[3rd Supplementary Budget] 35.3 Trillion Won Allocated... Third Supplementary Budget in 48 Years and Largest Ever

Expenditure Restructuring 10.1 Trillion · Fund's Own Resources Utilization 1.4 Trillion... National Bond Issuance 23.8 Trillion
Revised Revenue 11.4 Trillion · Record High... Actual Disbursed Amount 23.9 Trillion

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is giving a preliminary briefing on the 3rd supplementary budget bill for 2020 at the Government Complex Sejong on the 29th of last month.

[Asia Economy Reporter Kwangho Lee] The government has prepared a third supplementary budget (supplementary budget) worth 35.3 trillion won to overcome the novel coronavirus infection (COVID-19). This supplementary budget is the sixth since the Moon Jae-in administration and is the largest single supplementary budget in 48 years. The government plans to use this supplementary budget to strengthen the economy and invest in preparation for the post-COVID era.

On the 3rd, the government held an extraordinary cabinet meeting at the Government Complex Seoul, presided over by Prime Minister Chung Sye-kyun, to finalize the "3rd supplementary budget for early economic crisis recovery and preparation for the post-COVID era," and decided to submit it to the National Assembly on the 4th.

This supplementary budget is the largest ever, surpassing the 1998 International Monetary Fund (IMF) foreign exchange crisis supplementary budget (13.9 trillion won) and the 2009 global financial crisis supplementary budget (28.4 trillion won). Previously, the government had invested 23.9 trillion won in the first (11.7 trillion won) and second (12.2 trillion won) supplementary budgets. Including the third supplementary budget, the total reaches 60 trillion won.

The funding for the supplementary budget will be covered by expenditure restructuring (10.1 trillion won) and fund self-resources (1.4 trillion won). The remainder will be raised through government bond issuance (23.8 trillion won). This supplementary budget includes a revenue adjustment of 11.4 trillion won to cover the expected shortfall in tax revenue due to the economic downturn caused by the COVID-19 crisis, so the actual amount to be executed is 23.9 trillion won. The revenue adjustment is also the largest ever.

Of the 23.9 trillion won to be released this time, 5 trillion won will be used to strengthen financial packages (135 trillion won + α) to protect Korean companies and jobs. 1.9 trillion won will be invested as emergency funds for small business owners, small and medium-sized enterprises, and mid-sized companies, and 3.1 trillion won will be supplied as emergency liquidity support for key industries and companies such as aviation, shipping, and refining.

In addition, 8.9 trillion won will be provided for special employment stability measures to overcome the job crisis. This is the largest single project. Specifically, 1.7 trillion won will be allocated for employment retention subsidies (580,000 people), including easing unpaid leave requirements, and 1.5 trillion won will be expanded for emergency employment stability subsidies for special types of workers and self-employed individuals (1.14 million people).

Along with this, 11.3 trillion won will be spent on an economic reinforcement package. A total of 3.7 trillion won will be distributed to revitalize domestic consumption, exports, and regional economies through eight discount consumption coupons (1.684 billion won) for agricultural and marine products, lodging, tourism, culture, and dining out; Onnuri gift certificates (2.76 billion won); subsidies exclusively for returning companies (200 million won); and local love gift certificates (3.177 billion won). Furthermore, 76 trillion won will be poured into the Korean New Deal?digital, green, and human (employment stability)?over the next five years. The goal is to create 550,000 jobs. This supplementary budget includes 5.1 trillion won for this, and a comprehensive plan will be finalized and announced in July.

Moreover, 2.5 trillion won will be invested to advance, industrialize, and globalize K-quarantine to lead the global quarantine market, as well as to strengthen social and natural disaster response systems such as industrial accidents and fires.

Due to the issuance of the largest-ever deficit government bonds, fiscal soundness indicators will also deteriorate to record levels. This year, the national debt ratio relative to GDP will rise to 43.5%, the highest ever, and the managed fiscal balance deficit ratio will expand to 5.8%, surpassing the 4.7% recorded in 1998 during the aftermath of the foreign exchange crisis, setting a new record.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "If growth can be driven in a short period and sound fiscal health can be restored, the rise in the national debt ratio due to the third supplementary budget is fully bearable," adding, "We will accelerate the transition to a leading economy and make every effort." The government plans to execute more than 75% of the supplementary budget within three months upon its passage by the National Assembly.