"An Additional 20 Trillion Won Needed for Extra Budget, Amount Could Increase Further
Active Consideration of COVID-19 Policy Finance Debt Forgiveness"
Jinseong Jun, Policy Committee Chair of the Democratic Party of Korea, stated that the "250,000 won universal livelihood recovery subsidy" could be included in the second supplementary budget (extra budget). However, he noted that the specific method of support may vary depending on the government's fiscal capacity.
On June 6, during an interview with MBC Radio, Jun said, "Of course, it is one of the cards for the supplementary budget," adding, "In the first supplementary budget, the scale of support for the livelihood recovery sector, which was aimed at overcoming sluggish consumption and weak domestic demand, was far too small." He continued, "It is naturally one of the options, but we need to examine how much fiscal room there is, and also, the capacity for consumption differs by income group," indicating that the scope and method of support require further review.
He said, "If we provide universal support, the consumption effect is certain and we can achieve the policy goals, but there is the issue of whether the government has enough fiscal capacity. Therefore, whether to focus selectively on the middle- and lower-income groups depends on the government's fiscal situation."
He also mentioned the issuance of local currency as an alternative. Jun pointed out that, with government financial support, people can purchase local gift certificates at a 10% discount, and said, "If fiscal capacity is limited, providing a 10% subsidy to achieve a 100% effect through local currency is also very necessary."
He also addressed the issue of self-employed people's debt resulting from business suspension orders during the COVID-19 period. Jun said, "At that time, the government issued business suspension orders to small business owners and self-employed people, and to compensate for the resulting business losses, policy finance was provided. However, all of this remains as debt," adding, "Because the debt burden is very heavy, active support measures for this issue are also needed."
He went on to say, "We believe that aggressive consideration should be given to debt forgiveness in the area of policy finance."
Regarding small business owners who have debts with regular financial institutions, he said, "We need to consider ways to restructure their debts through programs such as the Saechulbal Fund or bad banks."
On the scale of the second supplementary budget, Jun stated, "If we subtract the approximately 14 trillion won finalized for the first supplementary budget from the 35 trillion won proposed by the Democratic Party, the party’s basic position is that an additional 20 to 21 trillion won is needed."
He added, "Our economic situation is deteriorating, and especially the slump in consumption in the livelihood economy is serious. Depending on the president's determination and the government's fiscal capacity, the amount could increase even further."
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