Second supplementary budget to include emergency relief payments for all

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Second supplementary budget to include emergency relief payments for all

Audio report: written by reporters, read by AI


President Lee Jae-myung, right, speaks during a Cabinet meeting at the presidential office in Yongsan District, central Seoul on June 10. [NEWS1]

President Lee Jae-myung, right, speaks during a Cabinet meeting at the presidential office in Yongsan District, central Seoul on June 10. [NEWS1]

 
The Korean government plans to distribute emergency relief payments to the entire population as part of its second supplementary budget, with an emphasis on supporting low-income households.
  
The upcoming extra budget will total approximately 20 trillion won ($14.4 billion), with the largest share — 13 trillion won — allocated to the so-called livelihood support fund, according to multiple government officials on Monday. 
 

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The Cabinet is scheduled to deliberate the proposal at a meeting on Thursday.
  
Officials had considered a plan to exclude high-income earners from receiving the payments, but they have now settled on distributing the funds to the entire population.
 
Low-income households will receive higher payments: 300,000 won for those in the second-lowest income bracket or single-parent families and 400,000 won for recipients of the basic livelihood security program.
  
An additional 100,000 won will go to those in the bottom 90 percent income bracket, meaning most Koreans will receive at least 250,000 won. 
 
The government intends to disburse the funds in two phases, using existing welfare standards to expedite the first round.
  
“A key priority of this extra budget is speed,” a government official said.
 
Authorities are also considering setting new income thresholds within the 250,000-won recipient group to provide extra support to low-income earners in that category, aligning them with the second-lowest income tier.
  
The ruling Democratic Party (DP) previously proposed in February a similar cash relief plan, offering 250,000 won to all citizens and 350,000 won to vulnerable groups. That proposal required 13.45 trillion won in total.
  
The government’s updated plan would provide 150,000 won to the top 10 percent of earners or around 5.12 million people, 250,000 won to the rest of the population or about 43.98 million, 400,000 won to 380,000 low-income individuals and 500,000 won to 1.69 million basic livelihood recipients. 
 
President Lee Jae-myung, center, speaks during a Cabinet meeting at the presidential office in Yongsan District, central Seoul on June 10. [YONHAP]

President Lee Jae-myung, center, speaks during a Cabinet meeting at the presidential office in Yongsan District, central Seoul on June 10. [YONHAP]

 
This approach would cost about 12.76 trillion won, trimming approximately 700 billion won from the DP's plan.
  
The policy reflects President Lee Jae-myung’s emphasis on prioritizing support for vulnerable groups while also partially accommodating the ruling party’s call for universal payouts.
  
“Universal support remains our party’s principle,” Rep. Heo Young, the Democratic Party’s deputy policy chief, said. “But if the government proposes a differentiated plan, we’ll assess our fiscal capacity and discuss it.”
  
The government and ruling party plan to finalize the extra budget during a policy consultation meeting on Wednesday.
  
Health insurance premiums will serve as the basis for calculating income brackets.
 
While some lawmakers had proposed issuing the payments exclusively through local currency vouchers, officials are now weighing options used in 2020 during the first round of pandemic relief, including credit card top-ups and prepaid cards.
  
Democratic Party officials perform a campaign event to promote the use of local currency during a central election committee meeting at the party's headquarters in western Seoul on May 21. [NEWS1]

Democratic Party officials perform a campaign event to promote the use of local currency during a central election committee meeting at the party's headquarters in western Seoul on May 21. [NEWS1]

 
Separate from the cash relief, the extra budget is expected to include additional funding for local governments’ issuance of regional currency. 
 
These vouchers, typically sold at a 10 percent discount, have been co-funded by the central and local governments. The first extra budget this year included 400 billion won for this purpose, with the government aiming to secure about 1 trillion won total.
  
The central government in 2021 supported the issuance of 20.2 trillion won in regional currency by contributing 1.05 trillion won. 
 
The support rate this year will be adjusted based on each local government’s fiscal capacity, with more funds directed to non-capital regions suffering from weak consumption. The total issuance volume could then fall short of the 2021 level.
  
The focus on cash relief and regional currency means other stimulus proposals, such as a credit card cashback scheme and various consumer coupons that were included in the DP’s earlier proposal, will likely be excluded from the final draft.
  
The government plans to fund the extra budget mainly through the issuance of treasury bonds, while also implementing aggressive spending cuts. 
 
It is also expected to adjust its revenue estimates to reflect lower-than-anticipated tax income.
  
In the case of revenue shortfalls, the Ministry of Economy and Finance may preemptively issue debt equal to the expected shortfall — known as a revenue adjustment — subject to approval by the Strategy and Finance Committee in the National Assembly. 
 
“Considering procedural requirements, the earliest the proposal could pass the plenary session would be early July,” a committee official said.


Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY JANG WON-SEOK [[email protected]]
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