Posted March. 25, 2009 08:58,
The government will provide 4.1 trillion won (2.97 billion U.S. dollars) for cash-strapped small and medium-size enterprises and small retailers.
The amount of credit guarantees for small business owners and unregistered retailers including snack stall owners and street vendors will jump from 4.7 trillion won (3.4 billion dollars) to 8.2 trillion won (5.94 billion dollars).
A Cabinet council hosted by President Lee Myung-bak yesterday proposed an extra budget of 28.9 trillion won (20.9 billion dollars).
The supplementary budget is the biggest in Korean history and more than double that of 13.9 trillion won (10 billion dollars) in 1998, when Korea was in the throes of the Asian currency crisis. The government plans to suggest the proposal to the National Assembly before the end of this month and execute it from May at the earliest.
The supplementary budget consists of 17.7 trillion won (12.8 billion dollars) in net amount of increase and 11.2 trillion won (8.1 billion won) of budget designed to make up for an expected shortfall in tax revenue.
The extra budget breaks down to 4.2 trillion won (three billion dollars) to be spent on financial support to low-income households; 3.5 trillion won (2.5 billion dollars) on retaining and creating jobs; 4.5 trillion won (3.2 billion dollars) on small and medium enterprises, exporters and the self-employed; three trillion won (2.1 billion dollars) on provincial economies; and 2.5 trillion won (1.8 billion dollars) on green growth.
Strategy and Finance Minister Yoon Jeung-hyun said, If the extra budget is efficiently executed as scheduled, Koreas economic growth rate could rise 1.5 percentage points and 550,000 jobs will be created. Combined with deregulation and private investment, economic growth will rise around two percentage points.
He also hinted at more fiscal spending if the economic slowdown continues in the second half, saying, The door is always open.
The Strategy and Finance Ministry said the national debt will grow 19 percent from 308.3 trillion won (223.2 billion dollars) late last year to 367 trillion won (265.8 billion dollars) late this year due to the supplementary budget.
Per capita debt will also rise from 6.34 million won (4,596 dollars) to 7.53 million won (5,453 dollars) over the same period. The national debt as a percentage of GDP will increase from 32.5 percent late last year to 38.5 percent at the end of this year.
The fiscal deficit is expected to worsen from minus 1.7 percent or 16.6 trillion won (12 billion dollars) last year to minus 5.4 percent or 51.6 trillion won (37.3 billion dollars) this year, shattering all previous records including minus 5.1 percent in 1998.