Gasoline Tax Cut Expanded to 15%, Diesel to 25%... Government Makes All-Out Effort to Shield Livelihoods Amid War

Fuel Tax Cuts Effective from March 27 to End of May

1.5 Trillion Won Special Supply Chain Support Program Launched

Expressway Toll Exemption for Cargo and Bus Industries

Nuclear Power Plant Operation Rate to Be Increased to Over 80%

The government will expand the fuel tax cut rate for gasoline from the current 7% to 15%, and for diesel from 10% to 25%. The fuel price-linked subsidy for cargo trucks and buses will also be temporarily increased to up to 70%. In addition, a new 1.5 trillion won special supply chain support program will be established and managed to closely oversee items with high dependence on the Middle East, such as naphtha and urea.

Yonhap News Agency

On March 26, at an "Emergency Economic Review Meeting" presided over by President Lee Jaemyung, the government announced these measures as part of its "Emergency Economic Response Plan in Response to the Middle East War." The government stated, "The overall domestic economy is facing increasing downward pressure as international oil prices have surged following the closure of the Strait of Hormuz," adding, "We will minimize the shock through proactive and comprehensive responses."

Expanded Fuel Tax Cut...All-Out Efforts for Price Stability

The government is prioritizing energy price stability. The fuel tax cut rate for gasoline will be raised from 7% to 15%, and for diesel from 10% to 25%. As a result, gasoline will see an additional reduction of 65 won per liter, and diesel 87 won per liter. The application period is from March 27 until the end of May.

The government will maintain the petroleum price ceiling system and minimize the increase in diesel prices. In particular, policy efforts will focus on stabilizing diesel prices, which have a significant impact on ordinary citizens and the logistics industry.

The fuel price-linked subsidy for cargo trucks and buses will also be temporarily expanded. The support ratio, previously 50%, will be increased to up to 70%, with an extension to be considered if necessary.

Additionally, the government will maintain its stance on freezing public utility rates and strengthen efforts to manage the prices of essential daily goods, including dining out and processed foods. For key items such as rice, eggs, and mackerel, the government will stabilize supply and demand by releasing government reserves and expanding imports.

Yonhap News Agency

Emergency Supply Chain System Activated...Focused Management of Naphtha and Urea

Supply chain response is also a core pillar. The government will immediately activate the "Supply Chain Crisis Response Headquarters," headed by the Deputy Prime Minister for Economic Affairs, and will closely manage items with high dependence on the Middle East, such as naphtha and urea.

Naphtha has been designated as a crisis item, and emergency supply adjustment measures—such as export controls and inducement of domestic supply—will be implemented. For urea and urea solution, the government will prevent hoarding, promote import diversification, and release public reserves to stabilize the market.

Monitoring will also be strengthened for nonferrous metals and petroleum price-linked products. For items like aluminum, reserves will be increased, and for items with significant price volatility, such as construction materials and asphalt concrete, a real-time monitoring system will be established.

Corporate support will be provided concurrently. The government will launch a 1.5 trillion won special supply chain support program to compensate for increased alternative import costs through financial support and provide emergency operating funds.

On the morning of November 27, 2022, the fourth day since the Industrial Transport Solidarity Pohang Branch of the Korean Confederation of Trade Unions Public Transport Union (Industrial Transport Solidarity) went on a general strike, cargo vehicles stood still in the Pohang Steel Industrial Complex, located in Ocheon-eup, Nam-gu, Pohang-si, Gyeongsangbuk-do. Photo by Yonhap News Agency

Expanded Support for SMEs and Small Business Owners

Support for vulnerable sectors will also be significantly strengthened. The scale of policy financial support will be expanded from the current 20 trillion won to more than 24 trillion won. Export-oriented small and medium-sized enterprises will receive loans with reduced interest rates and liquidity support, as well as expanded access to emergency business stabilization funds and guarantees.

To ease the burden of logistics costs, the support limit for export vouchers will be doubled, and a fast-track system will be introduced to make decisions on emergency support within three days of application.

For small business owners and self-employed individuals, management stabilization vouchers to cover fuel and utility costs will be swiftly provided, and up to 70 million won in emergency funds will be available if sales decline.

For farmers and fishermen, funds for purchasing fertilizer raw materials and low-interest loans will be offered. The cargo and bus industries will benefit from direct support measures such as exemption from highway tolls.

On the first day of the implementation of the petroleum price ceiling system on the 13th, Minister Kim Junggwan of the Ministry of Trade, Industry and Energy visited a gas station in Mapo, Seoul, and spoke with the gas station staff. 2026.03.13 Photo by Yoon Dongjoo

All-Out Effort to Stabilize Foreign Exchange and Financial Markets

Measures to respond to instability in the foreign exchange and financial markets will also be implemented. The government will maintain a 24-hour monitoring system and take immediate market stabilization measures if necessary. In the bond market, an emergency buyback program worth 5 trillion won will be deployed, and a 100 trillion won market stabilization program will be activated as needed.

In the foreign exchange market, the government will aim to stabilize the exchange rate by expanding capital inflows and improving the investment environment. Strategies include improving foreign investor accessibility and encouraging capital inflows by joining major global indices. The government also announced that it would strengthen oversight, stating, "We will respond with zero tolerance to fake news and market manipulation that exploit market instability."

The government emphasized that these measures are not limited to short-term responses, but are also connected to mid- to long-term tasks such as energy structure transformation and supply chain diversification. Efforts will be made to improve the energy supply structure by raising nuclear power plant operation rates to over 80%, securing alternative energy sources, and promoting energy-saving campaigns. In addition, a supply chain analysis system will be established, and policy foundations will be laid to respond to the reorganization of global value chains.

The government stated, "As the possibility of a prolonged war cannot be ruled out, we will utilize all policy tools to minimize the economic shock," adding, "We will focus our policy capabilities on stabilizing people's livelihoods and securing market confidence."

Gori Nuclear Power Plant Unit 1

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