The Democratic Party and Government Discuss Economic Policy Directions for the Second Half of the Year… Ruling Party Urges "Government to Take Active Measures"

[Asia Economy Reporter Jeon Jin-young] The Democratic Party of Korea and the government held a party-government council meeting on the 25th to discuss the economic policy direction for the second half of the year. Amid discussions on the second supplementary budget (supplementary budget) and nationwide disaster relief funds, the party pressured the government, saying, "Now is the time for active fiscal policy, and we urge the government to take an active stance." Regarding the disaster relief payment plan to be included in the second supplementary budget, the party supports payment to the 'entire population,' while the government insists on covering 'up to the bottom 70% of income.'

Floor leader Yoon Ho-jung said in his opening remarks, "The nationwide disaster relief package will be a comprehensive measure to revitalize domestic demand beyond the entire population."

[Image source=Yonhap News]

Floor leader Yoon explained, "It combines loss compensation support for small and medium-sized business owners affected by quarantine measures, direct cash support to households exhausted by COVID-19, and additionally, a win-win consumption subsidy to stimulate consumption. It is a package that supports the affected groups such as small business owners and self-employed people broadly and deeply, while increasing income for middle and low-income groups to revitalize domestic demand and actively encourages consumption among high-income earners who have the capacity to consume. I want to call this method a universal support system for the entire population."

He added, "Since approximately 32 trillion won in additional revenue has already been secured compared to the previous year, it seems possible to compile the supplementary budget without issuing government bonds. Compared to the fiscal expenditures of advanced countries overseas in response to COVID-19, our COVID-19 fiscal spending is still considered insufficient. We expect a more active role of fiscal policy," urging the government to respond.

He continued, "This is a time when inclusive fiscal policies are needed to reduce household burdens and resolve polarization," emphasizing, "The government must play a significant role to sufficiently support the people who have endured sacrifices trusting the government so far."

Park Wan-joo, chairman of the Policy Committee, said, "When an economic crisis hits, the damage to the vulnerable always intensifies," adding, "Many citizens and companies have suffered sacrifices, but especially small business owners, self-employed people, and young people without a strong social foundation have been included in the discussions. An important focus of today's council is to recover from the damage caused by the COVID-19 situation and to prepare at least minimal policies."

[Image source=Yonhap News]

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said in his opening remarks, "The second half of this year is a period of full economic recovery after COVID-19. It is also an important time to decide on the Korean New Deal and the carbon-neutral future-leading strategy."

Deputy Prime Minister Hong said, "To enhance the policy's perceptibility, we will focus on preparing the second supplementary budget in connection with ongoing reviews. The government will concentrate on implementing the economic policy direction for the second half of the year and make every effort to ensure the early return of our economy, which has deviated from the growth path due to the COVID-19 crisis."

He added, "We will raise the potential growth rate to the next level through improving the economic structure, enhancing competitiveness and productivity, and securing growth engines to prepare for an innovative future."