South Korea announces US$29 billion third stimulus budget to fight COVID-19 misery
03 June, 2020
South Korea unveiled on Wednesday (Jun 3) a 35.3 trillion won (US$28.8 billion) supplementary budget, to raise the total stimulus to 270 trillion won for an economy facing its worst growth since the 1998 Asian financial meltdown as a result of coronavirus pandemic.
Announcing South Korea's major ever supplementary budget, and the 3rd this year, the federal government has set up support measures equal to about 14 % of gross domestic product to counter the monetary fallout from the coronavirus.
The latest budget aims to direct more shelling out for protecting jobs, development of a vaccine for COVID-19, also to provide discount coupons to improve consumption. More loans will be made to small- to medium-sized businesses hit by slumping sales.
Finance Minister Hong Nam-ki said the federal government had to look past concerns about taking the debt-to-GDP level higher, which is projected to improve to 43.5 % of the economy from just underneath 40 per cent prior to the outbreak.
"We're facing an financial crisis now, we'd no choice but to accomplish more on the fiscal front as fiscal policies will be the last bulwark (of government policies)," Hong told journalists in a news briefing days prior announcing the excess budget.
On Monday, South Korea reduced its monetary growth forecast this year to 0.1 per cent from 2.4 per cent, predicting the worst performance since 1998.
As well as the earlier increases in fiscal stimulus by the government, Bank of Korea has cut key interest levels twice since March.
The proposed supplementary budget provides a fiscal injection of 23.9 trillion won, and cover an anticipated 11.4 trillion won shortfall in revenues as a result of economic slowdown.
Exports tumbled for the 3rd straight month in-may and the outlook for the trade-reliant economy is cast in doubt due to the global pandemic and simmering tensions between your United States and China.
To fund the budget, at the mercy of parliamentary approval, South Korea will issue yet another 23.8 trillion won in government bonds, taking total treasury bond issuance because of this year to 167.8 trillion won.
The net increase in treasury bond issuance will be 108.5 trillion won, a lot more than double of the amount this past year.
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