[Q&A] Hong Nam-ki "3rd Supplementary Budget Bill to be Submitted in June... Mostly Deficit Bonds Issued"

"Emergency Disaster Relief Fund Supplementary Budget, Efforts to Complete Deliberation by April"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance, said on the 22nd, "The 3rd supplementary budget (supplementary budget) will be worked on in May and can be presented in early June," adding, "Most of it will inevitably be financed through deficit bonds issuance."

At a joint government briefing on the results of the 5th Emergency Economic Meeting chaired by President Moon Jae-in on the same day, Deputy Prime Minister Hong said, "The 3rd supplementary budget will reflect the needs for revenue adjustment, 10 trillion won for special employment stability measures, and additional support and financial reinforcement needs amounting to 100 trillion won plus alpha for financial stability."

The following is a Q&A with Deputy Prime Minister Hong.

▲What is the scale and submission timing of the 3rd supplementary budget, and how much deficit bond issuance is expected?

=The 3rd supplementary budget is an unavoidable measure. Overall, it will reflect the needs for revenue adjustment, and also include the 10 trillion won for employment shock countermeasures announced today. The scale is expected to be considerable, and I would say the 3rd supplementary budget will be quite large, with most of it inevitably covered through deficit bond issuance.

▲President Moon mentioned the Korean New Deal; what are the specific plans?

=It could be a Digital New Deal aligned with the transition to a digital nation. It also includes fostering non-face-to-face service industries and non-face-to-face industries. An expanded concept of SOC New Deal, including social overhead capital (SOC), may be included. Social New Deals such as job creation and social safety nets can also be conceived as projects. We will review throughout May and provide additional details later.

▲Is the government’s stance unchanged in response to the ruling party’s demand for 100% emergency disaster relief payments?

=Emergency disaster relief payments are inherently projects that must be provided promptly. We once again request the National Assembly to complete deliberations by April and finalize the decision as soon as possible. If the National Assembly confirms it, the government will prepare thoroughly in advance to enable immediate support with almost no delay.

▲Is there a plan to separately announce employment measures for people in their 40s later?

=The government completed a special customized job plan for people in their 40s at the end of March. However, since the employment situation has changed significantly since then, there is a need to respond to the overall employment shock. If it is judged necessary to have tailored measures for people in their 40s, we will supplement the already reviewed plans and announce additional measures at the appropriate time.

▲What is the economic growth effect of the current period industry support and employment measures?

=The employment and corporate support measures announced today are, as the name suggests, special measures to address the current employment shock, such as unemployment or employment retention. I would say that trying to quantify the economic growth effect as a percentage is less meaningful. Physically, we could force a percentage figure, but beyond that, these measures hold significant economic importance.

▲Is there a plan to revise the 3.4% nominal growth rate in the 3rd supplementary budget?

=We plan to work on the 3rd supplementary budget in May and present it around early June. Along with this, we usually announce the second half economic policy direction in July every year, but this year we plan to move it forward by a month to early June. I expect the second half economic policy direction and the 3rd supplementary budget to be announced around the same time. The economic outlook forecasted in the second half economic policy direction will likely be reflected in the 3rd supplementary budget.

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