South Korea to Distribute Cash Aid to Citizens in Effort to Boost Economy

TEMPO.CO, Jakarta - South Korea will begin distributing cash assistance to all citizens on July 21. The aid is part of a government initiative aimed at stimulating domestic consumption and boosting national economic growth.

This move follows the approval of South Korea's Cabinet of an additional budget of 31.8 trillion won (about Rp 378.5 trillion), sanctioned by the National Assembly on Friday, June 4, 2025.

The aid program is a crucial part of the first additional budget of Lee Jae Myung's government.

According to the plan, all South Korean citizens residing in the country as of June 18 will receive a one-time payment of 150,000 won (about Rp 1.7 million).

The government stated that the widespread disbursement of funds is intended to boost national consumer spending.

The targeted additional aid will be provided based on income levels. Individuals in almost poor households and single-parent families will receive 300,000 won (about Rp 3.5 million), while recipients of basic living allowances will receive 400,000 won (about Rp 4.7 million).

To promote balanced regional development, residents outside the Seoul metropolitan area, including Gyeonggi Province and Incheon, will receive an additional 30,000 won (Rp 357,146).

Those residing in 84 designated rural communities and fisheries facing national population decline will be given an additional 50,000 won (Rp 525,244).

The second phase of payments, scheduled between September 22 and October 31, will give an additional 100,000 won (about Rp 1.1 million) to 90 percent of the lowest income recipients.

Eligibility will be determined by detailed income screening based on national health insurance premiums, with criteria to be announced in September.

"We will ensure comprehensive preparations for the launch of these payments to serve as a catalyst for economic recovery by boosting consumption and supporting those in need," said Deputy Minister of the Interior Kim Min-jae, who leads the inter-agency task force overseeing the program.

Provision of cash aid is not new to South Korea. They have also issued cash aid packages and economic stimuli to encourage domestic consumption, especially during the COVID-19 pandemic and when facing economic slowdowns. However, the scale and scope of the 2025 program is among the largest and most comprehensive in the country's history.

South Korea's economy is currently facing significant issues. In the first quarter of 2025, South Korea's economy experienced a contraction of 0.2 percent, marking the first decline since the second quarter of 2024, raising concerns of a recession if negative growth persists in the next quarter.

This economic contraction is due to weak industrial production, sluggish domestic consumption, and a decline in exports due to trade tensions and tariff policies from the United States burdening key export sectors such as semiconductors, automotive, and steel. Additionally, political uncertainty and unstable global conditions further exacerbate the economic situation.

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