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South Korea spends US$10.2 billion to ease oil surge crisis

The measures come days after data showed consumer price inflation hitting a 7-year high

South Korea spends US$10.2 billion to ease oil surge crisis

South Korea said on yesterday it would spend 10.5 trillion won (US$10.2 billion) over a year to help ease the financial burden on some 14 million people from a surge in oil prices, calling the situation a crisis.
Prime Minister Han Seung-soo told a news conference the government planned to refund part of the additional money that low income earners spend on buying fuel.
"The super-high oil prices are affecting not only our country but the whole world. But the difficulty is especially severe with our country that produces not a single drop of oil but is the world's fifth-largest oil consumer," Han said.
South Korea's financial measures to alleviate the pain on oil users come as other Asian countries roll back oil subsidies which are proving too costly for governments to shoulder.
India and Malaysia raised fuel prices last week, joining a growing list of Asian governments no longer able to afford big subsidies and triggering protests.
South Korea's package accounts for half of the additional cost rising oil prices cost the country of 49 million people annually, Han said.
He added the government did not need to collect more tax or incur debt to fund the package but would use surplus tax revenues from last year and a surplus expected over the next year.
The measures come days after data showed annual consumer price inflation in May hit a seven-year high of 4.9 percent, led by fuel costs and staying above the central bank's target of between 2.5 percent and 3.5 percent for the sixth month in a row.
Finance Minister Kang Man-soo said the government did not lower domestic levies on fuel sales as lower taxes could spur consumption and it wanted to ensure the poor benefited more.
Prime Minister Han said the government would consider cutting domestic fuel sales taxes and other additional measures once the Dubai crude price 1M-rose past US$170 per barrel. Prices are presently at US$122.89.
Group of Eight energy ministers are set to meet on Sunday amid unprecedented volatility in oil markets and growing public discontent over a failure by governments to soften the blow on consumers as crude prices climbed further on Friday, rising more than US$10 to a record US$139 a barrel.
Energy officials from five top consumer nations including South Korea urged producers to step up investment on Saturday, but they offered no new ideas on how to deal with record prices.
The United States called for an end to heavy price subsidies that protect many Asian drivers from soaring costs, but China and India said they could only raise domestic rates gradually in view of their fragile economies.


Updated : 2021-07-30 10:30 GMT+08:00