Fourth supplementary budget set at 7.8 trillion won
The government has decided on a fourth supplementary budget of 7.8 trillion won ($6.6 billion).
If approved by the National Assembly, total spending in four supplementary budgets this year will amount to 66.8 trillion won, a record.
The government said it will submit the supplementary budget to the National Assembly on Friday.
The government stressed that the fourth supplementary budget, unlike the third, is focused on supporting small businesses and people particularly vulnerable to the recent spike in coronavirus cases.
Nearly half of the budget, or 3.8 trillion won, will be used for disaster emergency relief grants going to some 3.77 million people.
Some 3.2 trillion won of that amount will be given in cash grants of up to 2 million won to 2.91 million self-employed businesses.
The third supplementary budget funded emergency relief grants for all Korean households.
In detail, the government has decided to offer assistance of 1 million to 2.43 million won to self-employed businesses with annual revenues below 400 million won. The total budget for that assistance will be 2.4 trillion won.
Restaurants and coffee shops in the greater Seoul area whose businesses hours and services have been restricted due to the social distancing regulations will receive an additional 500,000 won. The total budget for the additional 500,000 won payments is 500 billion won. Some 323,000 business owners are expected to receive them.
An additional 1 million won will be given to 150,000 internet cafes, noraebang (singing rooms), small cram schools and indoor gyms that that have been forced to close.
Additionally, the government will be spending 1.4 trillion won to protect jobs by subsidizing some companies’ employees’ paychecks and those categorized as holding special jobs.
The subsidy is for companies that saw sales or production drop more than 30 percent in the last three months compared to the same period a year ago. It will help pay employees forced to take leaves.
The special jobs are held by people denied unemployment benefits including door-to-door salespersons, insurance salespersons and freelancers.
The government estimated it can help protect 1.19 million jobs.
It previously spent 10 trillion won on such special job security measures.
On Wednesday, Statistics Korea released a report that showed jobs shrinking in the sixth consecutive months. While the number of jobs that shrunk in August was somewhat lower than July’s, it still remained above 200,000.
The jobs report this month is expected to be even worse as August figures did not include the impact of the resurgence of the coronavirus in mid-August, heavy rains and two typhoons.
The government also plans to use the fourth extra budget to expand social welfare.
It includes 200,000 won for every Korean household with children in elementary school or younger.
In the first supplementary budget, the government gave 400,000 won to families for each child under the age of seven.
Subsidies for some 5.32 million children were given.
The fourth supplementary budget also includes a 20,000 won smartphone bill payment to every Korean aged 13 or older. Telecommunication companies will subtract 20,000 won from phone bills for one month.
The government has allocated 900 billion won for the phone bill payments.
The various kinds of government support including the phone bill payments will not be given to foreigners in Korea.
During an eighth emergency economic meeting at the Blue House, President Moon Jae-in stressed the impact of the spike in virus cases on the economy. Top government officials including Finance Minister Hong Nam-ki as well as Democratic Party leader Lee Nak-yon attended the meeting.
“Through seven emergency economic meetings, the government has come up with unprecedented bold measures to overcome the economic crisis caused by the coronavirus,” Moon said. “We have injected 277 trillion won of funds, which is equivalent to 14 percent of our GDP, in protecting jobs and companies while supporting the domestic market and revitalizing the economy.”
He said the Korean economy is enjoying the fastest economic recovery among Organisation for Economic Cooperation and Development (OECD) countries while foreign investors have retained confidence in it.
“The government, whose job is to protect livelihoods, had no choice but to come up with additional measures with a heavy feeling of responsibility,” he said.
He asked the National Assembly and government to move quickly so funds from the fourth extra budget are released before the Chuseok holidays.
Moon added that the government has decided to temporarily raise the limit on gifts bought by public servants from 50,000 won to 200,000 won on agriculture and fishery products to support farms hurt by the recent typhoons and rains.
With total government spending this year at 554.7 trillion won while total income will be 470.7 trillion won, this year’s deficit has grown to 84 trillion won, more than double the 30.5 trillion won deficit expected at the beginning of this year.
With the fourth supplementary budget, the government’s debt is now 846.9 billion won, 106 trillion won more than last year.
The national debt-to-GDP ratio is now close to 44 percent, up 0.4 percentage points from 43.5 percent as of the third supplementary budget.
During a press briefing Thursday, Finance Minister Hong Nam-ki stressed that the current fiscal deficit and rising national debt was inevitable.
"I hope it would be understood as a temporary situation," Hong said. "Korea isn't the only country [with rising debt and fiscal deficits] as other major advanced countries are seeing similar problems."
However, Hong stressed that Korea's situation is relatively better.
"[International] credit rating agency evaluates Korea's fiscal status positively," Hong said.
BY LEE HO-JEONG [firstname.lastname@example.org]