Lee Delivers Policy Speech on 30.5 Trillion Won Supplementary Budget
"Even Domestic Demand Is Struggling... 11.3 Trillion Won Allocated to Stimulate Consumption"
"The Weight of Suffering Is Not Equal... 1.13 Million Delinquent Borrowers' Debt to Be Written Off"
President Lee Jae Myung is delivering his first policy speech on the government's submission of the second supplementary budget bill at the National Assembly plenary session hall in Yeouido, Seoul, on the 26th. Photo by Yonhap News
On the 26th, President Lee Jae Myung delivered his first policy speech at the National Assembly, stating, "It is irresponsible negligence for the government to simply stand by and insist on austerity in the face of an economic crisis. Doing so is tantamount to denying the very reason for the government's existence." He added, "They say 'timing is everything in the economy.' Now is exactly that time."
President Lee explained, "To overcome the economic downturn and restore livelihoods, we have drawn up a supplementary budget bill totaling 30.5 trillion won. It is important to revitalize our economy, especially the domestic market, through the prompt formulation and swift execution of the supplementary budget."
President Lee emphasized the government's role while acknowledging the grave reality. He said, "The illegal 12·3 emergency martial law has dealt a fatal blow to an already sluggish domestic market. The rapidly changing international situation, from the U.S.-triggered tariff shock to the recent Israel-Iran conflict, makes it impossible to predict even the near future." He stressed, "Now is the time for the government to step in so that the economy can rebound."
President Lee asserted, "The government must protect the lives of the people and respond to crises with pragmatism. It is not ideology or slogans, but practical actions to revive the economy and livelihoods that should be the direction of the new administration."
"Even Domestic Demand Is Struggling... 11.3 Trillion Won Allocated to Stimulate Consumption"
President Lee Jae Myung is greeting National Assembly Speaker Woo Won Sik after delivering the supplementary budget policy speech at the National Assembly on the 26th. Photo by Yonhap News
President Lee diagnosed, "While export recovery remains sluggish, even domestic demand is facing difficulties. Due to high inflation, high interest rates, and a high exchange rate, the economic growth rate has remained in the 0% range for four consecutive quarters, and in fact, the first quarter even saw negative growth." He continued, "The consumption capacity of the middle class is shrinking, and self-employed individuals are reaching a point where they can no longer bear their debts. In the first quarter, government consumption, private consumption, facility investment, and construction investment all contracted. The number of young people who have given up looking for jobs is at an all-time high, and the number of self-employed individuals closing their businesses has reached one million per year."
In response, President Lee announced that 11.3 trillion won has been allocated to stimulate consumption as an immediate measure against the severe domestic downturn. He said, "We have prepared consumption coupons worth about 13 trillion won to strengthen purchasing power and support the revitalization of the domestic market. The consumption coupons will be universally distributed to all citizens, including taxpayers, but more targeted support will be provided to vulnerable groups and regions facing population extinction. Each citizen will receive 150,000 won, with the amount rising to a maximum of 520,000 won depending on circumstances and region." To breathe life into local economies, he also revealed that an additional 600 billion won in government funding will be injected into regional gift certificates, raising the discount rate and expanding issuance by an additional 8 trillion won.
He also announced the allocation of 3.9 trillion won in investment promotion funds to boost the economy. The main focus is on early investment in social overhead capital (SOC) projects such as railways, roads, and ports, as well as supplying 5.4 trillion won in liquidity to the sluggish real estate project financing (PF) market. President Lee said, "We aim to revive Korea's growth engine by expanding investment in artificial intelligence (AI) and renewable energy, and by providing 1.3 trillion won in funding, including contributions to venture and small business mother funds."
"The Weight of Suffering Is Not Equal... 1.13 Million Delinquent Borrowers' Debt to Be Written Off"
On the 26th, citizens at the Seoul Station concourse watched the live broadcast of President Lee Jae Myung's supplementary budget proposal speech. Photo by Yonhap News
President Lee announced that 5 trillion won has been allocated for livelihood stabilization to support small business owners and vulnerable groups. He explained, "Even in an economic crisis, the weight of suffering is not the same for everyone. The new administration will write off long-term delinquent debt for 1.13 million vulnerable borrowers who have no ability to repay, and will clear debts of up to 50 million won that have been overdue for more than seven years, giving those who are effectively bankrupt and unable to repay a chance to return to normal economic activity." For small business owners who are making sincere repayments, the administration will extend installment periods and further reduce interest, while also increasing closure support grants to help those who have closed their businesses get back on their feet. Additionally, 1.6 trillion won will be invested in strengthening the employment safety net, including expanding unemployment benefits and the National Employment Support System.
President Lee also emphasized the start of fiscal normalization through a 10.3 trillion won revenue adjustment. He stated, "There was a tax revenue shortfall of more than 80 trillion won in total in 2023 and 2024, and a significant shortfall is also expected this year. If the tax revenue gap is left unaddressed, the government will be forced to cancel a large portion of the budget at the end of the year. This would effectively result in austerity management, which would hinder the recovery of livelihoods and the economy." He continued, "The new administration intends to pursue transparent and responsible fiscal policy, not irregular or expedient measures. By reflecting the revenue adjustment in the supplementary budget, we intend to execute only the necessary projects in the right places, even if the budget has already been allocated."
President Lee concluded, "The supplementary budget bill is a priming pump to end the economic drought and the minimum necessary measure for economic recovery. Based solely on pragmatism, I will do my utmost to safeguard the lives of the people and open the path to economic recovery and growth."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
