South Korea is preparing to introduce a $17 billion supplementary budget, described as a “wartime” financial package, to address the economic impact of rising energy prices driven by the ongoing conflict in Iran. The government announced plans to draft this additional budget, amounting to 25 trillion won, next month, financed by surplus tax revenues.
Budget Minister Park Hong-keun emphasized that the funds would primarily support small and medium-sized enterprises as well as vulnerable households affected by the prolonged Middle East conflict. He highlighted measures to alleviate the financial strain on citizens caused by soaring oil prices, including the implementation of an oil price cap system designed to stabilize domestic fuel costs.
Meanwhile, Han Byung-do, floor leader of the ruling Democratic Party, urged swift action on the budget bill within the National Assembly, insisting there was no justification for delay. Earlier, President Lee Jae Myung called for a supplementary budget focused on stabilizing the economy, aiding affected industries, and enhancing supply chain resilience.
South Korea’s economy is particularly vulnerable due to its heavy reliance on imports passing through the Strait of Hormuz, a vital shipping lane that has been effectively blocked by Iran since February 28, following attacks by the US and Israel. This disruption has led to a sharp increase in energy prices, prompting Seoul to impose a fuel price cap for the first time in nearly three decades.
In a related development, the ruling party announced plans to lift the existing 80 percent cap on coal-powered electricity generation and increase nuclear power usage to a similar level, aiming to mitigate the energy supply challenges caused by the conflict.
