Yoon administration to propose some 35 tril.-won extra budget for pandemic-hit merchants

Finance Minister Choo Kyung-ho / Yonhap

The government of President Yoon Suk-yeol plans to propose an extra budget, estimated at around 35 trillion won ($27.5 billion), this week as it seeks to compensate pandemic-hit merchants for their losses.

The finance ministry, led by new Finance Minister Choo Kyung-ho, plans to unveil details about this year's second extra budget Thursday, as Yoon took office earlier in the day.

The new government is also expected to announce a set of measures to ease the burden of high inflation on people.

During the election campaign, Yoon promised to spend around 50 trillion won to compensate the self-employed for their losses caused by tougher COVID-19 curbs.

The now-dissolved transition team estimated a fall of some 54 trillion won in the income of the self-employed.

The former President Moon Jae-in government drew up seven rounds of supplementary budgets totaling some 134 trillion won between 2020 and 2022 to cope with the fallout of the COVID-19 pandemic.

It provided a total of 35.1 trillion won to pandemic-hit merchants, far below their estimated business losses.

Choo's economic team also faces tough challenges at home and abroad as economic uncertainty has heightened amid the war between Russia and Ukraine and the Federal Reserve's aggressive monetary tightening.

The energy price hikes created by the war sent global inflation flying higher, which has prodded central banks around the globe to tighten monetary easing.

Korea's consumer prices spiked 4.8 percent in April on-year, the fastest on-year gain in more than 13 years, amid surging fuel prices and a rebound in demand from the pandemic.

Concerns about stagflation, a mix of slumping economic growth and high inflation, have arisen as high inflation is feared to erode private spending.

The International Monetary Fund lowered its 2022 growth outlook for Asia's largest economy to 2.5 percent while raising its inflation forecast to 4 percent this year. (Yonhap)

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