by 3 minutes Read (Reuters) – SEOUL, July 1 (Reuters) – On Thursday, South Korea unveiled a 33 trillion won ($29.2 billion) supplementary budget, the country’s highest ever for extra spending outside of its annual budget, to help households cope with the pandemic, support small businesses, and generate jobs. The government intends to create 164,000 new jobs as a result of the supplementary stimulus package, which will be funded by additional tax revenues expected this year, according to the finance ministry. The additional budget, which must still be approved by parliament, comes as the ruling Democratic Party struggles to regain public favor ahead of the 2022 presidential elections as the Bank of Korea prepares to tighten monetary policy. “Despite evident evidence of economic recovery, the effects on small enterprises and individuals who are vulnerable to the pandemic are still being felt,” Finance Minister Hong Nam-ki said during an embargoed news conference on Tuesday. “Timely measures are required, and it is once again time for fiscal policy to take a more prominent role.” The extra budget will be split between supporting small firms and providing cash handouts to households, with 15.7 trillion won going to small businesses and 2.6 trillion going to job searchers in need, according to the ministry. The government would also utilize the extra funding to purchase COVID-19 vaccines, expand vaccination, and increase coronavirus testing, totaling 4.4 trillion won. In 2020, South Korea gave 310 trillion won in economic support, including four additional budgets, to assist Asia’s fourth-largest economy in coping with the effects of the coronavirus epidemic. In March, the government approved the first extra budget for this year, totaling 14.9 trillion won. According to the finance ministry, the government will use extra tax income of 31.5 trillion won forecast this year to fund spending. According to the current supplementary budget, total government spending would reach a new high of 604.7 trillion won this year, increasing 18.0 percent from last year, while predicted tax collections will rise 6.8%. The debt-to-GDP ratio, on the other hand, is likely to fall to 47.2 percent this year from 47.3 percent in 2020, and to be lower than the 48.2 percent forecast in March. This week, South Korea raised its growth prediction for 2021 to an 11-year high of 4.2 percent, pledging to continue providing fiscal support to an economy hit hard by COVID-19. As a result of COVID-related lockdown measures, the economy fell 0.9 percent in 2020, the largest full-year drop since 1998. On July 2, the ministry intends to present the budget blueprint to parliament. 1 dollar = 1,129.6300 won Joori Roh contributed reporting, while Ana Nicolaci da Costa edited the piece./nRead More