Korea Plans Handouts for 80% of Households With Extra Budget
South Korea plans to offer pandemic relief handouts to 80% of households with its next extra budget, according to the ruling party.
The budget will be proposed at around 33 trillion won ($29.2 billion), funded from excess tax revenue, Park Wan-joo, head of the Democratic Party’s policy committee, said in a briefing Tuesday. It also will be used to support small businesses that suffered from virus restrictions, according to a transcript of Park’s comments following a meeting with government officials.
The budget would support the whole population, with the lower 80% of earners receiving handouts and the rest benefiting from cash rebates on credit-card spending, according to the statement. Details of how much each person will receive and whether the aid will be in cash or credit-card points were not released.
The expected budget amount was announced a day after the government said it now sees the economy growing 4.2% this year, a full percentage point higher than its previous projection. The bullish outlook was based on record export performance and expectations that consumption will be further propped up by fiscal stimulus.
Korea has been one of the least-hit economies throughout the Covid-19 crisis thanks to surging demand for its tech exports and relatively contained outbreaks at home. While that has prompted the central bank to shift focus to managing financial risks and plot a path to normalization, fiscal authorities want to ensure the recovery doesn’t lose momentum.
Finance Minister Hong Nam-ki said Monday that monetary and fiscal policies need not move in tandem, largely echoing earlier comments by the central bank governor.
The budget proposal will be submitted to the parliament Friday. If approved, it would mark Korea’s sixth extra budget since the pandemic hit, and the second-largest spending layout among them.
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