Second extra budget to total 7.6 trillion wonThe government proposed a second supplementary budget for this year worth 7.6 trillion won ($6.19 billion), which will be used for coronavirus relief grants of up to 1 million won promised to 14.8 million households.
Unlike the 11.7 trillion won supplementary budget passed by the National Assembly March 17, this budget will be paid for through adjustments in spending. The first extra budget is being financed by government bonds.
The Ministry of Economy and Finance said it has saved 3.6 trillion won by suspending several government projects as well as other cutbacks.
The biggest cut of 904.7 billion won was made in defense spending.
This included slashing spending of 300 billion won on F-35 fighter jets, 200 billion won less spending on helicopters and 100 billion won less in Aegis ship expenses.
The government also saved 550 billion won by postponing several infrastructure projects.
More than 695 billion won was saved by cutting government employees’ labor expenses, including 395 billion won by encouraging some employees to take unpaid leave.
The government also earmarked 2.8 trillion won by suspending financial investments such as purchasing dollars to stabilize the foreign exchange market.
“Recently the IMF changed its forecast to say the global economy will decline 3 percent this year and many advanced economies are suffering negative growth,” Finance Minister Hong Nam-ki said during a press briefing on Thursday. “We have to prepare for many difficulties as we aren’t certain for how long Covid-19 will continue.
“Considering all variables comprehensively, we decided to fund [all of the supplementary budget] through adjusting this year’s existing budget without issuing government bonds as we promised earlier.”
The government estimate 9.7 trillion won will be needed for the coronavirus relief grants, 2.1 trillion won of which will be covered by local governments.
The supplementary budget is the second this year and the fifth under the Moon Jae-in administration.
The combined amount of the two supplementary budgets this year is at 19.3 trillion won, while the total amount of supplementary budgets created under the current administration since its first year in 2017 amounts to 40.2 trillion won.
In total, that’s more than those under either of the two previous conservative administrations. A total of 33 trillion won in supplementary budget spending was passed by the Lee Myung-bak administration, which during its five-year term had to confront the 2008 global economic meltdown. The total amount of extra spending under the Park Geun-hye administration was 40 trillion won.
The Moon government estimated the total amount of support it has rolled out to fight the coronavirus at 150 trillion won, including 100 trillion won for financial market stabilization programs.
Finance Minister Hong said total government support to combat the coronavirus would amount to 500 trillion won after adding in indirect support measures of around 350 trillion won. The 350 trillion won includes postponing loan payments; suspending employee contributions to national health insurance, employment insurance, job injury insurance and the national pension service; and suspending value-added taxes and corporate taxes for some businesses.
“The emergency disaster support aid will ease the burden on people’s livelihoods and stimulating spending,” Hong said.
He said the government plans to stick to its initial proposal of giving relief grants to 70 percent of Korean households with the lowest incomes.
BY LEE HO-JEONG [firstname.lastname@example.org]