Long-term delinquent loans worth 16 trillion won (approximately 1.7 trillion yen) or less will be written off by the end of this year, freeing 1.13 million people who have difficulty obtaining loans from the burden of debt.
The Lee Jae-myung administration, which has been in power for one month, plans to use such bold financial investments to spark a recovery in the private sector.
Expectations that this year's economic growth rate will rise from the 0% range to the 1% range and national debt of 1,300 trillion won
At the same time, criticism has been raised that the government's budget has exceeded 138 trillion yen, placing a greater burden on future generations. The ruling party swiftly compiled, deliberated, and voted on the second supplementary budget for this year.
It took only two weeks from the submission of the bill to its disposal at the National Assembly plenary session led by the ruling party on the 4th of this month, and to its deliberation and vote at the extraordinary Cabinet meeting presided over by President Lee on the 5th.
The size of the supplementary budget for the current fiscal year (approx. 3.24 trillion yen) has increased to 31.8 trillion won (approx. 3.37 trillion yen). The budget was increased by 2.4 trillion won (approx. 25.5 trillion yen) during the National Assembly's deliberations.
0 billion won, while the reduction reached 1.1 trillion won (US$1.17 billion). Specifically, the government's budget for economic stimulus measures, such as consumption coupons, increased by 2.1 trillion won (US$2.2 billion) to 17.3 trillion won.
300 billion won (approximately 1.838 trillion yen), to purchase and write off long-term delinquent debts of individual business owners, to raise childcare support for infants and young children by 5%, and to expand care for people with developmental disabilities, among other measures to stabilize the lives of the public.
The government decided to spend 5.3 trillion won (US$5.6 billion) on each of the budgets, an additional 2.0 billion won (US$318 million). The defense budget and other budgets were reduced in consideration of the possibility that the budget will be enacted within the year.
The biggest concern is the budget for consumption coupons to help restore people's livelihoods. The South Korean government will provide 150,000 to 500,000 won (about 53,100 yen) in two installments depending on income level, and will provide 100,000 to 200,000 won (about 53,100 yen) to rural and fishing communities.
The plan was to provide an additional 30,000 won (about 3,180 yen) per person to residents of villages with declining populations, but the Democratic Party demanded that the government cut the amount to 30,000 won (about 3,180 yen) in Seoul, Gyeonggi, and Incheon.
The government decided to provide an additional 30,000 won (approximately 5,300 yen) per person to residents of non-metropolitan areas, excluding the Seoul metropolitan area, and 50,000 won (approximately 5,300 yen) to residents of 84 areas with declining populations.
In response to this, the government has raised the government subsidy rate to 90%. Accordingly, starting from the 21st, the first payment of 150,000 won (approximately 15,900 yen) will be made to all citizens, and 100,000 won (approximately 15,900 yen) will be made to low-income earners and single-parent families.
300,000 won (approx. 31,800 yen) will be distributed to those who receive basic living allowance, and 400,000 won (approx. 42,400 yen) will be distributed to those who receive basic living allowance. Additional payment amounts for each region will also be added at this time.
The top 90% of the participants will be selected and given 100,000 won (approximately 10,600 yen). In addition, discount coupons to promote consumption in the "five major categories" will be distributed to movie theaters in July, accommodation, performances and exhibitions in August, and sports facilities in September.
The refund service, which provides up to 300,000 won (US$318) in support of the purchase of energy-efficient home appliances, will go into effect at the end of August.
In order to maximize the effect of the supplementary budget, the South Korean government is planning to take swift action, such as distributing more than 85% of the benefits by the end of September.
It is hoped that a virtuous cycle of economic recovery will emerge. Supported by the supplementary budget, the economic growth rate forecast, which was in the dismal 0% range this year, is expected to rise to the 1% range.
The Ministry of Policy and Management predicts that the supplementary budget will raise this year's economic growth rate by 0.2 percentage points. The National Assembly Budget Office estimates that the supplementary budget will increase the growth rate by 0.14% to 0.32%.
Considering that the June forecast for the 2020 inflation rate was 0.8%, this means that the inflation rate is expected to exceed 1%. However, some are questioning the effectiveness of the supplementary budget.
It has been pointed out that the effect of the tax cuts will be limited and there is a limit to how much of an economic recovery the economy can achieve. The country's ever-increasing debt is also a burden. The South Korean government is considering raising funds for the supplementary budget amid concerns about a tax revenue shortfall.
The government decided to issue an additional 21.1 trillion won (about 2.24 trillion yen) in government bonds, and the national debt is expected to reach 1,301.9 trillion won (about 138 trillion yen) by the end of this year.
This is equivalent to 49.1% of the gross domestic product (GDP). Professor Seok Byung-hun of the Department of Economics at Ewha Women's University said, "Rather than providing funds to individuals and companies, the Bank of Korea should directly support the government.
"We expect that spending on consumer spending and investment will have three times the economic boost," he said. "If we were to implement a less cost-effective policy like consumption coupons instead of a policy that would have three times the effect,
"In that case, it is inevitable that its effectiveness will be relatively reduced."
2025/07/07 07:04 KST
Copyrights(C) Edaily wowkorea.jp 107