South Korea proposes an additional $17 billion budget to buffer the rising energy costs caused by the Iran conflict

On Tuesday, South Korea proposed a supplementary budget of 26.2 trillion won (about $17.1 billion) to ease the pressure on households and businesses from rising energy prices. Conflicts in the Middle East have caused tight energy supplies.

According to the Google Translate version of South Korea’s budget document, about 10.1 trillion won will be used directly for “easing the burden of high oil prices”; other measures also include support for exporters and increased grants to local governments.

The Minister of Planning and Finance said, “It is necessary to provide fiscal support quickly, relieve hardship for people as soon as possible, and ensure that the momentum of economic recovery painstakingly restored by this administration is not extinguished.”

Since the attacks by the United States and Israel on Iran on February 28, crude oil prices have surged sharply. Tight supply conditions have hit Asian economies, especially countries that are highly dependent on Middle East imports.

According to the 2024 report of South Korea’s Energy Statistics Information System, as the fourth-largest economy in Asia, South Korea imports 94% of its energy, of which nearly 72% of its crude oil comes from the Middle East.

Among the 10.1 trillion won package, the core is 5 trillion won earmarked for a cap on oil prices—a policy announced by President Yoon Jae-myung on March 9.

Seoul will also raise the refund limit for public transportation tickets nationwide. The government will allocate 4.8 trillion won to issue consumer vouchers for the 70% of people with lower incomes; each person’s amount will range from 100k to 600k won, determined according to income level and region.

The package of relief measures can also include fuel subsidies for farmers, fishermen, and operators of small cargo ships.

Another 9.7 trillion won will be used to increase subsidies to local governments.

The Minister of Planning and Finance said that the budget funds will come from tax revenues driven by the chip export boom and gains in the stock market.

According to reports by relevant media, the bill has been submitted to the National Assembly. It is expected to receive support from the main opposition People Power Party and is hoped to be passed before April 10.

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