[THE INVESTOR] The South Korean government said on June 28 that it will draw up a 10 trillion-won (US$8.45 billion) extra budget to cope with a myriad of economic challenges including slumping domestic and overseas demand, and Britain’s recent vote to leave the European Union.

Including the proposed extra budget, the Finance Ministry said it would need to inject 20 trillion won into Asia’s fourth-largest economy this year by utilizing tax revenue surpluses and various state-run funds.



“We will map out the supplementary budget without issuing Treasury bonds,” said Lee Ho-seung, a director general at the Ministry of Strategy and Finance. “We will raise the money by using last year’s rolled-over tax revenue and this year‘s expected tax surplus.”

The exact size of the supplementary budget will be determined after more consultations with the parliament, according to the ministry.

The extra budget proposal comes on the back of the Bank of Korea’s recent rate cut to fuel an economic recovery.

Early this month, the central bank slashed its policy rate to a record low of 1.25 percent, calling on the government to take similar policy actions.

By Kim Ji-hyun (jemmie@heraldcorp.com)