Ruling Party and Government Lean Toward 'Selective Support' for Disaster-Affected Small Businesses
Sector-Specific Differential Support Expected
[Asia Economy Reporters Kim Hyun-jung and Jang Se-hee] The government and ruling party are pushing for a plan to provide the 3rd emergency disaster relief fund in response to the resurgence of the novel coronavirus infection (COVID-19) at a scale of '3 trillion won + α.' Since universal payment to all citizens or differentiated payment based on median income would require enormous budget and administrative capacity, they have settled on a 'selective support' targeting small business owners who have been most affected.
According to government and ruling party officials on the 27th, the main point of the 3rd disaster relief fund payment plan currently being discussed in the National Assembly is 'pinpoint support for affected small business owners.' The total budget is expected to be around 3 trillion won, which is similar in scale to the 2nd disaster relief fund (3.8 trillion won) paid through the 4th supplementary budget previously implemented. A government official said, "To ensure the fastest possible payment, it is most likely to be pursued in a similar manner and scale to the 2nd disaster relief fund payment that was previously promoted."
There is a strong expectation that it will not deviate significantly from the '3.6 trillion won' proposed by the opposition People's Party at the early stage of discussions. As with the 2nd support, the government and ruling party agreed on a plan to provide about 1 to 2 million won per sector among small business owners with a certain scale (annual sales of 300 million won or less). In addition, some groups such as the near-poor whose livelihoods are threatened are expected to be added.
The funding is planned to be included in next year's main budget, currently under review by the National Assembly, which is about 556 trillion won in scale, and is expected to be covered through contingency funds and government bond issuance.
The specific increase amount is still under discussion within the ruling party. Although some within the ruling party previously suggested preparing a separate supplementary budget, the goal has been set to include it in next year’s main budget, obtain the Ministry of Economy and Finance’s approval for the increase, and process it by the legal deadline of the 2nd of next month.
Universal payments such as the nationwide regional currency (local gift certificates) proposed by Gyeonggi Province Governor Lee Jae-myung and others, or payments based on median income, have been excluded from the discussion. This is the result of focusing on options with limited resources and those that can be administratively implemented quickly.
However, it is not possible to rule out the possibility that the goal of 'payment before Lunar New Year' targeted by the ruling party and government may become difficult due to friction during discussions with the opposition. Currently, the People's Party is reiterating the opinion that the funding for the 3rd disaster relief fund should be secured by cutting the 'Korean New Deal' budget. A government official said, "We are not currently considering cutting existing project budgets," adding, "We need to observe the situation of the National Assembly discussions."
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