Sources at the Ministry of Unification said the 2013 budget passed by parliament Tuesday set aside 1.09 trillion won (US$1.02 billion) in operating expenses for the cooperation fund, up 9.1 percent from a little over 1 trillion won last year. In addition the ministry's budget has been increased by 4.4 percent on-year to 222.2 billion won.
The moves come as President-elect Park Geun-hye said she will take steps to open dialogue with the communist country and seek a course to ease tension and promote cooperation with the North. Park, who visited Pyongyang in 2002 and held talks with late North Korean leader Kim Jong-il, will become South Korea's first female president when she takes office on Feb. 25.
Cross-border relations have been stalled following North Korea's sinking of a South Korean naval vessel in March 2010 and the subsequent ban on most cooperative projects by Seoul. An artillery attack on an island in the Yellow Sea eight months after the sinking and the test firing of two long-range rockets this year further exacerbated tensions.
Reflecting the increase, state support for the reunion of families separated by the Korean War (1950-53) and humanitarian assistance have been increased by 13 percent from the previous year to 735.7 billion won.
The total covers direct and indirect support for family reunions, support for private organizations that have taken the lead in expanding ties with the North, and money set aside to send 400,000 tons of rice and 300,000 tons of fertilizers to the North.
Besides such money, Seoul will provide 27 billion won to international agencies that provide aide and other forms of support to North Korea.
The ministry also said this year's budget allows for the use of 265 billion won to fuel economic cooperation. The 2.6 percent on-year increase can encourage trade and be used to give loans to companies that carry out business activities with the North, as well as money that can be used to develop a mineral mine in the country.
Seoul said it has earmarked 90.2 billion won this year to facilitate the development of the Kaesong Industrial Complex.
The complex located just north of the demilitarized zone that separates the two Koreas is considered the crowning achievement of the first inter-Korean summit meeting held in June 2000. Operations at the complex have not been affected by the downturn in inter-Korean relations but plans to expand it have made little progress.
Lawmakers also increased funds that can be used to help North Korean escapees settle in South Korea from 123.9 billion won last year to 134.2 billion won in 2013.