. The announcement of the first Covid case on May 12, 2022, followed by the acknowledgement of the Hermit Kingdom's first coronavirus-related death a day later, saw Supreme Leader Kim Jong Un declare a national emergency. North Korea had already spent some 25 months in lockdown, having sealed its borders in January 2020 - cutting all humanitarian aid - amid concerning reports of the virus from China. The 'maximum emergency epidemic prevention system' plunged Kim's people into an even stricter lockdown regime and was not lifted until the following summer. As the restrictions were relaxed, CSIS, a Washington-based think tank, collected testimonies of 100 North Koreans reached via discreet micro surveys conducted by covert interviewers on the ground. Its report, conducted in partnership with the George W. Bush Institute, found Kim's regime effectively left the population to fend for themselves in the face of mass infection and rising death tolls and brutally cracked down on cries for help. Despite Pyongyang's official claim of 'zero cases' until May 2022, 92 out of the 100 North Koreans surveyed said they or someone they knew had been infected before that date - many as early as 2020. Entire military battalions, civilian factories and schools were reportedly overwhelmed with sick people. A woman working in the student/education sector highlighted that conditions were particularly bad in winter 2020 'with a lot of cases across the country'. Within nursing homes, she said, 'there were so many deaths that there weren't enough coffins, so I thought it was serious'. One respondent recounted how half the soldiers in a military communications battalion fell ill during a November 2021 outbreak. Another said students were collapsing in classrooms. 'Fevers were happening everywhere and many people were dying within a few days,' they said. In the absence of any testing regime, diagnosis came down to guesswork. 'They said it was Covid if you have a fever and cough,' one person told survey collectors. At the hospital, if a person had a fever and cold symptoms, it was suspected to be coronavirus,' said another. One soldier described how doctors were instructed not to prescribe medicine even when symptoms were obvious. And 20 of the 100 respondents said they were aware of damage, and even death, caused by medicines that were either folk remedies, fake, or not taken properly. One respondent noted: 'There were a lot of fake medicines, and people died because they couldn't use real medicine.' Another said, 'There are a few people who died because they should have taken medicine that suits their illness, but if they hear a medicine is good, they start taking it without looking into what it really is.' With most of the weakened population struggling to access enough food, let alone adequate medicine or vaccines, honesty became just as dangerous as the virus itself. Official government policy before May 2022 stated that the country had 'zero' cases. Respondents indicated that local reports of outbreaks were therefore met with censure and punishments. 'The clinic doctor told me I have Covid,' one respondent said, 'but said if I admit it, I'll be taken away.' The report also laid out in chilling detail the array of punishments meted out for even the most minor breaches of lockdown rules, based on the interviews with respondents. Citizens caught breaking curfew were sentenced to 10–15 days in forced labour camps, while holding a gathering, like a birthday party, could earn two weeks behind barbed wire. The smallest breaches, such as failing to wear a mask would result in two days of hard labour - even as respondents said most people simply couldn't lay their hands on a mask. Others fared far worse. Attempting to smuggle food across the border during lockdown was punishable by six months in a forced labour camp. A harsher penalty was handed to those charged under the regime's sweeping Emergency Quarantine Act - a deliberately vague and catch-all statute. The punishment was reportedly three years' imprisonment 'as an example to others'. One of the most disturbing entries in the report details the case of a quarantine official who failed to properly disinfect the isolation ward under their supervision. They were immediately dismissed under wartime law and had their family detained. However, the largest category of frustrations expressed by the respondents focused on the general ineffectiveness of Pyongyang's refusal to accept vaccines or other forms of aid from other countries, the report found. One respondent said: 'Only my country has closed borders and doesn't allow travel between regions, and I heard that other countries offered vaccines, but we refused. They don't care whether the people live or die because they have good quality medicine and got jabs.' Another noted: 'The UN said they were going to give our country medicine and rice, but the Supreme Leader stopped them.' The CSIS report laid out in chilling detail the array of punishments meted out for even the most minor breaches of lockdown rules, based on the interviews with respondents When vaccines finally did arrive, respondents to the survey claimed that only a select few were able to access them. 'In my country, only the central party cadres are considered people, and the real people are treated worse than pigs,' one person said. 'It was rumoured that everyone would be jabbed when the vaccine came in from China, but only the top officials got it,' another said, while a third respondent added: 'Central Committee cadres were jabbed with (vaccines) made in the US. The people are treated like animals.' The CSIS report did not hold back in its assessment of Pyongyang's approach to the pandemic. 'We believe that if the government had spoken truthfully about the pandemic and accepted outside help from 2020, many deaths could have been avoided. Survey respondents all noted increased access to COVID-19 testing and vaccines after May 2022 when Pyongyang admitted to cases of COVID-19 and reportedly accepted some assistance from China. 'Prior to the regime's long-delayed announcement of an outbreak in May 2022, citizens reported having virtually no access to vaccines, no antiviral medications, and minimal supply of personal protective equipment. Moreover, lockdowns of markets and restrictions on internal movements exacerbated food and medicine shortages. It's likely the national government dealt with the pandemic crisis by shirking responsibility and compelling the populace to fend for themselves. 'The government's negligence was nothing short of abominable,' it concluded.
