The South Korean government Tuesday approved a 28.9-trillion won ($20.7 billion) extra budget in its latest move to bolster domestic demand and jumpstart the slumping economy, Yonhap News Agency reported.
The figure is equivalent to 3 percent of the nation's gross domestic product (GDP) and the largest ever since 1998 when the nation drew up a 13.9 trillion won supplementary budget in the wake of the Asian financial meltdown, according to the Ministry of Strategy and Finance.
This is in addition to a 284.5-trillion won regular budget for 2009. The latest extra budget plan will be submitted to the National Assembly for approval next month, the ministry said.
"The global economic downturn is taking place at a faster pace than has been expected in terms of its depth and breadth," Finance Minister Yoon Jeung-hyun was quoted as saying.
"Reflecting changed economic conditions at home and abroad, the government decided to draw up this extra budget to overcome the current crisis as quickly as possible."
Of the total, the government earmarked 17.7 trillion won for additional spending, with the remaining 11.2 trillion won to be used to make up for shortfalls in tax revenue.
The extra budget, to be funded mostly by the sale of government bonds, is the latest in a string of economic stimulus measures that the government has unveiled to counter an accelerating economic downturn following the collapse of global investment banks last year.
Earlier, Yoon said the nation's gross domestic product will contract 2 percent this year with employers eliminating around 200,000 jobs. In the fourth quarter, the economy, Asia's fourth-largest, shrank 5.6 percent from three months earlier, the sharpest contraction in 11 years, according to the central bank.
He expects that the additional spending, coupled with deregulation and more corporate investment, could lead to a 2 percentage-point hike in GDP and create 550,000 new work positions this year.
Job creation and stabilization of livelihood for low-income people topped the spending list.
The ministry said that it will inject about 3.5 trillion won into generating jobs and helping companies retain workers despite the worsening economic downturn. Public works and diverse job training will also be provided.
Around 4.2 trillion won will be given to those in the low-income bracket in the form of cash, consumption coupons and cheaper loans, while unemployment benefits will be expanded, according to the ministry.
To help cash-strapped small companies and exporters, 4.5 trillion won will be injected, with 3 trillion won earmarked to bolster provincial economies. For eco-friendly businesses and future growth engines, 2.5 trillion won will be spent.