Support measures may cost 9.1 trillion wonThe details of cash handouts and the waiving of insurance premiums and utility bills have been firmed up as the government draws up a second supplementary budget.
It said that 70 percent of Korean households will benefit from the support, which is designed to help them and the economy during these times of trouble.
The government on Monday said it estimates the budget needed to cover the cash payments will amount to roughly 9.1 trillion won ($7.4 billion).
The central government will cover 78 percent, or 7.1 trillion won, while local governments will cover the remaining 2 trillion won.
The 7.1 trillion won will be included in the supplementary budget, which the government is hoping to get passed at the National Assembly in April but after the April 15 general elections.
“The size of the [second] supplementary budget will be around 7.1 trillion won,” Finance Minister Hong Nam-ki said during a press briefing held after the third emergency economic council meeting chaired by President Moon Jae-in.
“We have designed it so that it has the simultaneous effect of protecting livelihoods and stimulating spending,” Hong said. “We’re targeting a supplementary budget that only focuses on emergency disaster aid.”
The supplementary budget will be financed by restructuring the existing budget, such as cutting spending on defense, environment and infrastructures projects, the finance minister said
Hong said if the government needs more it will consider getting the additional funding through bond issuance. The 11.7 trillion won supplementary budget that passed the National Assembly earlier is mostly covered by government bonds.
A person living alone will receive 400,000 won, a family of two 600,000 won, a family of three 800,000 won and a family of four or more 1 million won.
To be eligible, a single person living alone should have a monthly income not exceeding 2.6 million won, a family of two 4.49 million won, a family of three 5.81 million won, a family of four 7.12 million won and a family of five 8.44 million won.
The Ministry of Economy and Finance said payments will be in the form of regional coupons or another cash equivalent.
Households in the top 30 percent income bracket will not be able to apply for the benefits. It estimates 14 million households, or 36 million people, will qualify for the support.
Payments for four social insurances - the national pension fund, health insurance, employment insurance and work-related injury insurance for small businesses and the self-employed -will also be reduced.
Starting this month and through May, people in the lowest 20-to-40 income bracket will receive a 30 percent reduction on their health insurance payments. That means employees who make 2.33 million won or less a month pay less for health insurance. The government estimates that 4.88 million people will benefit from the cut, which will save a total of 417.1 billion won.
People in the lowest 20 percent are not included because they are already receiving a 50 percent cut on their health insurance premiums.
For work-related injury insurance payments, 30 percent will be cut for employers with fewer than 30 workers, the self-employed and some other specific categories until September.
Some 2.59 million businesses as well as 80,000 special labor workers will be affected by the cut, which is estimated to save them up to 443.5 billion won.
The government is also easing the rules for the suspension of national pension payments between March and May. It will now suspend the payments for those who have a reduced income. Businesses with fewer than 30 employees can request the suspension for three months until May.
BY LEE HO-JEONG [email@example.com ]