South Korea sets $5.2bil stimulus package as economy falters

SEOUL: South Korea unveiled a $5.2 billion follow-up stimulus
package on Monday, including tax breaks worth $2 billion, as the
government tries to shore up Asia's fourth-largest economy in the face
of the protracted debt crisis in Europe.
The steps would save
taxpayers some 2.3 trillion won ($2.0 billion) in personal income tax,
home transaction tax and domestic sales tax on automobiles and large
electronics appliances, the finance ministry said in a statement.
"The
fiscal crisis in Europe is continuing for a longer period than expected
and the simultaneous slump in the advanced and emerging economies is
continuing," Finance Minister Bahk Jae-wan said at a policy meeting.
The
ministry said the package, which also includes a plan to make sure
provincial governments spend their full budget allocations, would
amount to 4.6 trillion won this year and 1.3 trillion won for next
year, worth about $5.2 billion in total.
The measures were a
follow-up to a $7 billion package in late June. Together, the stimulus
packages are equal to about 1 percent of gross domestic product.
In June, the government had foreshadowed there could be further steps, so the market had been expecting an announcement.
The
government has ruled out more direct measures to boost budget spending,
saying it did not want to increase debt levels and fiscal soundness was
important given Europe's problems.
After the country's
export-reliant economy lost steam, the central bank cut interest rates
in July for the first time in three years and is widely tipped to
deliver another rate cut as early as Thursday. ($1 = 1130.3000 Korean
won)- Reuters