SEOUL — South Korea has announced plans to introduce a $17 billion supplementary budget aimed at cushioning the economic impact of rising energy prices driven by the Middle East conflict.
UPDATE: South Korea to set out $17bn ‘wartime’ supplementary budget
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The government said it intends to finalise a budget of 25 trillion won next month, funded through excess tax revenues, as part of a broader strategy to stabilise the economy amid prolonged geopolitical tensions. Officials described the move as a “wartime” measure designed to address the fallout from surging oil prices.
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Budget Minister Park Hong-keun said the package would prioritise relief for small and medium-sized enterprises as well as vulnerable households affected by higher fuel costs. He added that the government would expand fuel tax cuts and ensure the smooth implementation of a fuel price cap system to ease the burden on citizens.
President Lee Jae Myung has also called for urgent measures to stabilise the economy, support key industries, and strengthen supply chain resilience. The administration is moving swiftly to secure parliamentary approval, with ruling party leaders emphasising the need for timely action.
The economic strain is largely linked to disruptions in the Strait of Hormuz, a critical corridor for global oil shipments. A significant portion of South Korea’s energy imports passes through the route, which has been affected by escalating tensions following military actions involving the United States, Israel, and Iran.
In response, authorities are also reviewing energy policies, including increasing reliance on nuclear power and easing restrictions on coal-fired generation to maintain supply stability.
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The proposed budget reflects South Korea’s efforts to shield its economy from external shocks while ensuring energy security and supporting domestic demand during a period of heightened global uncertainty.