SEJONG, Sept. 10 (Yonhap) — A fourth supplementary budget worth 7.8 trillion won (US$6.6 billion) is mainly aimed at helping small merchants and self-employed people cushion the economic impact of a recent resurgence of the new coronavirus.
The additional fiscal boost came less than a month after health authorities tightened social distancing rules to contain a new wave of contagion, amid growing concerns that the nation’s economic slump may be deeper than expected.
Presiding over an emergency economic council meeting, President Moon Jae-in said the fourth extra budget is a “tailored” relief package for the business sector that suffered the most damage from the virus resurgence.
The resurgence of the new coronavirus has “rapidly put a damper on all economic activities and delayed the pace of an economic rebound,” Moon said.
In particular, small merchants and self-employed people have felt the pinch of the elevated social distancing rules because they are suffering from lost income and high rental costs, Moon said.
Since late last month, restaurants and smaller eateries in the greater Seoul area have been required to operate until 9 p.m., and only takeaway and delivery are permitted from 9 p.m. to 5 a.m.
For franchise coffee chains, bakeries and ice cream parlors, only takeout and delivery have been permitted regardless of operating hours.
It marked the first time in 59 years for the South Korean government to allocate four extra budgets in a single fiscal year.
About half of the fourth extra budget, or 3.8 trillion won, will be spent for small merchants and self-employed people. Of that, the government plans to provide 3.2 trillion won in cash handouts to 2.91 million small merchants and self-employed people.
Under the plan, a small merchant with annual revenue of 400 million won or less will receive 1 million won in cash if the merchant suffers from lost income, the Ministry of Economy and Finance said.
Internet cafes, indoor sports facilities and cram schools will receive 2 million won each. For restaurants, smaller eateries and other merchants that shortened business hours, they will receive 1.5 million won each.
Another 1.4 trillion won will be used to help virus-hit companies maintain 1.19 million jobs.
In May, the government offered some 1.5 million won each in subsidies to 500,000 temporary or freelance workers who lost their jobs due to the coronavirus pandemic.
For the 500,000 workers, they will receive another 500,000 won each without screening procedures. The government will give 1.5 million won each in subsidies to another 200,000 temporary or freelance workers after conducting screening procedures, the ministry said.
To help 550,000 low-income households that lost jobs, the government will give emergency relief funds. The amount of the handouts will vary from 400,000 won for single-person households to 1 million won for households with four or more members.
As people go contactless in the wake of the pandemic, the government will give a phone bill subsidy of 20,000 won per person to all people aged 13 or older. About 46.4 million people will be eligible for the phone bill subsidy, the ministry said.
Another 1.1 trillion won will be spent for households that care for preschool and elementary school children. The ministry said 200,000 won per child will be offered.
The fourth extra budget will be funded mostly by 7.5 trillion won of new state bonds, the ministry said.
In addition to the fourth extra budget, the government will draw up a stimulus measure worth 4.6 trillion won to prop up the economy and support containment efforts, Finance Minister Hong Nam-ki told reporters.
Domestic consumption has shown signs of deterioration because of the tightened distancing rules, Hong said.
Hong said the government will submit the fourth extra budget bill to the National Assembly on Friday.
The government will spare no efforts to begin offering subsidies and cash handouts ahead of the Chuseok holiday season that starts on Sept. 30, Hong said.
Four extra budgets are expected to take the nation’s debt-to-GDP ratio to 43.9 percent this year, compared with just below 40 percent before the pandemic.
Pounded by the coronavirus outbreak, the nation’s economy has plunged into a recession as its gross domestic product shrank 3.3 percent in the second quarter after a 1.3 percent on-quarter retreat three months earlier.
Earlier this week, Korea Development Institute, a state-run think tank, downgraded the nation’s economic growth outlook to a contraction of 1.1 percent this year, a sharp downward revision from a 0.2 percent expansion in its May forecast.
So far, South Korea has pledged 277 trillion won in stimulus packages to help the nation’s economy recover from the pandemic.