S. Korea to execute largest-ever extra budget to battle pandemic

South Korea will execute its third supplementary budget of 35.1 trillion won ($29.3 billion) on Monday as part of a move to minimize the economic impact of the ongoing coronavirus pandemic, the Ministry of Economy and Finance said Sunday.

The latest COVID-19 response budget, the single biggest spending in the country’s history, was approved by the National Assembly late Friday, surpassing the extra budget of 28.4 trillion won passed amid the 2009 global financial crisis. 

Earlier in March, lawmakers passed the first extra budget of 11.7 trillion won, followed by a second that totaled 12.2 trillion won in April. 

The government’s third budget will mainly support employment with more than 9 trillion won being injected into government-led job security activities. It has predicted that nearly 8.92 million employees, including 3.21 million workers facing job losses and 1.01 million small business owners, will benefit from the budget. 

Given that more than 90 percent of the first and second virus response budgets have been executed so far, the government vowed to carry out the timely execution of the latest extra budget, spending 75 percent within three months, according to the Finance Ministry. 

Meanwhile, the government plans to unveil a comprehensive plan for its economic stimulus measures dubbed the “Korean New Deal,” in the middle of this month, officials said.

The new fiscal scheme includes 100 trillion of government spending over the next five years, up 24 trillion won from the planned budget of 76 trillion won.  

Borrowing the policy concept from the New Deal -- a set of government projects in the US during the 1930s in response to the Great Depression -- the government has announced the Korean version of the New Deal project, a spending plan to reshape the domestic economy in the aftermath of the coronavirus crisis. It is focused on developing the country’s new growth engines such as data-driven businesses and contactless healthcare services. 

Responding to climate changes, a series of government funds backed by the new fiscal program will also be implemented to finance local companies running eco-friendly businesses as well as to promote research and development of renewables such as solar power or hydrogen fuel.

By Choi Jae-hee (cjh@heraldcorp.com)