Lee Hyo-jin covers the Bank of Korea, the banking industry and broader financial news. Her previous beats include foreign affairs, North Korea and general reporting on Korean society.
Korea mulls mixed cash handouts in new supplementary budget
Jin Sung-joon, center, policy chief of the ruling Democratic Party of Korea, speaks during a party meeting at the National Assembly in Seoul, Tuesday. Yonhap
By Lee Hyo-jin
Extra budget plan to be discussed at Cabinet meeting Thursday
Speculation is mounting that the government will introduce a two-phase emergency relief program, combining universal and targeted cash payments in an effort to balance economic stimulus with fiscal soundness.
These payments, if carried out, will be a shift from President Lee Jae-myung's campaign pledge to provide a uniform payment to every citizen.
A second supplementary budget, which includes the proposed relief package, is expected to be tabled at a Cabinet meeting on Thursday.
According to government sources, the relief plan would first provide a basic cash payment to all citizens. After assessing income data from the initial round, a second phase of additional payments would be distributed specifically to lower-income households.
The base amount in the first round is likely to be 150,000 won ($110) per person. The socially vulnerable, including low-income households and single-parent families, could receive higher amounts ranging from 300,000 won to 400,000 won, according to local media reports.
In the second phase, an additional 100,000 won could be distributed to everyone except the top 10 percent of income earners, based on health insurance premium data.
The cash handout plan seeks to strike a balance between demands for universal payments — which would provide support to all citizens regardless of income — and calls for targeted assistance.
The relief program is a key component of the proposed supplementary budget, estimated at around 20 trillion won. This marks the second extra budget this year, following a 13.8 trillion won package passed in May. Of the new budget, approximately 13 trillion won is expected to be allocated for the cash handout program.
Cash relief was a central campaign pledge of Lee, who promised a uniform payment of 250,000 won to every citizen regardless of income.
However, after he took office on June 4, concerns over fiscal soundness sparked debate within political circles over whether the payments should be universal or targeted.
The ruling Democratic Party of Korea (DPK) has consistently advocated for universal payments, arguing that they would provide faster and more visible benefits to the public. Nonetheless, party officials have occasionally signaled openness to a mixed model that takes budget constraints into account.
"In February, we proposed a plan based on the principle of universal payments, under which additional support would be provided to vulnerable groups," DPK policy chief Rep. Jin Sung-joon said during a party meeting Tuesday.
He noted that the final details, including the overall fund size and the structure of programs, will be decided through coordination with the government.
President Lee Jae-myung speaks during a press briefing aboard the presidential jet en route to Canada to attend the G7 Summit, Monday. Joint Press Corps
The president himself also hinted at selective support, stressing that the program's primary purpose is to boost consumption, rather than to serve as a welfare policy.
"There are differing views on how the supplementary budget should be structured. It ultimately depends on whether we see this as income support or a measure to boost consumption," Lee said during a press briefing aboard the presidential jet en route to Canada to attend the G7 Summit.
"I believe a mixed approach may be the most reasonable. But we need to carefully review the finance ministry's proposal and consult with the (ruling) party before making the final decision," he added.