The South Korean government approved a 26.2 trillion won ($18.3 billion) supplementary budget on Monday to address the fallout from the deteriorating situation in the Middle East.
President Lee Jae-myung presided over a Cabinet meeting at Cheongwadae, the presidential office, and approved the first supplementary budget for fiscal year 2026 along with a revised fund management plan. The National Assembly is set to begin its review process immediately.
The so-called "war supplementary budget" allocates 10.1 trillion won to ease the burden of high oil prices, 2.8 trillion won for public livelihood stabilization, 2.6 trillion won for minimizing industrial damage and stabilizing supply chains, and 1 trillion won for government bond repayment.
The government dedicated approximately 40% of the supplementary budget to easing high oil price burdens in response to surging international oil prices and supply instability of naphtha and other materials caused by the Middle East crisis. A total of 5 trillion won has been earmarked for implementing an oil price cap system. The remaining 4.8 trillion won will fund direct relief payments of 100,000 to 600,000 won per person to citizens in the bottom 70% income bracket.
The government also allocated 2.6 trillion won for minimizing industrial damage and stabilizing supply chains to support export and logistics companies directly hit by the Middle East crisis.
A total of 2.8 trillion won will be spent on stabilizing livelihoods of vulnerable groups and supporting young people. The budget will expand Geunyang Dream Centers, which provide daily necessities to low-income households, to 300 locations. An additional 200 billion won in emergency business stabilization funds will be supplied to small business owners. Funding will also go toward the "Startup for All" project to help promising entrepreneurs and job programs targeting young people classified as "resting," meaning those who are neither employed nor seeking work.
The supplementary budget is financed by 25.2 trillion won in excess tax revenue driven by the semiconductor boom and other factors, along with 1 trillion won from internal fund sources. No additional government bonds will be issued.
The ruling and opposition parties agreed the day before to pass the supplementary budget in a plenary session on April 10.