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New US$13b spending agreed

SOUTH Korea's government and ruling party have agreed new spending plans worth around 18 trillion won (US$13 billion) out of a 29-trillion-won extra budget to revive the economy, the ruling party said yesterday.

The additional spending will help bolster economic growth by 1.5 percentage points, or 2 percentage points if accompanied by more private sector investment and deregulation, the Grand National Party said in a statement.

"The party and the government reached an agreement on a supplementary budget of around 29 trillion won. We decided to set aside some 18 trillion won for fresh spending and 11 trillion won for tax shortfalls," GNP spokesman Yoon Sang-hyun said.

The additional spending, which is equivalent to about 2 percent of the country's annual gross domestic product, came as Asia's fourth-largest economy continues to head toward its first recession in 11 years.

The finance ministry expects the country's economy to shrink around 2 percent this year, while 200,000 jobs will be lost.

Spending allocations

The government plans to spend 4 trillion won to 4.5 trillion won to help people with low incomes, 3 trillion won to 3.5 trillion won to recover jobs and 4.5 trillion won to 5.0 trillion won to support small exporters and the self-employed, the GNP said.

It will inject 2.5 trillion won to 3.0 trillion won to revive provincial economies and invest 2.0 trillion won to 2.5 trillion won in research and development, as well as education and river development.

The government plans to submit the budget bill to parliament for approval by the end of this month.


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