The government announced a supplementary budget of 12.2 trillion won to respond to wildfires, address trade wars, secure competitiveness in artificial intelligence (AI), and support the recovery of people's livelihoods. This is the first time since May 2022, shortly after the launch of the Yoon Suk-yeol administration, that the government has announced a supplementary budget following the establishment of a supplementary budget to advance the new administration's national tasks.
On the 18th, the government held an extraordinary Cabinet meeting to deliberate and approve the first supplementary budget for 2025. This supplementary budget is composed of ▲ 3.2 trillion won for disaster and emergency response ▲ 4.4 trillion won for addressing trade risks and enhancing AI competitiveness ▲ 4.3 trillion won for supporting people's livelihoods ▲ 0.2 trillion won for interest on government bonds, divided into four major categories.
The government explained, "We selected only essential projects that are directly related to the purpose of the supplementary budget, have high effectiveness, and can be executed quickly in order to swiftly address the most urgent issues in our economy." The funding for the supplementary budget will be drawn from available resources of 4.1 trillion won from global surplus and reserve funds, with the shortfall of 8.1 trillion won to be secured by issuing additional government bonds. The government plans to submit the approved supplementary budget to the National Assembly on the 22nd.
◇ Emergency recovery 1.4 trillion won… additional 1.4 trillion won for insufficient reserves
In this supplementary budget, the government has decided to invest 3.2 trillion won in disaster and emergency response. It will allocate 1.4 trillion won in emergency funds for the recovery from the massive wildfire damage that recently occurred in the Gyeongbuk region.
First, the disaster and emergency response budget for each ministry will be significantly increased. According to the Ministry of Economy and Finance, the current scale of disaster and emergency response budget available from the Ministry of the Interior and Safety, Ministry of Environment, and Korea Forest Service is merely 244 billion won. Considering that about 1.2 trillion won is expected to be required for the recovery from the wildfire damage, the disaster and emergency response budget is pathetically insufficient. Therefore, the government has decided to provide a total of 946 billion won, including 660 billion won for the Ministry of the Interior and Safety, 112 billion won for the Ministry of Environment, and 174 billion won for the Korea Forest Service.
It will allocate 200 billion won to support low-interest loans for the recovery of housing for affected residents and supply 1,000 dwellings for rent near the disaster area.
A budget of 1.7 trillion won has also been reflected to strengthen disaster prevention and response capabilities. An expense of 1.077 trillion won is allocated for the acquisition of six new forest helicopters and the expansion of large water baskets, 232 billion won for the expansion of multipurpose wildfire fighting vehicles, and 68 billion won for the introduction of AI surveillance cameras and high-performance drones. Additionally, it has decided to increase the reserves by 1.4 trillion won to address the additional recovery costs from wildfires and to prepare for typhoons and heavy rainfall during the summer.
An expenditure of 433 billion won has been allocated for airport facility improvement projects to prevent the recurrence of the aircraft landing incident at Muan Airport, along with a budget of 1.259 trillion won for the repair support of aging sewer pipes to prevent sinkhole incidents.
◇ Trade response 2.1 trillion won… AI and semiconductors 2.3 trillion won
Responding to the trade tsunami from the United States and securing national competitiveness in AI are also key goals of this supplementary budget. A total of 4.4 trillion won has been allocated for trade and advanced industry responses.
The government will invest 2.1 trillion won in trade responses through this supplementary budget. Specifically, this includes 1.8 trillion won for supporting export companies from tariff damage, 200 billion won for stabilizing core parts supply chains, and 100 billion won for proactive measures against employment shocks.
The government will invest 1.5 trillion won to expand special funding of 25 trillion won for providing liquidity support to corporations. The special funding of 25 trillion won consists of 15 trillion won for low-interest loans to support corporations expected to suffer from reciprocal tariffs and 10 trillion won for guarantee insurance for promising sectors for small and medium-sized enterprises. The funds invested through government contributions to establish special funding will amount to 1.5 trillion won.
In addition, a new tariff response voucher program worth 100 billion won will be established to explore alternative markets. An expense of 200 billion won has been allocated for stabilizing the supply of core items, and a budget of 100 billion won has been provided to address employment shocks caused by trade crises.
A budget of 1.8 trillion won has been set aside for AI ecosystem innovation. A budget of 1.5 trillion won has been designated solely for the procurement of 10,000 high-performance GPUs (graphic processing units). Furthermore, it will invest 200 billion won to select elite teams to develop K-LLM (Korean large language model).
Kim Yoon-sang, the second deputy minister of the Ministry of Economy and Finance, noted, "Since the inauguration of the Trump administration, the United States has announced AI investment plans exceeding 700 trillion won, the European Union over 300 trillion won, and China has revealed DeepSeek," adding that the supplementary budget has been adjusted in consideration of the global competition in AI.
A budget of 500 billion won has also been allocated to enhance competitiveness in advanced strategic industries such as semiconductors.
◇ Establishment of credits and win-win payback to support small businesses
A total of 4.3 trillion won has been reflected for people's livelihood support. This includes 2.6 trillion won to alleviate the expense burden on small businesses facing management difficulties, 1.6 trillion won to expand sales bases for small-scale businesses, and 200 billion won for supporting the living stability of vulnerable groups.
A credit system has been established to alleviate the expense burden on small businesses. Up to 500,000 won will be provided to 3.11 million small businesses with annual sales of less than 30 million won. The credits issued can be used to pay for public utilities and various insurance premiums. About 1 trillion won will also be invested to secure funds for financial support for small businesses.
Measures to stimulate consumer spending include a win-win payback program and a 'public delivery app discount coupon' initiative. The win-win payback program reimburses 20% of the amount spent with a card at small business stores if it exceeds last year's spending. For example, if personal spending increases by 500,000 won, up to 100,000 won will be refunded.
The public delivery app coupon program will offer a 10,000 won discount coupon for orders over 20,000 won on public delivery apps like Ddaenggyeo and Meokgaebi, with a budget of 650 billion won allocated for coupon issuance.