[Full Text] Hong Nam-ki "Emergency Disaster Relief Fund 'One-Point Supplementary Budget' to be Submitted to the National Assembly This Afternoon"

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance. (File photo)

[Sejong=Asia Economy Reporter Joo Sang-don] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced on the 16th, "This afternoon, we will submit a 'one-point' supplementary budget bill to the National Assembly exclusively for the emergency disaster relief fund."

On this day, Deputy Prime Minister Hong made this announcement at the Government Complex Sejong in the '2020 2nd Supplementary Budget Announcement.'

At this occasion, Deputy Prime Minister Hong explained, "Considering that the benefit to the people should be delivered as soon as possible to maximize the effect due to the urgent nature of the support," and "the government has decided to provide an emergency disaster relief fund of 1 million KRW based on a four-person household to 70% of households excluding the top 30% income group, taking into account the severity and the breadth and depth of the damage caused by this situation."

Below is the full text of Deputy Prime Minister Hong's announcement.

Dear respected citizens, our livelihoods and economy are currently facing unprecedented difficulties with much greater uncertainty than during the IMF foreign exchange crisis.

We all need 'extraordinary measures' to endure this difficult time and protect our lives.

Accordingly, the government decided and announced the payment plan for the 'emergency disaster relief fund' at the emergency economic meeting presided over by the President on March 30. Today, I would like to explain the '2nd supplementary budget bill' to support this.

So far, the government has been announcing and implementing support measures exceeding 150 trillion KRW, including a comprehensive package worth 32 trillion KRW starting with urgent quarantine responses against the unprecedented COVID-19 infectious disease, and a financial stability program worth over 100 trillion KRW including fiscal and financial support.

Moreover, including indirect support effects such as loan and guarantee maturity extensions, social insurance premiums, VAT, and corporate tax payment deferrals amounting to 350 trillion KRW, the total scale reaches approximately 500 trillion KRW.

In particular, considering the severity and the breadth and depth of the damage caused by this situation, the government decided to provide an emergency disaster relief fund of 1 million KRW based on a four-person household to 70% of households excluding the top 30% income group. Considering the urgent nature of the support, which maximizes its effect when benefits reach the people as soon as possible, we will submit a one-point supplementary budget bill exclusively for the emergency disaster relief fund to the National Assembly this afternoon.

We hope the National Assembly will discuss this intensively and swiftly so that the promised support can be implemented as soon as possible for the people.

Now, I will explain the scale, content, and funding of the supplementary budget.

The total required amount for the emergency disaster relief fund is 9.7 trillion KRW. The funding will be shared between the central government and local governments at a ratio of 8:2 (7:3 in the case of Seoul), and accordingly, the government has prepared a supplementary budget bill of 7.6 trillion KRW excluding the 2.1 trillion KRW burden of local governments.

The supplementary budget expenditure project is solely the emergency disaster relief fund project, in line with the one-point supplementary budget purpose, and I will now explain the specific details.

First, the support target for this emergency disaster relief fund is set at 14.78 million households, which corresponds to the bottom 70% income group. The bottom 70% income support criterion was decided after much discussion and consideration, taking into account urgency, fairness, and limited fiscal capacity.

We sincerely ask for generous understanding from those citizens who are not included in the support target due to various circumstances.

Eligibility will be determined based on health insurance premiums as of the end of March this year. However, even if a household falls within the bottom 70% income group, high-asset households meeting certain criteria will be excluded. This includes households with a combined property tax base exceeding 900 million KRW or financial income subject to comprehensive financial income tax of 20 million KRW or more annually.

Second, the support amount will vary by household size, with a maximum payment of 1 million KRW. Single-person households will receive 400,000 KRW, two-person households 600,000 KRW, three-person households 800,000 KRW, and households of four or more persons will receive 1 million KRW.

Previously, low-income consumption coupons and special childcare coupons, which were provided as emergency support, will be separately supported if eligible. Considering the overall framework of COVID-19 measures, a four-person household receiving basic livelihood security benefits (including two children under seven years old) can receive up to 2.2 million KRW in additional support.

Third, the payment method will utilize electronic money or local gift certificates by each local government. Since electronic money is already in use by local governments, it allows for rapid execution and can limit usage periods, which is expected to help the support funds quickly translate into consumption.

