The government announced on Monday a stimulus package worth 5.9 trillion won ($5.23 billion) to boost lackluster domestic consumption and exports by the protracted eurozone debt crisis and a slowdown in China.

The Finance Ministry said it would allocate 4.6 trillion won for this year and 1.3 trillion won for next year in its fiscal support measures.

The economic support will be made mainly in the form of tax cuts to recharge sagging domestic demand, ministry officials said.

The package was arranged after the government took an 8.5 trillion won stimulus measure in June.

“There are growing concerns about our sagging economic power,” Finance Minister Bahk Jae-wan was quoted as saying.

The government’s latest stimulus measures include the exemption of capital gains taxes for five years for newly built homes purchased this year. The housing acquisition tax rates will also be halved for home purchases made during the rest of this year, the ministry said. Individual income tax will also be cut.

Other measures include the reduction of special consumption taxes on large home appliances such as TVs and vehicles by 1.5 percent purchased during the rest of the year.

The new stimulus package is expected to boost the nation’s economic growth by 0.06 percent this year and 0.10 percent next year, the ministry said.

The government has been under pressure to set up a supplementary budget to help revitalize the country’s economy. But the ministry said the latest stimulus measures will not require an additional budget because most of the measures are tax cuts and expansions of social welfare programs.

Analysts said the Korean economy may get another boost this week as the central bank is expected to reduce interest rates. The Bank of Korea will likely cut the benchmark by a quarter point to 2.75 percent on Sept. 13, according to all 13 economists in a Bloomberg News survey.

But some experts expressed concerns that the government’s additional fiscal spending plans could make it harder for the government to achieve a balanced budget next year due to increased expenditures and less tax revenue.

By Park Min-young (claire@heraldcorp.com)