Second Disaster Relief Fund and Government Treasury

[Asia Economy Reporter Lee Kwang-ho] There is growing demand to provide a 'second disaster relief fund' to all citizens struggling due to the novel coronavirus infection (COVID-19) crisis. This is because disaster relief funds and local currency have shown effects in stimulating consumption. Above all, there is an expectation that even after COVID-19 ends, the economy is likely to remain poor for a considerable period.

The second disaster relief fund was first mentioned recently when Lee Jae-myung, Governor of Gyeonggi Province, proposed it to the government. On the 2nd, Governor Lee officially requested the government to prepare a supplementary budget (supplementary budget) to provide 200,000 won per person as the second disaster relief fund to all citizens. Following this, Kim Doo-kwan, a member of the Democratic Party of Korea, expressed agreement with Governor Lee's proposal, and voices of support emerged within the ruling party.

If 200,000 won per person is paid as the second disaster relief fund to all 51.78 million people, a budget of 10.356 trillion won is required. Considering that the second supplementary budget for disaster relief was 12.2 trillion won, if the second disaster relief fund is provided, a total budget exceeding 22.5 trillion won will be spent on disaster relief payments. The government says that while preparing the second and third supplementary budgets, it has already carried out intense expenditure restructuring, saying it has "tightened the belt as much as possible." In other words, the funds for the second disaster relief fund will likely need to be raised through deficit bond issuance. If this happens, the national debt will increase to 850.5 trillion won, and the increase compared to last year will exceed 109.7 trillion won, far surpassing 100 trillion won. This is why the government is reluctant to provide the second disaster relief fund.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, drew a line on the 1st when announcing the '2020 Second Half Economic Policy Direction,' saying, "From the perspective of the fiscal authorities, we are not considering additional disaster relief payments," and "The government has not considered it at all." Economic experts also worry that if the second disaster relief fund is provided, the country's finances will become strained, leaving insufficient 'ammunition' to efficiently overcome the COVID-19 crisis.

From the government's standpoint, fiscal soundness must certainly be considered. It is not possible to indiscriminately distribute money to the public. However, saying "we cannot provide because the treasury is empty" while many people are currently struggling to make a living is not a desirable image of the government. After all, it is the people who fill that treasury. However, those hoping for disaster relief funds should have the awareness that "I will repay that money in the future." The mindset of "future generations will repay the money I spent" is irresponsible.

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