South Korea to roll out $17 bn ‘wartime’ budget

SEOUL, South Korea: South Korea aims to roll out a $17 billion “wartime” supplementary budget and expand fuel tax cuts as the war in Iran pushes up energy prices, the government said Thursday.

Officials aim to “draw up a supplementary budget worth 25 trillion won next month — funded by excess tax revenue — in response to the prolonged Middle East conflict”, the government said in a statement.

Budget minister Park Hong-keun also said the bill aims to support small and midsized firms and vulnerable households hit by the prolonged war.

“We will first ease the burden on citizens caused by high oil prices and support the smooth implementation of an oil price cap system to stabilise domestic fuel prices and reduce fuel costs,” Park said.

Han Byung-do, the ruling Democratic Party’s floor leader, said it and the government would accelerate their review of the budget bill in the National Assembly, stressing there was “no reason for any delay”.

President Lee Jae Myung earlier urged the government to prepare a supplementary budget aimed at steadying the economy, supporting impacted industries and strengthening supply chain resilience.

Much of South Korea’s imports pass through the Strait of Hormuz, a critical shipping route that has been effectively shut by Iran since the US and Israel began attacking the country on February 28.

South Korea’s ruling party said last week officials would lift a cap on coal-powered generation capacity set at 80 percent and boost the use of nuclear power to about the same level.

The disruption along the key oil route has sent prices soaring and prompted Seoul to impose a fuel price cap for the first time in nearly 30 years.