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South Korea Allocates $609M Extra Budget to Counter Mideast Crisis Impact

South Korea's government has approved a supplementary budget allocating 924.1 billion won to address economic disruptions from the Middle East crisis. The funds will primarily stabilize supplies of crude oil and strategic materials like naphtha, impacted by the Strait of Hormuz closure due to the Iran war. A significant portion will support domestic petrochemical companies and secure additional oil reserves, while also aiding small exporters hit by the turmoil. The budget also includes investment in AI for manufacturing and direct cash handouts for lower-income households.

Key Points: S. Korea's $609M Extra Budget for Mideast Crisis Response

  • $609M extra budget for Mideast crisis
  • Stabilize crude oil and naphtha supplies
  • Support for petrochemical companies and SMEs
  • Funds for AI transformation in manufacturing
  • Cash handouts for low-income earners
2 min read

S. Korea earmarks $609 million in extra budget for Mideast crisis response

South Korea earmarks $609 million to stabilize oil supplies and support industries affected by the Middle East conflict and Iran war disruptions.

"The country has been facing difficulties in supplying the items with the effective closure of the Strait of Hormuz following the outbreak of the Iran war - Yonhap news agency"

Seoul, March 31

The Ministry of Trade, Industry and Resources said on Tuesday it has allocated 924.1 billion won in a supplementary budget to respond to the Mideast crisis amid disruptions in energy and industrial supply chains.

The announcement came after the Cabinet, chaired by President Lee Jae Myung, approved a government bill for a 26.2 trillion-won supplementary budget aimed at tackling difficulties stemming from the escalating conflict in the Middle East and revamping the local economy, which, if passed by the National Assembly, will provide cash handouts, totaling 4.8 trillion won, to the bottom 70 percent of income earners.

The ministry plans to spend 664.2 billion won on stabilising supplies of crude oil and strategic industrial materials, including naphtha, as the country has been facing difficulties in supplying the items with the effective closure of the Strait of Hormuz following the outbreak of the Iran war, reports Yonhap news agency.

Of the 664.2 billion won, 469.5 billion won will be used to support domestic petrochemical companies operating naphtha cracking facilities, and another 158.4 billion won will be funneled into securing additional oil reserve supplies.

Some 22.3 billion won has been set aside for the government response to unfair market practices involving fuel prices, with another 8.1 billion won earmarked for establishing domestic production infrastructure of rare earths, according to the ministry.

The ministry said it will also inject 145.9 billion won into supporting small and medium-sized firms facing export difficulties due to the Middle Eastern turmoil and helping petrochemical and other industries taking a blow from the situation.

Additionally, the ministry plans to spend 114 billion won on promoting the artificial intelligence (AI) transformation of manufacturing industries, including shipbuilding, steel and automobile, in a bid to boost the long-term competitiveness of the sectors.

The supplementary budget bill will soon be reported to the National Assembly for approval, with the rival parties earlier agreeing to vote on the bill next Friday.

- IANS

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Reader Comments

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Priya S
Interesting to see the focus on AI transformation for manufacturing. India's 'Make in India' and PLI schemes should also heavily invest in AI for our core sectors. It's the future. The cash handout part is also noteworthy for supporting lower-income groups during a crisis.
A
Aman W
While the budget is huge, I hope the execution is transparent. Sometimes these funds don't reach the SMEs who need them most. We see similar challenges here. Good planning is one thing, effective delivery is another. 🤞
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Sarah B
The Strait of Hormuz closure is a major concern for all oil-importing nations. It shows how interconnected the global economy is. Investing in alternative energy sources becomes even more critical. Hope for peace in the region soon.
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Vikram M
₹5000+ crores just for securing oil reserves! This crisis is a stark reminder of our own vulnerabilities. We must fast-track domestic exploration and renewable energy projects. Atmanirbhar Bharat is not just a slogan, it's a necessity for survival.
K
Kavya N
Supporting SMEs facing export difficulties is crucial. Many Indian MSMEs also get hit when global trade routes are disturbed. Our government should have similar contingency plans ready. The focus on rare earths production is very forward-thinking.

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