COVID-19 Supplementary Budget '10 Trillion+α' to be Submitted to the National Assembly Early Next Month... Party and Blue House Take the Lead

Hong Nam-ki's Economic Team Appears to Follow President's Hardline Remarks
Concerns Over Populist and Hasty Budgeting Ahead of April General Election

On the 25th, at the Democratic Party headquarters in Yeouido, Seoul, a high-level government-party-civil society meeting related to COVID-19 was held, attended by Kang Ki-jung, Senior Secretary for Political Affairs to the Blue House (third from the left), Kim Sang-jo, Chief of Policy Office, Lee Nak-yeon, Chairman of the COVID-19 Disaster and Safety Countermeasures Committee, Lee Hae-chan, leader of the Democratic Party, Lee In-young, floor leader, Hong Nam-ki, Deputy Prime Minister for Economy, and Park Neung-hoo, Minister of Health and Welfare. Photo by Yoon Dong-joo doso7@

[Sejong=Asia Economy Reporters Kim Hyun-jung and Jang Se-hee] The government will submit a supplementary budget plan exceeding 10 trillion won to the National Assembly early next month to minimize the social and economic damage caused by the novel coronavirus infection (COVID-19). It is expected to be the largest-ever "super supplementary budget," surpassing the 11.6 trillion won budget prepared during the 2015 Middle East Respiratory Syndrome (MERS) outbreak. However, since this policy is being promoted under the leadership of the Blue House and the ruling party rather than the government’s economic team, concerns are rising about a hasty budget preparation ahead of the April general election.

On the 25th, a senior official from the Ministry of Economy and Finance said, "Starting today, we plan to review supplementary budget projects through the administrative system Onnara," adding, "Our goal is to create the supplementary budget plan in consultation with each ministry within this week and submit it to the National Assembly early next month." In this regard, the Democratic Party of Korea, the government, and the Blue House agreed at a high-level party-government-Blue House meeting held that morning to prepare the supplementary budget as quickly as possible. They also decided to consider an emergency financial order if the National Assembly is unable to operate normally. The supplementary budget will include support for small business owners in Daegu and Gyeongbuk, assistance for affected export companies, and rent reductions for small and medium-sized self-employed businesses.

Before the supplementary budget is processed, 2 trillion won in contingency funds will be immediately provided. Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said at the meeting, "There is no need to wait for the supplementary budget for quarantine measures; it is appropriate to provide 2 trillion won in disaster contingency funds as soon as possible," and mentioned the need for additional measures and support plans beyond the first comprehensive package support plan to be announced this week.

The size of the supplementary budget has not been finalized, but since the damage is expected to be greater than during the 2015 MERS outbreak, it is highly likely to exceed 10 trillion won. However, since the operation of the massive 512.5 trillion won budget started less than two months ago and there are concerns about worsening fiscal soundness due to the burden of national debt and resource procurement, it is generally expected not to exceed 15 trillion won.

Lee In-young, floor leader of the Democratic Party of Korea, and Hong Nam-ki, Deputy Prime Minister for Economy, are attending a high-level meeting on COVID-19 held at the Democratic Party headquarters in Yeouido, Seoul on the 25th, and are talking before the meeting begins. Photo by Yoon Dong-joo doso7@

Some point out that the leadership of such economic policies is skewed toward the ruling party and the Blue House. In fact, Deputy Prime Minister Hong, who had maintained a conservative stance saying "it is inappropriate to mention the supplementary budget," wrote on his personal SNS on the evening of the 24th, after President Moon Jae-in’s remark to "consider preparing a supplementary budget," that he would "review and announce it with a sense of urgency." A week earlier, on the 18th, when President Moon ordered "special measures," the Ministry of Economy and Finance and related ministries hurriedly prepared a package of measures, which is scheduled to be announced on the 28th. The mention of an emergency financial and economic order at the party-government-Blue House meeting is in the same context. This order can be issued by the president in the event of a natural disaster or a serious fiscal and economic crisis when there is no time to wait for the National Assembly to convene.

Concerns about hasty budget preparation ahead of the general election are also being raised. Kim Jae-won, policy chief of the United Future Party, said on a radio program on the 25th, "I am willing to cooperate with preventive and proactive supplementary budget preparation," but added, "However, if the supplementary budget includes populist spending or government publicity expenses, they should be boldly cut."