Presidential Office: "Compensation for Losses to Be a Stepping Stone for Comfort and Courage... Payments Start at 3 PM" (Comprehensive)

"Unlike personal payments and direct government use/investment, less impact on inflation"
"Low interest rate impact due to no deficit bond issuance"
"Will review inflation and interest rate increase factors from international environmental changes"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] The Presidential Office stated on the 30th regarding the passage of the second supplementary budget worth 62 trillion won for COVID-19 loss compensation for small business owners and self-employed individuals, "Payments will be possible from 3 PM today," adding, "We hope this loss compensation will serve as a stepping stone of courage and comfort for small business owners and the self-employed." The Presidential Office's position is that the impact on inflation and interest rate hikes due to this supplementary budget will be minimal.

A senior official from the Presidential Office said at a briefing held at the Yongsan Presidential Office building in the afternoon, "The supplementary budget passed and approved by the National Assembly yesterday has been allocated today. We once again thank the National Assembly for handling this swiftly."

He continued, "As President Yoon Seok-yeol has emphasized several times, loss compensation due to government quarantine measures is a natural duty of a rule-of-law country. It is very fortunate that we can keep our promise to the people as soon as possible. We will do our utmost to ensure rapid execution so that small business owners can feel the effects as quickly as possible."

Regarding criticism that President Yoon did not fulfill his campaign promise of retroactive application of the supplementary budget, the official responded, "There are two ways to apply retroactively. One is to amend the law itself to allow retroactive application, but there were many concerns about legal stability and difficulties in implementation with that method." He added, "The supplementary budget we are implementing this time includes a lot of loss compensation content that is effectively retroactively applied under the name of loss compensation funds." He further explained, "Rather than amending the law, we included this in the supplementary budget from the perspective that it is more important to promptly compensate for losses that occurred before the enactment of the loss compensation law."

Regarding the impact on inflation and interest rate hikes, he said, "If cash is given through the supplementary budget, individuals may either consume or save it. Economically, since the government is not spending, investing, or consuming directly, the impact on prices is minimal." He added, "In terms of interest rate fluctuations, since there is no issuance of government bonds, the impact on interest rates is also considered to be small."

Specifically on inflation, he mentioned global supply chain issues, the Ukraine war situation, and international grain prices, stating, "We have extensive experience from the 1970s (such as the oil shock). The result is that it takes a long time, and short-term resolution is very difficult." He emphasized, "However, during this process, what the government must do is help economic actors such as small business owners and low-income people who are struggling to endure these difficulties."

He also said, "Stabilizing the inflation expectations of economic actors is the most important. When costs suddenly rise, everyone tries to raise prices." He added, "The government's duty is to monitor and try to reduce difficulties such as cost burdens in the production, import, and consumption processes to prevent such situations from occurring."

Regarding criticism that the livelihood stabilization measures announced today under the chairmanship of Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho mainly focus on real estate taxation and may be insufficient to stabilize livelihoods, he said, "The current economic growth rate is seen as mid-2%, but since this is the potential growth rate, the number itself may not be a big problem." He added, "However, real income has decreased significantly, and the public's perceived income and inflation can be seen as different."

On regulatory innovation, the official said, "What I found particularly important in President Yoon's remarks was the mention of shadow regulations in administration. These are regulations imposed by administrative practices rather than by law." He explained, "The government intends to start efforts with regulations that can be addressed at the administrative level without amending laws, and for legal amendments, to request cooperation from the National Assembly. It is understood as a determination to reform administrative regulations and enforcement ordinances from the government side first."

Another Presidential Office official attending the briefing addressed reports about reviewing the abolition of the Special Inspector General system, saying, "With the complete removal of prosecution investigation rights (검수완박), the abolition of the Office of Civil Affairs, and the dismantling of the Presidential Office's control tower for internal affairs, the overall conditions have changed significantly compared to previous administrations." He added, "Therefore, we are designing an effective system to thoroughly root out power-related corruption, including the Special Inspector General system." He clarified, "This means a system that includes the Special Inspector General system, not that we are considering its abolition."

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