Small Business Support Plan to be Announced as Early as the 28th... Supplementary Budget of About 33 Trillion Won Under Review

Ahn Cheol-soo, Chairman of the Presidential Transition Committee (right), is giving opening remarks at the COVID-19 vaccine development site meeting held on the morning of the 25th at SK Bioscience in Bundang-gu, Seongnam-si, Gyeonggi-do. On the left is President-elect Yoon Seok-youl. Photo by Transition Committee Press Corps

[Asia Economy Reporter Kim Hyung-min] The Presidential Transition Committee is set to announce the scale and details of support measures for small business owners, including loss compensation, as early as the 28th. Along with this, the outline of the second supplementary budget (supplementary budget) is also expected to be revealed.

Hong Kyung-hee, deputy spokesperson for the Transition Committee, stated at a briefing at the committee's office in Tongui-dong, Jongno-gu, Seoul on the 25th, "The Special Committee on COVID-19 Emergency Response's Livelihood Economy Division will finalize the plan through a meeting this Wednesday."

The announcement will be made directly by Transition Chairman Ahn Cheol-soo. Deputy spokesperson Hong explained the schedule, saying, "It will be difficult to announce on Wednesday itself, so the announcement will be made over Thursday and Friday."

The support plan for small business owners will comprehensively include additional payments of quarantine support funds, a pledge of President-elect Yoon Seok-yeol, improvements to the loss compensation system, and financial and tax support measures such as debt adjustment.

The quarantine support fund is likely to be paid at 6 million won, as pledged by President-elect Yoon. The number of recipients may increase beyond the 3.2 million small business owners who were eligible for the 3 million won support fund earlier this year.

Revisions to the loss compensation system are expected to include raising the correction rate and the minimum amount. The Transition Committee is discussing raising the correction rate, which is used to estimate the direct loss amount caused by compliance with quarantine measures among the decrease in operating profit of small business owners, from the current 90% to 100%, and increasing the minimum amount from the current 500,000 won to 1 million won.

The financial support plan focuses on reducing the interest burden on small business loans, extending repayment schedules, and reducing excessive debt.

The Transition Committee plans to include in the financial support plan a bank refinancing and secondary interest subsidy support measure that converts high-interest loans obtained from secondary financial institutions such as card companies, capital companies, and savings banks into bank loans to reduce interest burdens.

They are also considering extending the maturity of existing loans, scheduled for the end of September, to the end of this year, establishing a fund to reduce small business debt, and increasing the principal reduction rate for small debts from the current 70% to 90%.

As for tax support measures, plans are underway to postpone the payment deadlines for taxes such as local income tax for small self-employed businesses and small and medium-sized enterprises.

The Transition Committee is looking into organizing the second supplementary budget at around 33 trillion won to support these small business owner support measures. They are reviewing whether the supplementary budget funds can be secured through expenditure restructuring, global surplus funds, revenue revisions, and surplus fund resources.

In this case, the scale of expenditure restructuring is mentioned to be up to 10 trillion won. This is because the tax revenue conditions this year are favorable, allowing the budget revenue scale to be increased by up to 10 trillion won through revenue revisions.

Additionally, they plan to mobilize 3.4 trillion won from global surplus funds generated by last year's excess tax revenue and surplus fund resources as supplementary budget funds.

The Transition Committee is considering ways to avoid or minimize the issuance of deficit bonds, but realistically, some issuance of deficit bonds may be unavoidable.