Beginning as early as late August, people who belong to the bottom income bracket of up to 80 percentile will receive 250,000 won (about 220 U.S. dollars) per person in “subsidy for shared recovery from Covid-19.” Therefore, a four-member family will receive 1 million won (about 880 dollars). Self-employed and small business owners who suffered damage from the pandemic will receive up to 9 million won (7,940 dollars) per person from September.
The government held a Cabinet meeting presided over by Prime Minister Kim Bu-gyum and approved a second extra budget of 33 trillion won (29 billion dollars), the largest ever in history, on Thursday. The centerpiece of the extra budget is a “package of three subsides for Covid-19 damage” worth 15.7 trillion won (13.8 billion dollars). When combining the national subsidy for citizens and the “Consumption Plus subsidy” of extra 100,000 won per person paid to low-income households, the total payout amounts to 10.7 trillion won (9.4 billion dollars). The subsidy for damage including “Hope and Recovery fund” paid to small business owners amounts to 3.9 trillion won (3.4 billion dollars), while cashback for credit card use, which amounts to up to 300,000 won (265 dollars) per person, adds up to 1.1 trillion won (1 billion dollars) in total. Since cashback is made available to high-income earners, the subsidies can be effectively considered a “cash payment package” for all citizens.
Detailed standards on payment of the subsidies will be announced after late this month. Since it is not known who will be receiving subsidies at present, there can be confusion. Some critics at the National Assembly have already suggested that the beneficiaries of the subsidies can be changed.
Since the government has started payment of massive cash-like subsidies ahead of next year’s presidential election, the government’s annual spending of 604.7 trillion has exceeded 600 trillion won for the first time ever. Since the government has decided to use 2 trillion won (1.77 billion dollars) to repay national debt and this year’s economic growth target has been raised, the ratio of national debt relative to GDP will decline 1.0 percentage point to 47.2 percent.
Ae-Jin Ju email@example.com