[Economic Outlook] Will the Current Account Deficit Occur in May... Public Hearing on Financial Tax System Reform Direction Held

Focus on Public Hearing for Financial Tax System Reform Direction
Announcement of Application for Period Industry Stability Fund

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the '9th Emergency Economic Central Disaster and Safety Countermeasure Headquarters Meeting' held at the Government Seoul Office in Jongno-gu, Seoul on the 2nd. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Jang Sehee] The Bank of Korea will announce the balance of payments trends on the 7th. On the same day, the Ministry of Economy and Finance will hold a public hearing on the direction of financial tax reform. The Industrial Stabilization Fund, established to support companies facing financial difficulties due to the COVID-19 pandemic, will also begin accepting support applications starting this week.

◆ Bank of Korea to announce May balance of payments... Focus on COVID-19 impact = The Bank of Korea will announce the balance of payments trends for May on the 7th. In April, exports sharply declined due to the COVID-19 crisis, turning the current account into a deficit (-$3.12 billion) for the first time in a year.

In April, the current account recorded a deficit of $3.12 billion. This marked a shift to deficit after 12 months, following a surplus of $390 million in April last year. In terms of deficit size, it was the largest deficit in 111 months since January 2011. Following April, attention is focused on how much the May balance of payments was affected by the COVID-19 impact.

◆ Public hearing on financial tax reform to be held = A public hearing on the direction of financial tax reform will also be held on the 7th. The government has announced a financial tax reform plan that imposes a financial investment income tax at a rate of 20% (25% for amounts exceeding 300 million KRW) on capital gains exceeding 20 million KRW earned by individual investors from domestic listed stocks starting in 2023.

The public hearing is a forum for the government to gather opinions from the financial investment industry and the market based on the previously announced financial tax reform plan. The government plans to finalize the proposal after considering the opinions from the hearing.

◆ July issue of Fiscal Trends published... Focus on tax revenue decline = On the same day, the July issue of the monthly Fiscal Trends will be released. National tax revenue from January to April this year totaled 100.7 trillion KRW, a decrease of 8.7 trillion KRW compared to the same period last year. Attention is focused on whether this tax revenue decline continued in May.

Meanwhile, the Industrial Stabilization Fund will be fully operational. The Industrial Stabilization Fund Management Committee plans to announce the application for financial support this week. Companies facing liquidity difficulties due to the COVID-19 crisis with total borrowings of 500 billion KRW or more and 300 or more employees are eligible to apply.

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