Date
30 March 2017
Fear of contracting MERS has kept South Koreans from going out and spending money. Photo: Reuters
Fear of contracting MERS has kept South Koreans from going out and spending money. Photo: Reuters

S Korea boosts budget by US$13 billion as MERS hits economy

South Korea announced a financial package Thursday of more than 15 trillion won (US$13 billion) including a supplementary budget, Reuters reported.

The stimulus is designed to boost growth as a deadly outbreak of Middle East respiratory syndrome adds pressure on the already shaky economy.

Finance Minister Choi Kyung-hwan said although there were concerns a supplementary budget could hurt fiscal soundness, it would be better for the economy in the long term.

“We were contemplating a supplementary budget to make up for a tax revenue shortfall, as global growth had been very weak from the start of the year,” Choi said.

“Then MERS happened, and we had to do it.”

A finance ministry director said much of the funding for the supplementary budget would come from sales of short-term treasury bonds.

The government aims to present a finalized supplementary budget by early July.

Choi told a news conference earlier he was concerned growth will lag below 1 percent in the second quarter and that such low growth could continue.

The ministry said earlier this week the MERS outbreak could take 0.2-0.3 percentage points off economic growth.

MERS has affected 180 patients and 29 have died from the virus by Thursday.

Fear of contracting MERS has kept South Koreans’ wallets shut, and sales at department and discount stores in the first week of June showed double-digit percentage declines in the previous two weeks compared with average sales, finance ministry data showed.

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RC/FL

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