Kang Seung-woo is the Business Desk editor at The Korea Times. Prior to this position, he covered politics, national affairs, finance and sports.
Parties differ on how to finance relief funds
Rep. Kim Tae-nyeon, center, the floor leader of the ruling Democratic Party of Korea, speaks during a party meeting at the National Assembly in Seoul, Monday. / Yonhap
By Kang Seung-woo
By Kang Seung-woo
With the payout of the government's third emergency disaster relief package looming, major political parties are now locking horns with each other over how to finance the cash handouts that will be used to help people deal with the impact of the COVID-19 pandemic.
The ruling Democratic Party of Korea (DPK) is seeking to secure the funds via a government bond issuance, while the main opposition People Power Party (PPP) is calling for a drastic cut in the budget assigned to the government's New Deal initiative.
According to the parties, the government will need 5 trillion won ($4.52 billion) to selectively distribute emergency disaster relief money to those hit hard by COVID-19, including the self-employed and small business owners. The money also includes 1.5 trillion won to purchase COVID-19 vaccines for public use.
The government's proposed budget for next year was 556 trillion won before the third relief fund discussions began. This is the first time the budget has surpassed 550 trillion won.
“As we need up to 4.9 trillion won for the disaster allowance and vaccines, the government needs to raise next year's budget by 2 trillion won and issue more than 2 trillion won in government bonds separately,” DPK Rep. Park Hong-keun, a member of the National Assembly Special Committee on Budget and Accounts, said in a party meeting Monday.
Rep. Choi In-ho, a DPK spokesman, stressed the need to revise the budget, citing the worsening situation.
“The situation has changed significantly from when the budget was drawn up (in September). We need to purchase more coronavirus vaccine, while the number of households suffering financial strain from the pandemic is increasing,” he said in a radio interview earlier in the day.
“In that respect, we need to consider various matters, including increasing the budget.”
However, the PPP has made it clear that it opposes the government funding the disaster allowance by issuing bonds ― in other words, an increase in the national debt ― due to a possible strain on the country's financial soundness.
As an alternative, the party, which first pushed for the emergency handouts, calls for the slashing of spending on some projects in the government's New Deal initiative ― a proposal which is drawing huge resistance from the ruling camp.
The Moon Jae-in administration has been pushing for a so-called Korean version of the New Deal aimed at promoting economic development by expanding digital infrastructure and fostering environmentally friendly businesses. The government has allocated 21.3 trillion won to finance the stimulus package next year.
“The government's budget for next year already includes 90 trillion won in national debt. It does not make sense that the government cannot cut 2 trillion won from the enormous budget (set for the New Deal initiative),” said Rep. Choo Kyung-ho of the PPP.
Rep. Joo Ho-young, the PPP floor leader, also said, “The government should cut unnecessary and non-urgent spending to prevent leading the country into a debt binge.”