Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Assembly approves W12.2 trillion extra budget
The National Assembly approves a 12.2 trillion-won ($10 billion) extra budget during a plenary session Thursday to provide emergency relief money to all citizens to help them better cope with the economic fallout from the COVID-19 pandemic. / Yonhap
By Yi Whan-woo
By Yi Whan-woo
The National Assembly approved a 12.2 trillion-won ($10 billion) extra budget Thursday to provide emergency relief money to all households nationwide.
This is the second extra budget this year to help the country better cope with the economic fallout from the COVID-19 pandemic. The previous one, worth 11.7 trillion won, was passed March 17.
With the 12.2 trillion won from the central government combined with 2.1 trillion won from local governments, 1 million won will be provided to households with four or more members, 800,000 won to three-person households, 600,000 won to two-person households and 400,000 won to single-person households. A total of 21.7 million households will receive the funding.
Citizens can apply for the relief money May 11 and will receive it starting May 13. It will be provided through debit cards ― prepaid cards or gift vouchers ― available to spend in local communities, depending on the choice of the recipients. For 2.7 million households in the low income bracket, the government will wire the emergency fund to their bank accounts starting May 4.
Thursday's budget is larger than the government's original proposal of 7.6 trillion won when the government sought to offer the relief funds to the bottom 70 percent of the income bracket.
But the rival parties, in accordance with their respective pledges during the April 15 general election, promised to give the emergency handout to all people.
The ruling Democratic Party (DPK) later convinced the finance ministry to do so.
To finance the fund, the parties agreed to allow the government to issue deficit-covering bonds worth 3.4 trillion won.
Regarding the criticism that the rich do not need the financial support, the government expects high-income earners to give all or part of the money back as a donation. If a household does not apply for the fund for three months, the government will regard this as donation and use it for state-run employment insurance programs, after the Assembly also passed a relevant bill regarding this.
Meanwhile, President Moon Jae-in asked the Cabinet to prepare a third extra budget bill for an estimated 30 trillion won.
If realized, this will be the second time in the nation's history that the government has allocated three extra budgets in one year.
With the two extra budget bills, the government deficit this year is already expected to increase by 90.2 trillion won compared to 2019.
The country's economy shrank 1.4 percent in the first quarter from the last three months of 2019, as the COVID-19 crisis hit consumer spending and industrial output. This was the sharpest contraction since the fourth quarter of 2008.