South Korea to Distribute 120-400 USD Vouchers to Boost Economy

The South Korean government has unveiled plans to distribute consumption vouchers to all its citizens as part of an additional budget proposal. This initiative, led by Jin Sung-joon, the chairman of the ruling Democratic Party's policy committee, includes tax adjustments and the issuance of consumption vouchers aimed at stimulating the economy. The proposal is set to be submitted to the cabinet on Thursday.

The government is considering distributing between 150,000 and 500,000 South Korean won (approximately 120 to 400 USD) to each citizen. The amount will vary based on income levels, with lower-income individuals receiving more substantial vouchers. This move is designed to provide financial relief and boost domestic consumption, especially in the face of economic challenges posed by the COVID-19 pandemic.

The consumption vouchers are part of a broader economic strategy that includes extending the repayment period for small business loans worth 50 trillion won (approximately 40 billion USD). This measure aims to alleviate the financial burden on small and medium-sized enterprises, which have been significantly impacted by the pandemic. By extending the loan repayment period from around 10 years to a longer term, the government hopes to provide these businesses with the breathing room needed to recover and continue operations.

The government's plan to issue consumption vouchers is not without precedent. In 2025, the government and the ruling Democratic Party are discussing the implementation of a "living recovery consumption voucher" program. This program, which will be distributed in the form of "regional currency" or local love vouchers, aims to encourage citizens to spend within their local communities. By doing so, the government hopes to stimulate local economies and support small businesses that have been hard hit by the pandemic.

The distribution of consumption vouchers is part of a broader effort to enhance South Korea's economic competitiveness. Despite facing challenges such as a decline in its national competitiveness ranking, South Korea has made strides in improving its economic performance. The country's export figures reached an all-time high last year, and consumer price inflation remained stable within the 1% to 2% range. These positive economic indicators suggest that the government's efforts to stimulate the economy are yielding results.

The South Korean government's decision to distribute consumption vouchers to all citizens is a bold move aimed at boosting domestic consumption and supporting small businesses. By providing financial relief to citizens and extending loan repayment periods for small enterprises, the government hopes to foster economic recovery and growth in the wake of the COVID-19 pandemic. The success of this initiative will depend on the government's ability to effectively implement the program and ensure that the vouchers are used to stimulate local economies.