[Q&A] Hong Nam-gi: "Telecommunication fees support limited to youth and elderly... Final decision by the ruling party"

Joint Briefing on the 8th Emergency Economic Meeting on the 10th

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said on the 10th, "The government proposed prioritizing support for the youth and elderly due to various circumstances, but after discussions yesterday (the 9th) morning with President Moon Jae-in and Democratic Party leader Lee Nak-yon, it was finally decided to provide support to all citizens aged 13 and above." The government had previously announced a uniform support of 20,000 won for communication expenses to all citizens aged 13 and above.

Deputy Prime Minister Hong stated at a joint briefing of the 8th Emergency Economic Meeting held at the Government Complex Seoul, "Due to the COVID-19 crisis, non-face-to-face activities have increased rather than face-to-face ones, so we decided to provide support to ease the burden of communication expenses."

He added, "However, I think a little more analysis is needed regarding the economic multiplier effect."

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

▲ Please distinguish between the cash support targets and indirect support targets in this measure.

= Representative cash support includes the 3.2 trillion won Small Business Hope Fund paid to 2.9 million small business owners. The 1.1 trillion won special childcare support paid to children is also a typical cash support target. Additionally, 600 billion won was allocated for employment stabilization support. Cases where the government provides jobs, or financial loans to small business owners and SMEs, and employment retention subsidies paid to employers can be seen as forms of indirect support.

▲ Is it possible to execute the budget before Chuseok?

= The government hopes that after submitting the supplementary budget bill tomorrow, the procedures next week will proceed smoothly and be promptly finalized. The government has already reviewed early execution plans for supplementary budget projects by forming a task force (TF) among related ministries, and will continue preparation for execution even while the National Assembly is deliberating. For cash support projects, efforts will be made to start payments before Chuseok, and even if payments are not fully completed, a significant portion will be processed.

▲ Due to the 4th supplementary budget, the fiscal balance deficit is projected to reach 6% of GDP. What are the plans to secure fiscal soundness?

= The national debt ratio to GDP was 43.5%, which will increase to 43.9%, and the managed fiscal balance will worsen from -5.8% to -6.1%, a 0.3 percentage point increase. I understand there may be concerns as the fiscal deficit ratio exceeds 6%. However, this is a temporary measure due to the COVID-19 crisis this year and next year. The government plans to manage the fiscal deficit ratio within 6% during the medium-term fiscal plan period. We intend to introduce fiscal rules to properly monitor the fiscal deficit and national debt ratio. We are working toward announcing the fiscal rules in September.

▲ You are investing 4.6 trillion won in measures for livelihood stabilization and economic recovery. Please explain the detailed funding plans.

= About 2 trillion won of execution effect can already be achieved from the central government's unused budget. Additionally, an extra 2 trillion won execution effect can be generated over the remaining four months, and 1 trillion won of public institution investment planned for the first quarter of next year will be brought forward to the fourth quarter of this year. 600 billion won will be mobilized from the existing budget and reserve funds for quarantine support.

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