The South Korean government passed an extra budget bill for the fourth round of COVID-19 relief funds at a Cabinet meeting held on Tuesday. The funds, which will support 6.9 million people, range from 500,000 won to 5 million won per person. The extra budget of 15 trillion won will be drawn up for the fourth round of emergency handouts, which are 5.2 trillion won larger than the first round of the COVID-19 emergency relief funds last year.
In particular, 9.9 trillion won out of the 15 trillion won will be covered by issuing government bonds. Regarding the controversy surrounding fiscal sustainability, the ruling Democratic Party of Korea has been saying that after carrying out restructuring of expenditures, the shortfall inevitably needs to be addressed through the issuance of government bonds. In the end, however, about half of the emergency relief funds will have to be covered by national debt.
Under the circumstances, Rep. Hong Ik-pyo, the chief of the ruling party’s policy committee, hinted at an increase in the extra budget on the same day when the third-largest extra budget bill was approved at a Cabinet meeting. He said that the direct support for the agricultural sector, which is urgently in need of support, is missing in the budget bill, adding there is room for an increase here and there in the extra budget bill since the need for additional support is being discussed in the National Assembly.
The country’s national debt is expected to soar to 965.9 trillion won at the end of the year with the issuance of government bonds this time. Even if cash handouts for those who have suffered economic damage due to the prolonged pandemic and government quarantine measures are inevitable, it should not damage national finance. Finance Minister Hong Nam-ki, who was reprimanded by the party leadership for saying the cash handouts should not exceed 12 trillion won, reportedly did not make any comments at the meeting, where the relief funds amounting to 20 trillion won was decided. It appears Hong stepped back again under the pressure of the ruling party. It is questionable whether the country’s head of economy, who should be responsible for the public purse, has been neglecting his duty.
Those eligible for the fourth round of emergency relief funds are up 2 million from the previous round. This is why the government should thoroughly check if public finances are wasted in wrong places. It is pointed out that there are small business owners, who receive government support for having one or two business sites that have recorded a drop in sales, even though their total sales have not seen dramatic decreases. A college student, whose parents lost their jobs, can receive special scholarships while a part-timer, who has lost their job, is ineligible for support, raising questions of fairness. Once the extra budget bill is passed at the National Assembly around March 18, the payment of emergency relief funds will begin just before the by-elections on April 7. The National Assembly should thoroughly check whether there are possibilities of unnecessary and non-urgent payments instead of focusing on increasing the scope and the number of recipients in order to earn more votes.