Ruling party seeks to give relief money to all

Finance Minister Hong Nam-ki speaks at a press conference on the extra budget at the Sejong Government Complex, Thursday. / Yonhap

By Kang Seung-woo

Following its win in Wednesday's general election, the ruling party is reigniting the drive to offer emergency disaster relief money to every household to ease economic strain from the coronavirus pandemic ― in the face of the government's opposition due to pressure on financial soundness.

On Sunday, the Democratic Party of Korea (DPK) held a trilateral meeting with Cheong Wa Dae and the government in Seoul to seek an understanding on expanding the scope of recipients. DPK Chairman Rep. Lee Hae-chan and floor leader Rep. Lee In-young sat with Senior Presidential Secretary for Policy Kim Sang-jo and Finance Minister Hong Nam-ki.

The initial government scheme was to deliver between 400,000 won ($328) and 1 million won in accordance with the number of household members in the bottom 70 percent of income-earners. But during the election campaign, the DPK pledged to give the disaster allowance to every citizen in an effort to gain votes.

Last week, the finance minister unveiled a 7.6 trillion won supplementary budget plan. In addition to budgets from local governments, a total of 9.7 trillion won will be used for 14.8 million households belonging to the income bracket.

However, the DPK is urging the government to spend more, saying an expanded allowance will require an additional 4 trillion won to benefit every citizen, although the ministry is opposed to the plan, citing financial stability concerns.

“The finance ministry is concerned that the expanded allowance may undermine financial stability, but the budget gap is not that far apart and we do not believe it would enormously trouble the nation's debt management,” a DPK official said.

The DPK plans to hold a plenary session later this month to quickly approve the extra budget bill in order to provide the relief package in May.

Given that Hwang Kyo-ahn, former chairman of the main opposition United Future Party (UFP), also suggested on the campaign trail that the government give 500,000 won to every citizen for disaster relief, the DPK believes there will be no major hurdles in expanding the number of beneficiaries and passing the relevant bills at the National Assembly.

However, taking responsibility for the UFP's defeat in the election, Hwang stepped down from the leadership post, leading to differing opinions within the party.

“An emergency allowance to every citizen will not stimulate domestic consumption as much as expected and will increase the national debt, which could undermine the economy and shift the burden of the public debt to future generations,” said Rep. Kim Jae-won of the UFP, head of the Assembly's Special Committee on Budget and Accounts.

According to the finance ministry, it plans to fund the supplementary budget by readjusting this year's annual budget and cutting costs rather than issuing government bonds.

However, the DPK's new proposal requires the government to issue bonds.

“With the national debt growing sharply, additional government bond issuance would benefit no one in the end,” Kim said.

According to the government, Korea's national debt came to 1,743.6 trillion won in 2019, up 60.2 trillion won from a year earlier. In addition, the finance ministry predicted last year that the country's debt ratio against its gross domestic product could reach 39 percent in 2020.