Fourth, to ensure orderly and coherent implementation with emergency disaster support projects independently promoted by local governments, we have closely coordinated project plans in advance. In principle, the government's basic framework of targeting the bottom 70% income group and providing 1 million KRW per household of four or more persons will be maintained, but local governments can flexibly implement additional payments and payment methods according to local conditions.

Now, I will explain the funding for the supplementary budget.

The IMF recently revised its forecast, expecting the global economy to shrink by 3% this year, with most advanced countries experiencing negative growth. Given the current situation where it is difficult to predict the extent and duration of the economic impact of COVID-19, we must prepare for even greater waves and difficulties. Considering these points comprehensively, as promised during the announcement of the disaster relief fund payment plan, this supplementary budget will be fully covered by adjusting the existing budget for this year without issuing deficit bonds.

In securing supplementary budget funds through expenditure restructuring, the government has strived to consider three things: not undermining the original purpose of expenditure projects, reflecting recent changes in economic variables and budget execution status, and incorporating efforts such as government-led cost-saving measures. As a result, the required 7.6 trillion KRW was secured through 6.4 trillion KRW of expenditure adjustment by cutting expenditure projects and 1.2 trillion KRW from early repayment and additional deposits of several funds.

First, regarding expenditure adjustments, we cut about 2.3 trillion KRW focusing on areas where savings are possible by reviewing the execution status of individual expenditure projects after the COVID-19 outbreak. We reduced budgets for projects where execution savings are possible by thoroughly checking bidding, contracting, and progress in defense and social overhead capital (SOC) sectors, and also cut official development assistance (ODA) projects reflecting changes such as travel restrictions in developing countries.

Second, as part of government-led efforts and sharing the burden, we adjusted about 800 billion KRW mainly from personnel expenses and government building construction costs. This includes savings from delayed recruitment in the first half of the year, full cuts of annual leave compensation, and partial reductions in government building construction costs considering project schedules.

Third, we identified about 500 billion KRW in reductions due to recent economic changes such as falling oil prices and interest rates. We cut interest repayment costs on government bonds and other debts due to lower interest rates, and adjusted fuel-related budgets such as vehicle fuel and heating costs, excluding necessary actual expenses, due to falling oil prices.

Fourth, considering the reduced need to secure won-denominated assets of the foreign exchange stabilization fund due to recent exchange rate increases, we reduced deposits to the foreign exchange stabilization fund by 2.8 trillion KRW.

Meanwhile, along with this expenditure restructuring, we sought to maximize the use of various funds. After closely analyzing the cash flow and management status of each fund, we secured an additional 1.2 trillion KRW by receiving deposits from funds currently holding mobilizable resources, such as the housing fund and farmland fund.

Thanks to these efforts, I would like to inform you that this supplementary budget of 7.6 trillion KRW will be implemented without issuing deficit bonds, maintaining the national debt ratio at the original level.

Dear respected citizens, this emergency disaster relief fund will alleviate the livelihood burdens of the people and stimulate consumption, serving as a catalyst to warm our frozen economy.

The government will mobilize all possible measures in finance, taxation, and finance boldly and swiftly until this crisis is over. In addition to this supplementary budget, the government will continuously review additional measures to protect our livelihood base from COVID-19, minimize bankruptcies and unemployment of companies facing crisis, and ultimately support the resilience and recovery of our economy.

In this process, finance must play a more active role as the last bastion of our economy. We are currently preparing additional measures among related ministries to prepare for the employment shock that will soon come, which will be a representative example.

This disaster relief fund is an 'emergency' disaster relief fund. To ensure that the benefits of the emergency disaster relief fund reach the people as soon as possible, the active cooperation of the National Assembly and local governments is crucial. The government will submit the supplementary budget bill to the National Assembly today. We earnestly request the National Assembly to start deliberations as soon as possible for the prompt approval of the supplementary budget bill to alleviate the difficulties of the common people.

Dear respected citizens, just as the entire nation united to achieve COVID-19 quarantine that the world admires, the government will do its best to ensure that the economy quarantine is also properly carried out so that our economy can return to normal track as soon as possible.

Thank you.

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