Hong Nam-ki "Increasing the supplementary budget is not easy"

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Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, expressed a negative stance on the calls from some quarters to increase the total amount of the 2nd supplementary budget (supplementary budget), saying it is "not easy." Although the daily number of COVID-19 confirmed cases has remained in the 1,000s for several days and stringent quarantine measures have been applied in the metropolitan area, leading the ruling party to argue for an increase in the supplementary budget size, Hong drew a clear line on this issue.

According to the Ministry of Economy and Finance on the 12th, Hong, who is visiting Venice, Italy to attend the G20 Finance Ministers and Central Bank Governors Meeting, held a press conference at a local hotel on the 10th (local time) and said, "There are demands from the National Assembly and the quarantine situation has changed, so we need to discuss it, but increasing the supplementary budget is not easy."

Regarding the government's decision to allocate 2 trillion won for debt repayment, he also expressed his intention to proceed as planned, saying, "It is a big burden to cancel this." This implies the need for caution as it could affect not only the government bond market but also the country's external creditworthiness.

However, Hong left room for adjustment among the detailed projects of the already submitted 2nd supplementary budget, saying, "The economic authorities should also consider the changed quarantine situation." In particular, regarding the criteria for providing national support funds to dual-income couples, he said, "We are deeply reviewing the application of relaxed criteria." He added, "The Earned Income Tax Credit (EITC) applies more generous income criteria to dual-income households than single-income ones, and I have instructed to consider applying a similar approach for support." The EITC application requirements are 30 million won for single-income households and 36 million won for dual-income households.

Regarding the credit card cashback policy, which has faced calls for withdrawal due to the recent severe quarantine situation, he expressed his intention to proceed, saying, "It helps to boost the consumption power damaged last year and is beneficial for the medium- to long-term economic growth path." However, he indicated that the timing would be adjusted, stating, "If the funds are not exhausted within the third quarter, the payment period will be extended."

It appears that the existing supplementary budget plan will be maintained for the 3.3 trillion won small business support fund (Hope Recovery Fund) and the 600 billion won loss compensation budget. Hong said, "The maximum for businesses subject to closure orders is up to 9 million won, and it is not easy to increase it further." Regarding the need to expand the loss compensation budget, especially in the metropolitan area where severe sales damage is expected following the application of the Self-Employed Loss Compensation Act from the 7th of this month, he said, "We will provide 600 billion won to those in urgent need, and the shortfall will be reflected in next year's budget as soon as the required funds are calculated, with payments made in January or February."

Meanwhile, Hong said about the annual growth target of "4.2%" presented by the government in the second half economic policy direction at the end of last month, "Although there is a variable due to the spread of COVID-19, it is achievable assuming control through strong quarantine measures."

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