[2nd Supplementary Budget] "Numerous Unclear Projects"... Haphazard Supplementary Budget

Support Targets for 3-Part Damage Assistance Package Undecided
Government to Announce Final Decision After July Review

[Asia Economy Reporter Jang Sehee] The Ministry of Economy and Finance has prepared the second supplementary budget (supplementary budget) for this year at a scale of 33 trillion won, but it has been revealed that the support targets for many projects are unclear. As a result, criticism of the haphazard supplementary budget formulation is expected to continue.

The government held a Cabinet meeting on the morning of the 1st and approved the "2021 Second Supplementary Budget." Among them, the "3 trillion won COVID-19 Damage Support Package" did not have a single project that was 100% finalized. The Ministry of Economy and Finance stated that it will calculate precisely to prevent confusion, but since individuals cannot even confirm whether they are beneficiaries of the policy, confusion is inevitable in the future.

① Hope Recovery Fund for Small Business Damage Support = The government provides the Hope Recovery Fund ranging from a minimum of 1 million won to a maximum of 9 million won to small business owners affected by COVID-19. Although the payment amounts based on long-term and short-term classification and annual sales criteria have been announced, the actual duration for which the classification into long-term and short-term applies has not been decided. The Ministry of SMEs and Startups will finalize and announce this later. The government classified the damage into gathering bans, business restrictions, and management crises. The periods are divided into long-term and short-term, and the 2020 annual sales are divided into 80 million won, 200 million won, and 400 million won for payment. For example, a business with 2020 sales of over 400 million won and long-term damage receives 9 million won, while one with short-term damage receives 7 million won. Among businesses classified as management crisis with sales decreased by more than 40%, those with 2020 sales over 400 million won receive 3 million won, and those with less than 80 million won receive 1.5 million won.

② COVID-19 Coexistence National Support Fund = The criteria for eligibility are unclear, making it impossible for individuals to immediately confirm whether they will receive disaster relief funds. The government only disclosed the income assessment timing for workplace subscribers and regional subscribers but did not present clear monetary criteria. Especially for regional subscribers, since 2019 income is used as the basis, many people whose income decreased in 2020 are likely to file objections. The government has also not set criteria for high-net-worth individuals who have low income but significant assets. Regarding this, a Ministry of Health and Welfare official stated, "We are reviewing the establishment and application of criteria for high-net-worth individuals who meet certain conditions."

③ Credit Card Cashback = The criteria for usage restrictions have not been decided. A government official said, "Usage restrictions are a highly contentious issue, so policy considerations are necessary," and "We plan to review through a task force and announce later." The government intends to clearly specify usage locations by July. For now, university tuition fees are recognized as additional consumption, but usage at department stores, large marts, online shopping malls, luxury brand stores, entertainment establishments, and vehicle purchases will be excluded. Relatedly, Lee Okwon, the first vice minister of the Ministry of Economy and Finance, said, "The policy intention is not to increase consumption in areas where consumption is already good, but to boost consumption in small businesses, self-employed, and local markets where consumption has shrunk."

Experts point out that if clear criteria are not presented, it may cause public confusion in the future. Professor Kim Taegie of Dankook University’s Department of Economics said, "People need to consume immediately, but if they do not know where to use it, it can be awkward," and "University tuition fees are largely a substitution effect rather than additional consumption, so it does not align with the policy intent." He added, "Most policies lack completeness," and "It seems to be a haphazard collection without principles."

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