Gov't to maintain expansionary fiscal policy next year

Deputy Prime Minister and Finance Minister Hong Nam-ki, right, speaks during a policy coordination meeting between the ruling Democratic Party of Korea and the finance ministry at the National Assembly on Yeouido in Seoul, Wednesday. Yonhap

'Containment effort the top priority, Level 3 social distancing must be avoided'

By Lee Kyung-min

The ruling Democratic Party of Korea (DPK) and the government agreed, Wednesday, to maintain an expansionary fiscal policy in 2021, as a precautionary move to ward off a longer-than-feared economic downturn brought on by the continued spread of COVID-19.

Deputy Prime Minister and Finance Minister Hong Nam-ki said policy priority will be placed first and foremost on containment efforts, among many other measures to combat the pandemic, adding fiscal discretion will function as the “last bastion of support.”

The government is unlikely to offer an emergency relief package similar to the previous one, whereby up to 1 million won ($840) was offered to all Korean households. The government is instead discussing limiting the recipients to those earning 50 percent or up to 70 percent of the median income, in a more efficient and tailored approach to help the most vulnerable.

“The budget for 2021 will be drafted in a way that bolsters key initiatives to the best degree manageable by the government. Next year's budget will be a continuation of this year's expansionary drive,” he said during a policy coordination meeting between the DPK and the finance ministry at the National Assembly on Yeouido in Seoul.

The government should prioritize containment efforts above all else, he stressed, as a prerequisite for the much-needed economic rebound thwarted repeatedly by continued infections.

“The recent flare-up must not become a full-blown second wave of COVID-19 infections nationwide. Heightening the current social distancing measures to Level 3 must be avoided at all costs,” he said.

The efficacy of next year's budget, the finance minister noted, will be felt more directly by parents of high school students, low-income earners, senior citizens and jobseekers.

High school education will become free. Relevant laws will be abolished to expand eligibility, allowing low-income earners with dependents to seek state welfare benefit.

The bottom 70 percent of people aged 65 and older will receive 300,000 won every month, an expansion from the bottom 40 percent.

Up to 3 million won will be given in allowances to jobseekers who have less than 300 million won in assets and earn less than 50 percent of the median income.

Also ensured is 20 trillion won allocated to support the Korean New Deal, a policy initiative set up to identify new sources of sustainable growth including ways to foster digital services.

“The government will seek a more inclusive society defined by a strengthened social safety net, a value equally pursued with bringing the momentum for economic recovery. We will speed up efforts to have the objectives more clearly felt and appreciated by the public,” he said.

The draft of the 2021 budget plan will be submitted to the National Assembly on Sept. 3.