South Korea plans US $10.8 bln stimulus package

South Korea's Finance Minister Kang Man-soo (front) and
Defence Minister Lee Sang-hee wait before President Lee Myung-bak
(not pictured) speaks at parliament in Seoul October 27, 2008.
South Korea will continue to pump sufficient liquidity into the financial markets
until uncertainty is eased, while increasing fiscal spending and
cutting taxes for 2009, President Lee Myung-bak said on Monday.
Reuters/Lee Jae-Won (South Korea)

From Bloomberg
November 2, 2008 23:12 EST

South Korea plans a 14 trillion won ($10.8 billion) boost to the economy next year as the nation tackles the biggest crisis since it needed an International Monetary Fund bailout a decade ago.

The package includes spending an extra 4.6 trillion won on regional infrastructure and providing 3 trillion won in tax benefits, mainly extending tax breaks on investment in factories, Finance Minister Kang Man Soo told reporters today in Gwacheon. Relief measures announced this year now total 33 trillion won, according to the finance ministry.

The currency and stocks rose after the government said the measures will add 1 percentage point to economic growth next year and create an extra 200,000 jobs. South Korea cut interest rates by a record last week and the Federal Reserve agreed to provide the central bank with $30 billion in U.S. currency after local financial markets tumbled.

A further 25 basis interest-rate cut is most likely this week.''

Japan announced a $51 billion stimulus package last week for Asia's largest economy and Germany plans to provide a 50 billion euro ($64.2 billion) boost to Europe's biggest economy.

The government announced Oct. 21 it will spend as much as 8 trillion won to buy land and unsold homes.

Lawmakers last week approved the government's guarantee of $100 billion in bank debts to help lenders struggling to access foreign funds. South Korea will also supply banks with $30 billion in U.S. currency.

The government said today it will look at expanding a guarantee on bank deposits to cover holdings by South Koreans in foreign-currency accounts at local banks.

Reflecting today's package, the government's total expenditure will increase to 283.8 trillion won in 2009 from a previous forecast of 273.8 trillion won, the finance ministry said. National debt will be 34.3 percent of gross domestic product next year, up from an earlier prediction 32.3 percent.

Related Posts :

1. Germany plans $64 billion stimulus package
2. Japan announced a 27 trillion yen ($275 billion) stimulus package
3. India unexpectedly cut rates for the 2nd time in 2 weeks
4. China cuts benchmark interest rates by 27 basis points

Sources :

Bloomberg: South Korea Plans 14 Trillion Won Stimulus in 2009 (Update2), November 2, 2008 23:12 EST

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