Gov’t to spend 85% of supplementary budget by June

Rep. Yoo Dong-soo, second from left, chair of the Democratic Party of Korea’s special committee on economic responses to the Middle East crisis, speaks during the panel’s meeting at the National Assembly Members’ Office Building in Seoul, Monday. Yonhap

The government will execute 85 percent of its supplementary budget within the first half of this year, in an effort to help boost consumer spending and revitalize the economy as the Middle East crisis continues to weigh on energy costs and supply chains.

Government officials and members of the ruling Democratic Party of Korea announced Monday that they are pushing to front-load spending and roll out relief measures for households.

As part of the scheme, the government will accelerate the execution of a 26.2 trillion won ($17.7 billion) supplementary budget passed earlier this month, in order to deliver support quickly to households and businesses.

“The supplementary budget must be implemented swiftly to ensure it reaches those who need it without delay,” said Rep. Ahn Do-geol, a senior lawmaker involved in the discussions.

Alongside the spending plan, officials are also preparing to lower vehicle insurance premiums, citing reduced driving under emergency traffic restrictions. As the energy supply has become unstable, the government implemented a two-day vehicle rotation system for the public sector earlier this month, restricting government workers from operating their vehicles one in every two days. For the private sector, a five-day rotating ban remains voluntary.

Details of the rate cuts are expected to be announced as early as next week. Officials said the rotating ban systems have reduced fuel consumption by roughly 6,900 barrels per month, a decline in road usage they say justifies lowering premiums.

“Driving distances have declined under the current restrictions, creating a basis for lowering insurance premiums,” Ahn told reporters. “The Financial Services Commission and insurance authorities are in close consultation and a plan will be announced by next week at the latest.”

Officials also discussed supply concerns involving key household items.

Waste disposal bags, a staple household item in Korea, have emerged as an early pressure point. While overall inventories remain stable, officials acknowledged that some retail outlets have reported temporary shortages, due partly to panic buying.

“Some outlets are experiencing shortages, but most local governments still hold about three to five months of stock,” Ahn said, adding that authorities are working to ease bottlenecks by redistributing supplies across regions.

The government is also considering longer-term measures, including increasing the share of recycled materials used in the production of waste bags, which rely on petrochemical inputs derived from naphtha.

In a contingency, officials have already issued guidelines allowing standard plastic bags to be used for waste disposal if needed.

More broadly, officials said there have been no major disruptions in the supply of petrochemical products so far, though daily monitoring has been introduced for selected items, such as medical supplies and processed goods.

Cheong Wa Dae is maintaining an emergency response system, as uncertainty surrounding the Strait of Hormuz continues to grow following the collapse of ceasefire talks between the United States and Iran.

Officials said the current posture will remain in place until there is a clear signal that tensions are easing, amid concerns that prolonged instability could feed into domestic prices and supply chains.