President Moon's 'Economic Central Disaster and Safety Countermeasures Headquarters' Message: "Preventing the Collapse of People's Lives Is the Top Priority" (Comprehensive)

President's First Emergency Economic Meeting on the 19th... Special Financial Measures of 50 Trillion Won to Support SMEs and Small Business Owners

[Asia Economy reporters Ryu Jeong-min, Won Dara, Jang Se-hee] "Preventing the collapse of the people's lives is the top priority." President Moon Jae-in said this on the 19th at the Blue House 'Emergency Economic Meeting.' The Blue House's perception surrounding the 'novel coronavirus infection (COVID-19)' is clear. It means that urgent and extraordinary measures are needed to dispel the dark clouds of crisis looming over the Korean economy.

President Moon explained, "At today's first emergency economic meeting, we will decide on the first measures to prevent the risk of bankruptcy for small and medium-sized enterprises (SMEs), small business owners, and self-employed people, who form the foundation of the ordinary economy, and to resolve financial instability," calling it "an extraordinary emergency financial measure worth 50 trillion won."

President Moon said, "First, the new support for emergency management funds for small business owners has been expanded to 12 trillion won. The institutions handling this have also been expanded to include commercial banks, allowing anyone to access ultra-low interest loans at about 1.5%," adding, "Along with this, a special guarantee support worth 5.5 trillion won for SMEs and small business owners will also be implemented."

[Image source=Yonhap News]

Furthermore, President Moon said, "The extension of loan principal maturities will be expanded and implemented across all financial sectors. For the first time ever, the entire secondary financial sector, including savings banks, insurance companies, credit unions, Saemaeul Geumgo, and card companies, has participated in the maturity extension," adding, "All financial sectors will defer interest payments on loans to SMEs and small business owners. A full guarantee program for micro small business owners will also be newly established."

President Moon took these extraordinary measures because the global crisis situation surrounding COVID-19 is serious. Blue House Press Secretary Han Jeong-woo expressed concern, saying, "Recently, as the COVID-19 situation has worsened to a global pandemic stage, we are facing a complex crisis situation involving the expansion of economic interdependence between the U.S. economy and domestic and foreign economies, as well as the real economy."

The 'Emergency Economic Meeting' on the 19th is effectively an economic 'Central Countermeasures Headquarters (CCH).' Key ministers from major economic departments, including Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, as well as Blue House aides such as Chief Secretary Noh Young-min, attended. Bank of Korea Governor Lee Ju-yeol also joined to explore COVID-19 response measures.

President Moon presided over the emergency economic meeting directly and plans to hold meetings weekly if possible. If necessary, it will be operated as a pan-government countermeasure meeting involving economic organizations, labor groups, and private experts. The core agenda on the first day focused on the operation plan for the emergency economic meeting, the preparation of a livelihood financial stability package, and financial support measures for SMEs and small business owners.

In particular, the issues faced by SMEs and small business owners, who have been directly hit by COVID-19, are a detonator shaking the roots of the Korean economy. According to the 'Household Credit (provisional) for Q4 2019' statistics announced by the Bank of Korea on the 25th of last month, the household credit balance at the end of last year was 1,600.1 trillion won, an increase of 27.6 trillion won compared to the end of the previous quarter. This is more than double the 723.5 trillion won during the global financial crisis in 2008. Household credit is a comprehensive household debt figure that includes loans from financial institutions such as banks and insurance companies, as well as pre-payment card usage amounts.

[Image source=Yonhap News]

Accordingly, the government, in cooperation with related ministries, has presented solutions to resolve funding difficulties for small business owners and to respond to the increased volatility in financial markets.

Cho Jung-sik, Policy Committee Chairman of the Democratic Party of Korea, stated at the policy coordination meeting that day, "To prevent the spread of financial market instability to the real sector, we must comprehensively promote market stabilization measures such as liquidity supply, bond market safety funds, corporate bond issuance, and stock market supply-demand stabilization measures." He emphasized the need to shorten the screening period for management stabilization fund loans and credit guarantee fund contributions as much as possible and to lower the criteria for financial support.

Lee In-young, floor leader of the Democratic Party, also announced that day, "We will establish an emergency economic countermeasure headquarters within the party's national crisis overcoming committee and speed up efforts in three major areas: finance, financial support, and self-employed and small business owners." Lee also proposed a "50% donation campaign of lawmakers' salaries."

Meanwhile, the Blue House and the ruling party sympathize with the purpose of disaster basic income but are examining issues such as fiscal soundness from multiple angles. Lee said, "Although the National Assembly approved a supplementary budget of 11.7 trillion won for COVID-19 the other day, it is regrettable that direct support measures were not prepared."

This content was produced with the assistance of AI translation services.