The 4th Supplementary Budget in 59 Years... 7.8 Trillion Won Tailored Support

Total Expenditure 554.7 Trillion Won... Up 18.1% YoY
National Debt 846.9 Trillion Won... Debt Ratio Soars to 43.9%

Prime Minister Chung Sye-kyun is delivering a speech at the emergency Cabinet meeting held at the Government Seoul Office in Jongno-gu, Seoul, on the 10th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kwangho Lee] The 4th supplementary budget bill worth 7.8 trillion won to provide the 2nd customized emergency disaster relief fund amid the resurgence of the novel coronavirus infection (COVID-19) was reviewed and approved at an extraordinary Cabinet meeting on the 10th. The government plans to submit the supplementary budget bill to the National Assembly tomorrow morning, and Prime Minister Chung Sye-kyun is expected to deliver a policy speech on the supplementary budget at the National Assembly next week.

On the same day, the government finalized the composition of the 4th supplementary budget at the 8th Emergency Economic Meeting chaired by President Moon Jae-in in the morning, and held an extraordinary Cabinet meeting chaired by Prime Minister Chung in the afternoon to review and approve the '2020 4th Supplementary Budget Bill' worth 7.8 trillion won for the payment of disaster relief funds.

The 4th supplementary budget provides customized support to small business owners, employment-vulnerable groups, households facing livelihood crises, and childcare burdens, who are severely affected by the resurgence of COVID-19. Unlike the 1st disaster relief fund (2nd supplementary budget) which was paid to all citizens nationwide, this support targets urgently needed groups.

Specifically, ▲3.8 trillion won for small business owners and small and medium enterprises ▲1.4 trillion won (1.19 million people) to respond to employment shocks caused by the prolonged COVID-19 situation ▲400 billion won (890,000 people) for emergency livelihood support for low-income groups ▲2.2 trillion won for emergency childcare support.

The funding will be raised through 7.5 trillion won in government bonds and 300 billion won in small and medium enterprise promotion bonds. To ensure prompt project execution, 100% of the support will come from the national treasury without any local government burden.

Accordingly, total revenue is expected to be 470.7 trillion won, the same as the 3rd supplementary budget, while total expenditure will increase by 18.1% from the previous year to 554.7 trillion won.

The integrated fiscal balance, which is total expenditure minus total revenue, is expected to show a deficit of 84 trillion won. The management fiscal balance, excluding various social insurances from the integrated fiscal balance, is projected to increase by 81 trillion won from last year (the original budget of 37.6 trillion won) to 118.6 trillion won.

With the issuance of all deficit bonds, the national debt this year will rise to 846.9 trillion won, and the national debt ratio to GDP (Gross Domestic Product) will jump to 43.9%. If GDP contracts this year, the national debt ratio is expected to exceed 45%, which will likely pose a burden on future fiscal soundness and national credit rating management.

This 4th supplementary budget is the first in 59 years since the May 16 military coup in 1961.

Prime Minister Chung said, "We will prepare to ensure that the supplementary budget is quickly delivered to those who are most in need," and requested, "I ask the National Assembly to understand the urgency of the people and process the supplementary budget bill as quickly as possible."

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