The 2nd Supplementary Budget of 34.9 Trillion Passed by the National Assembly... National Debt Ratio Drops from 48.2% to 47.2%

Disaster Relief Fund Paid to Bottom 88% Income Bracket
Cashback for Consumption Activation Reduced

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The second supplementary budget (supplementary budget) of 34.9 trillion won, prepared by the government in response to the COVID-19 crisis, has passed the plenary session of the National Assembly. This is an increase of 1.9 trillion won from the originally planned 33 trillion won by the government.

On the 24th, the Ministry of Economy and Finance announced that the 2021 second supplementary budget for coexistence and damage recovery support to overcome COVID-19 was confirmed by the National Assembly. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, attended the plenary session of the National Assembly that day and expressed his consent to the increase.

There were increases in support for small business owners' damage (1.4 trillion won), coexistence national support fund (500 billion won), emergency quarantine response (500 billion won), and support for vulnerable groups and livelihoods (200 billion won). On the other hand, job projects (300 billion won), bus and railway coupons (8.9 billion won), and credit card cashback (400 billion won) were cut. However, since 1.9 trillion won of the existing budget was utilized, no additional deficit bonds were issued.

The plan to repay 2 trillion won in government bonds included in the government proposal will also proceed without change. Accordingly, this year's national debt is expected to decrease from 965.9 trillion won at the time of the first supplementary budget to 963.9 trillion won.

The national debt ratio compared to Gross Domestic Product (GDP) will decrease by 1 percentage point from 48.2% to 47.2%. Although the effect of the 2 trillion won government bond redemption on reducing the national debt ratio is 0.1 percentage points, the denominator increases due to the upward revision of the growth rate forecast, resulting in an additional 0.9 percentage point decrease.

The integrated fiscal balance deficit, which shows the state of the national finances, will slightly increase from 89.9 trillion won at the time of the first supplementary budget to 90.3 trillion won, but the deficit ratio compared to GDP is expected to improve from 4.5% to 4.4% due to the upward revision of the growth rate forecast.

Meanwhile, the government convened an extraordinary Cabinet meeting at 10 a.m. that day to present and approve the supplementary budget announcement plan.