[Q&A] Hong Nam-ki: "Supplementary Budget Fully Funded by Expenditure Restructuring Without National Bond Issuance... Submitted to National Assembly Next Week"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki stated on the 8th, "(The emergency disaster relief fund) is being prepared as an additional supplementary budget including expenditure restructuring work according to the already announced criteria, and it is almost at the final stage, with plans to submit it to the National Assembly next week."

At a briefing on the results of the 4th Emergency Economic Meeting chaired by President Moon Jae-in, Deputy Prime Minister Hong said, "We have already decided and announced the support criteria comprehensively considering urgency, support equity, and fiscal capacity," drawing a line on the payment of emergency disaster relief funds to all citizens nationwide.

Below is a Q&A session with Deputy Prime Minister Hong Nam-ki, Minister of Trade, Industry and Energy Sung Yun-mo, Minister of SMEs and Startups Park Young-sun, and Commissioner of the National Tax Service Kim Hyun-joon.

▲Was there any discussion about the emergency disaster relief fund at the Emergency Economic Meeting? What is your stance on providing disaster relief funds to all citizens nationwide?

=Hong Nam-ki/There was no discussion about the disaster relief fund at today's 4th Emergency Economic Meeting. The government has already announced the disaster relief fund criteria considering urgency, equity, and fiscal capacity. We are proceeding with the supplementary budget preparation based on the previously announced criteria, and it is almost at the final stage. It will be covered by expenditure restructuring without additional national bond issuance. We plan to submit the government's supplementary budget proposal to the National Assembly next week.

▲There is a plan to pre-execute the budget, but does this reduce the capacity for economic rebound in the second half of the year?

=Hong/With social distancing causing consumption and sales to almost plummet, the public sector aims to provide liquidity by prepayment and advance payment to struggling companies. After the COVID-19 situation settles, additional consumption promotion measures will be necessary to restore economic vitality and stimulate demand.

▲What is the expected economic effect of the 17.7 trillion won scale?

=Hong/The public institutions will play a role in early demand creation for self-employed, small business owners, and SMEs facing difficulties. There will be effects of temporarily reinforcing liquidity and enhancing consumption capacity through deferred payments. While there is a domestic demand driving effect, reinforcing liquidity and demand for self-employed, small business owners, and SMEs in difficult times is highly meaningful.

▲The shutdown of overseas factories due to COVID-19 is increasing.

=Sung Yun-mo/There were shutdown difficulties due to the outbreak of COVID-19 in China in February. Currently, it has spread worldwide including Europe, the U.S., and Southeast Asia, and the shutdown of factories of global companies is on the rise. As of the 6th, 49 overseas factories, about 27% of major overseas factories, have suspended operations. There is no disruption at domestic production sites. We have confirmed no supply disruptions for 338 directly managed materials, parts, and equipment items. We are continuously identifying and addressing difficulties faced by overseas enterprises through support centers.

▲The Korea Venture Investment Corp. (KVC) plans to directly invest 150 billion won in startups. What are the selection criteria?

=Park Young-sun/The program may invest as little as 100 million won or tens of billions per company. We plan to invest in at least 1,000 companies. We intend to focus on future industries such as bio-diagnostic kits that can carry the brand name ‘Brand K’ and online/non-face-to-face (untact) sectors. The selection process is just beginning.

▲What is the response plan for companies that go bankrupt after advance payment?

=Hong/It is an extreme case and should not happen, but it is possible. The government plans to reflect content in budget execution guidelines to select companies considering the possibility of recovery. We will make efforts to recover and are currently devising measures to respond to contract breaches. If companies abuse this and go bankrupt, additional recovery efforts can be made under the National Bond Management Act. We will do our best to prevent cases of closure or bankruptcy.

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