[Summary] Growing Calls in Politics for a '3rd Disaster Relief Fund' as "Time Is Running Out"

Kim Jong-in "Disaster Relief Fund Issue, Preparing Now Is Appropriate"
Kang Eun-mi "Urgent Discussion Needed on Active Fiscal Policy"
Lee Jae-myung "Third Disaster Relief Fund, Payment in January Next Year Is Appropriate"

Kim Jong-in, Emergency Response Committee Chairman of the People Power Party, is adjusting his mask during the Emergency Response Committee meeting held at the National Assembly in Yeouido, Seoul, on the morning of the 23rd. / Photo by Yonhap News

[Asia Economy Reporter Lim Ju-hyung] As the resurgence of the novel coronavirus infection (COVID-19) continues, social distancing in the Seoul metropolitan area is set to be raised to Level 2, and voices in the political sphere are growing louder calling for the issuance of a third disaster relief fund. This is due to concerns that intensified social distancing could harm self-employed individuals and small business owners. The government has stated that before discussing fiscal policy, it will focus all efforts on successful quarantine measures.

Kim Jong-in, Emergency Committee Chairman of the People Power Party, pointed out at the party's emergency committee meeting on the 23rd, "The issue of a third disaster relief fund is being raised due to the third wave of COVID-19. The main budget, scheduled to be passed on the 2nd of next month, does not include disaster relief funds related to COVID-19 or economic measures for next year."

He added, "If an additional supplementary budget (supplementary budget) is to be discussed in January next year, there should be budgetary considerations regarding the disaster relief fund before the main budget is passed, in terms of government credibility."

He emphasized, "The survival issue of self-employed people arises again, and naturally the issue of disaster relief funds comes up. Since there is not much time left until the budget is processed, it is appropriate to anticipate and prepare."

Kang Eun-mi, the floor leader of the Justice Party, is speaking at the leadership meeting held at the National Assembly in Yeouido, Seoul on the 23rd. / Photo by Yonhap News

Kang Eun-mi, Floor Leader of the Justice Party, also urged the government to adopt an active fiscal policy, including a third nationwide disaster relief fund, at the leadership meeting that day.

Leader Kang said, "The government urgently needs to discuss active fiscal policies such as the third nationwide disaster relief fund and employment income insurance. However, selective execution like the second disaster relief fund had limited effects and there were even criticisms that the income of lower-income groups declined, so drastic measures are necessary." Leader Kang's remarks are interpreted as a call for rapid fiscal policy through uniform support payments to the entire population.

Voices calling for the issuance of a third disaster relief fund also emerged within the ruling party. Lee Jae-myung, Governor of Gyeonggi Province, said in a phone interview with 'Yonhap News' on the 21st, "With the third (COVID-19) wave underway, the economy will worsen more severely after the end of the year," adding, "December is difficult due to time constraints, and by February or March next year, controversies due to elections will increase, so it is appropriate to provide disaster relief funds in January."

While voices from both the opposition and some ruling party members calling for the third disaster relief fund are growing, the government is advocating a 'cautious approach,' stating it will focus all efforts on preventing the spread of COVID-19 and quarantine measures first.

Prime Minister Chung Sye-kyun is responding to a lawmaker's question at the plenary session of the Special Committee on Budget and Accounts held at the National Assembly in Yeouido, Seoul, on the 4th. / Photo by Yonhap News

The government's cautious stance on the disaster relief fund policy appears to be due to the enormous fiscal burden. Previously, the government invested budgets of 14 trillion won and 7.8 trillion won respectively for the first and second disaster relief fund policies. There are concerns that injecting a similar amount again could jeopardize fiscal soundness.

There has also been controversy over the actual economic effect of the disaster relief funds. According to Statistics Korea, consumption sharply declined after the first disaster relief fund payment period in May and June. Retail sales in the industrial activity trend for July actually decreased by 6.0% compared to the previous month, marking the largest decline in five months since February this year.

Given this, the government has stated that it will focus all efforts on successful quarantine before discussing household support.

Prime Minister Chung Sye-kyun emphasized at the National Assembly Budget and Accounts Special Committee plenary meeting on the 4th, "The government's attitude needed at this point is to actively make efforts to reduce economic wrinkles through successful quarantine," adding, "We must not allow COVID-19 to become severe until the end of next year, and if possible, we should succeed in quarantine and normalize the economy until vaccines and treatments are available. That is the path we must take."

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