Discussion on Disaster Relief Funds Likely to Pass to Next Ruling Party Leadership

[Image source=Yonhap News]

[Asia Economy Reporter Kang Nahum] As discussions on the payment of the second disaster relief fund are expected to be handed over to the new leadership of the Democratic Party of Korea, which will be elected on the 29th, opinions among party leadership candidates and Supreme Council candidates are divided over the payment method.

According to political circles on the 25th, the ruling party, government, and Blue House agreed at the high-level party-government-Blue House meeting held on the 23rd to postpone full discussions on the second disaster relief fund payment and to focus first on COVID-19 prevention measures.

They decided to discuss payments after observing whether social distancing is raised to level 3, reflecting the government's position that financial capacity must be considered to some extent. In fact, during the first disaster relief fund payment, more than 10 trillion won out of the 12 trillion won requested by the government was covered through 'expenditure restructuring' via supplementary budgets, but this time, most of the funding will inevitably come from government bond issuance.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, attended the National Assembly Budget and Accounts Special Committee the day before and said, "If we want to provide disaster relief funds similar to the first round, we have to cover it with a deficit," adding, "We have no choice but to rely 100% on government bond issuance." He explained, "Through the first to third supplementary budgets, we have almost completed expenditure restructuring projects worth about 25 trillion won, and there is little time left, so even if we do restructuring, there are limits," and "Even if public institution expenditures are restructured, the funds are not available for national use."

[Image source=Yonhap News]

However, if the spread of COVID-19 continues and social distancing is raised to level 3, government and ruling party re-discussion on disaster relief fund payments will be inevitable. In this case, the matter is likely to be handed over to the new party leadership elected four days after the payment decision. Currently, opinions among party leadership candidates differ somewhat on the payment method, especially on the major issue of whether to provide payments to all citizens nationwide or selectively.

First, candidate Lee Nak-yeon stated in a press release the day before, "Differentiated support that helps those in difficulty more is appropriate," expressing the view that 'selective payment' to the lower income brackets is suitable. He said, "This week will be a turning point in deciding whether to raise social distancing to level 3. I hope discussions on disaster relief funds will focus on prevention measures until the end of this week and be postponed thereafter."

Other party leadership candidates Kim Boo-kyum and Park Joo-min advocate for nationwide disaster relief fund payments. Kim said on a radio show that day, "If we provide disaster relief funds, I hope it will be 100% this time, but high-income earners should definitely be reimbursed through year-end tax adjustments or income tax filings," adding, "In that case, these people might not apply for the support, which could reduce the financial burden."

Park also stated in a press release that day, "The principle is that the second disaster relief fund payment should be made to all citizens nationwide," and "According to the '2020 Q2 Household Income and Expenditure Survey' released by Statistics Korea on the 21st, labor and business incomes decreased across all income brackets. Therefore, nationwide payment is reasonable."

Among Supreme Council candidates, a cautious approach prevails, suggesting that the payment target should be decided based on the spread of COVID-19. However, candidate Shin Dong-geun argues, "Rather than paying 100% of the population, it is better to give double to the lower 50%," and candidate Yang Hyang-ja also leans toward selective payment, stating, "This time, the target should really be limited to those who truly need it."

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