South Korea mulls 4th virus relief package, ruling party proposes near $20 bn

[Graphics by Song Ji-yoon]

South Korea is mulling to package a fourth Covid-19 relief fund to deliver extra funding for self-employed and small merchants by March or April.

The Ministry of Economy and Finance and related ministries have begun discussing the time and scale of fourth round of relief handouts on Tuesday. The move came after President Moon Jae-in’s urge in the previous day to come up with an institutional measure to compensate losses for businesses forced to shut down or cut back operations to meet with state-led mitigation measures.

Korea has enforced 2.5 level measure where private gatherings are capped at four and eating-in or businesses are banned after 9.00 p.m. for another two weeks as daily cases remain in three-digit numbers.

Ruling Democratic Party Chairman Lee Nak-yon in parliamentary speech on Tuesday argued for a supplementary budget “in sufficient and timely” manner.

The supplementary budget would come at the beginning of 2021 with another record-sized budget.

The ruling party is studying a supplementary budget in the scale of 20 trillion won ($17.9 billion) to 30 trillion won, a move that could be viewed negatively as it comes ahead of the by-elections to vote mayors of the country’s two major municipalities of Seoul and Busan in April.

Korea’s debt has been exceeding 40 percent of the gross domestic product due to stretch in budgeting. This year’s spending was budgeted at 558 trillion won, of which 72 percent would be expedited in the first half.

The country’s national debt is expected to reach 956 trillion won this year. If the government issues 20 trillion won worth debts to fund the relief package, the liabilities would reach 976 trillion won with the debt to GDP ratio soaring to 48.3 percent.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]