▲ Budget Minister Park Hong-keun (C) speaks to reporters at government complex in Sejong on March 27, 2026. (Yonhap)
▲ A gas station in Seoul on March 23, 2026 (Yonhap)

extra budget-Middle East

Gov't proposes 26.2 tln-won extra budget to cushion impact of Middle East tensions

By Kim Han-joo

SEOUL, March 31 (Yonhap) -- The Seoul government on Tuesday proposed a supplementary budget of 26.2 trillion won (US$17.1 billion) largely aimed at cushioning the impact of surging fuel prices amid escalating tensions in the Middle East that will include cash handouts for about 70 percent of the population.

The proposal, approved at a Cabinet meeting, focuses on three key areas -- responding to high oil prices, stabilizing livelihoods and minimizing industrial damage while securing supply chains, according to the Ministry of Planning and Budget.

"A massive wave of crises is rapidly approaching our economy, driven by a sharp increase in uncertainties at home and abroad stemming from escalating tensions in the Middle East," Budget Minister Park Hong-keun told reporters.

Global oil prices have risen sharply as the Strait of Hormuz has effectively been closed since U.S.-Israeli strikes on Iran in late February, disrupting global oil supplies. South Korea relies heavily on imports for energy.

The minister added that high oil prices and inflation are placing a heavier burden on vulnerable groups, including small business owners and the younger generation.

A key component of the proposal is cash handouts totaling 4.8 trillion won for the bottom 70 percent of income earners, the ministry said.

About 35.8 million people will receive between 100,000 won and 600,000 won per person, with payments differentiated by income level, region and whether recipients live in areas facing population decline.

The largest benefits of up to 600,000 won per person will go to basic livelihood security recipients living outside the Seoul metropolitan area.

Another 5.1 trillion won was allocated to support a fuel price cap program and measures to address potential supply disruptions of naphtha, a key feedstock widely used in petrochemical and other industries.

Under the price cap system adopted in March, the government sets maximum prices for fuel products supplied by oil refiners to gas stations and retail distributors every two weeks, reflecting changes in international oil prices.

Of the 5.1 trillion won, 87.7 billion won will be used to temporarily increase the public transportation refund rate by up to 30 percentage points for six months as a follow-up to a mandatory five-day vehicle rotation system.

The government has begun enforcing the vehicle rationing system in the public sector, while encouraging voluntary participation from the private sector and promoting public transportation use.

The ministry said another 9.7 trillion won will be used to significantly bolster local government finances.

Other spending includes 1.9 trillion won for youth entrepreneurship and job support, 500 billion won for renewable energy transition and 700 billion won for supply chain stabilization.

The supplementary budget will be financed without issuing additional government bonds, using 25.2 trillion won in tax revenue and 1 trillion won from public funds.

"The additional tax revenue stems from strong economic growth achieved under the current administration, including a boom in the semiconductor sector and robust stock market performance," Park said.

Rival parties have agreed to pass the supplementary budget bill at a plenary session scheduled for next Friday.

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