South Korea Plans Emergency Handouts to Households Hit by Virus

(Bloomberg) -- South Korea on Thursday unveiled a second extra budget worth 7.6 trillion won ($6.2 billion) to pay for emergency cash handouts to people as the coronavirus pandemic threatens jobs and wages.

The amount is larger than the 7.1 trillion won initially planned, underscoring the government’s determination to offer relief to households. The handouts will be distributed to 14.8 million middle and lower-income households via electronic cash, gift certificates and other methods, the finance ministry said in a statement.

The proposed extra budget comes a day after national elections in which President Moon Jae-in’s coalition appeared to win a parliamentary majority, according to exit polls released by local media. The victory could give Moon fresh momentum to pursue his worker-focused agenda.

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The new plan provides direct support to families excluding those in the top 30% percentile of income, with some four-person households to receive about 1 million won.

The budget proposed to fund the aid will be paid for out of cost-savings from elsewhere, rather than new bonds, according to the finance ministry. It follows another emergency budget worth 11.7 trillion won that passed just weeks ago after a record initial budget. The government last month also introduced a massive package of loan guarantees to help small businesses and financial markets survive the crisis

Finance Minister Hong Nam-ki said there may be more spending to come.

“The government will continue to consider additional measures to support the resiliency of our economy,” he said in a statement. “Fiscal spending has to play an active role as the last resort for our economy.”

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While the rise in infection cases has slowed in South Korea, the export-dependent nation is still struggling because the pandemic has hit trading partners hard. A growing number of analysts see the economy growing this year at the slowest pace since the Asian financial crisis of the late 1990s, or even contracting.

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