[Fact Check] "Why Insist on Prepaid Cards?" ... Controversy Over Daegu City's Emergency Living Expenses

Preventing Capital Outflow and Revitalizing Local Economy... Payment Scheduled for Early Next Month

On the morning of the 27th, members of the Democratic Party from Daegu City and district councils held a street picketing protest near Banwoldang Station in Jung-gu, Daegu, demanding the immediate payment of emergency livelihood funds. (Photo by Yonhap News)

[Asia Economy Yeongnam Reporting Headquarters Reporter Lee Young-wook] Regarding the emergency livelihood funds provided by Daegu City to citizens struggling due to the spread of the novel coronavirus infection (COVID-19), it responded, "It takes time to produce prepaid cards to be distributed to eligible recipients, and payment is possible in early April."

The controversies currently raised about Daegu City's emergency livelihood funds mainly concern two issues: 'Why does Daegu pay with prepaid cards while other cities and provinces pay in cash?' and 'Daegu's payment is much later compared to other cities and provinces.'

First, among the 10 metropolitan local governments preparing to provide emergency livelihood funds, Seoul plans to pay with local love gift certificates or prepaid cards, Incheon with local currency or Onnuri gift certificates, Gyeonggi Province with local currency, and Gwangju, Daejeon, and Gyeongnam with prepaid cards. None of them pay in cash.

On the contrary, Daegu plans to pay survival funds in cash to self-employed people in the future, in line with the purpose of supporting rent payments and other expenses.

The claim that the payment is too late is also untrue. Daegu City, Seoul City, and Daejeon City plan to pay in early April, while other cities and provinces plan to pay in mid-April. Daegu City explains that its payment timing is rather early.

However, time is needed to produce prepaid cards. Gyeonggi Province is expected to pay 100,000 KRW in local currency to all residents at once, so there is no need for card production, application, or verification procedures, which is why it can pay relatively quickly.

The reason why 11 metropolitan local governments, including Daegu City, pay with prepaid cards and Onnuri gift certificates instead of easy cash payments is that if cash is paid, a considerable number of citizens tend to hold onto the cash without immediate consumption. Even if they consume, it is difficult to achieve the original support purpose of revitalizing the local economy, which is collapsing due to outflow caused by online shopping, gambling consumption, and shopping at large marts.

Accordingly, Daegu City’s position is that it decided to provide prepaid cards and Onnuri gift certificates, which are temporary and limited to certain business sectors, to create a virtuous cycle where consumption happens quickly, especially for self-employed and small business owners severely affected in the region, and this leads to economic recovery.

Lee Seung-ho, Deputy Mayor for Economic Affairs of Daegu City, emphasized, "We hope citizens understand that much of the controversy is not true," and added, "Daegu City will do its best to ensure that emergency livelihood funds are paid to those who really need them and that the ripple effects are maximized to serve as a pillar for revitalizing the local economy."