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Second extra budget to help virus-hit households
Deputy Prime Minister and Finance Minister Hong Nam-ki, left, speaks at a briefing at Sejong Government Complex, Thursday. Yonhap
By Lee Kyung-min
Financing to cut expenditure, without debt issuance
By Lee Kyung-min
The government has drafted a second extra budget bill offering 7.6 trillion won ($6.2 billion) in financial assistance to the bottom 70 percent of Korean households hit by the COVID-19 pandemic, it said Thursday.
The Ministry of Economy and Finance said the amount will be used to give up to 1 million won to four-person households mostly in the form of coupons or debit cards with a certain amount of balance accepted at small- and medium-sized enterprises (SMEs).
The financial assistance will be 400,000 won to one-person households, 600,000 won for two-person households and 800,000 won for three-person households. Up to 14.78 million households are expected to benefit.
Eligibility will be determined by monthly premiums paid to the state-run National Health Insurance Service (NHIS).
Out-of-pocket monthly premiums should be 88,344 won or less for single-person households, 150,025 won for two-person households, 195,200 won for three-person households and 237,652 won for four-person households.
However, excluded are those who own homes worth over 1.5 billion won in officially assessed land value or those earning 20 million won or more in annual financial income such as dividends or interest from savings. About 125,000 such households are expected to be excluded, the ministry said.
Overseas Koreans and foreigners in principle are excluded, but those who have permanent resident status here or are with a Korean spouse will be eligible.
Also to be included are low-income people including veterans, the homeless and victims of domestic violence and child abuse.
Koreans who had been staying overseas for over a month as of March 29 will be excluded from the benefit.
The ministry said financing will not involve issuing government bonds, a major cause for concern due primarily to mounting government debt.
Instead, it reduced 3.6 trillion won in planned expenditures on state-run projects (2.4 trillion won), civil servants' pay cuts (695.2 billion won) and other costs including reductions in both oil purchases and interest payments (494.2 billion won).
Of the remaining 4 trillion won, 2.8 trillion won came from an exchange equalization fund, a part of a publicly managed fund, as the weakened Korean won allowed a reduction in holdings of won-denominated assets in the fund.
The remaining 1.2 trillion won came from other publicly managed funds allocated for housing, credit guarantees for housing and agricultural land management.
Of the 2.4 billion won budget cut, 904.7 billion won was made from defense, followed by social overhead capital (580.4 billion won), overseas direct aid (267.7 billion won), environment (205.5 billion won), agricultural fisheries (169.3 billion won) and industrial projects (50 billion won).
Also factored in is 300 billion won in reduced interest payment for government bonds following lowered interest rates, as well as 200 billion won saved on the back of the plummeting oil price.
The second extra budget bill will raise the government spending by 12.3 percent from a year earlier.
The government debt will stand at 815.5 trillion won with debt-to GDP ratio unchanged at 41.2 percent, as it forwent debt issuance, a way to raise funds to make up for the deficit by borrowing money from bondholders.
The bill will be submitted to the National Assembly later in the day.