reply South Korea Launches' Super Supplementary Budget 'to stabilize Economy

The Rok government recently held an interim state council and decided to increase the government budget for the third time this year, with a total amount of 35.3 trillion won, to help Korean businesses and businessmen overcome difficulties caused by the COVID-19 epidemic. The one-off increase of won35.3 trillion is the largest ever seen in South Korea's previous supplementary budgets.The Rok government recently held an interim state council and decided to increase the government budget for the third time this year to 35.3 trillion won to help Korean businesses and businessmen overcome difficulties caused by coVID-19 and cope with the impact of the epidemic on employment. More than 75 per cent of the new budget will be implemented within three months after it is passed by the National Assembly.This year's government budget has been marked by a series of record highs. When the government drew up its 2020 budget last year, it raised its quota to the highest level in history, prompting south Korean media to dub it a "super budget". Earlier this year, the coVID-19 outbreak led to two additional budgets for emergency response to the economic impact of the outbreak. This third round of supplementary budget, is more attention, by the South Korean media evaluation as the "super supplementary budget".The one-off increase of won35.3 trillion is the largest ever and the first time in 48 years that three successive budgets have been added in the same year. As a result, South Korea will spend won270tn this year to deal with the adverse impact of coVID-19, or 14 per cent of its forecast GDP. In addition, with the addition of the third round of budget, South Korea's total fiscal expenditure will grow by about 16.5 per cent year on year this year, the highest growth rate since the subprime crisis.For South Koreans, however, a third supplementary budget is no surprise. As early as the second supplementary budget, the government said it would push for a third round if necessary. The previous two additional budgets are part of the post-COVID-19 emergency response, which focuses on preventing sudden risks and supporting affected businesses. This supplementary budget is more inclined to stabilize the economy structurally and minimize the impact of the epidemic on the Economy.According to the supplementary budget released by the interim State Council, the supplementary budget will be mainly used in the following aspects. First, Won11.4tn will be used to fill the tax gap following the economic downturn. Second, 5 trillion won will be used to provide emergency support funds to smes and self-employed people, and provide liquidity funds to pillar industries and enterprises. Third, 8.9 trillion won will be used to stabilize employment, create jobs and subsidizing the unemployed. Fourth, 0.5 trillion won will be used to protect the low-income and vulnerable groups. Fifth, 3.7 trillion won will be used to stimulate domestic demand, exports and local economies. Sixth, 5.1 trillion won was invested in advance to promote the recently proposed "South Korea's new policy" (1.8 trillion won is double-counted). Seventh, 2.5 trillion won will be used to cultivate industries related to epidemic prevention and improve crisis response mechanisms.Although domestic and international organizations had previously been predicted South Korea this year's economic growth will be negative, but the south Korean economy, deputy prime minister and project finance minister HongNanJi said recently that the second quarter of the country's economy could be negative again a few percentage points, 2 o 'clock to the third and the fourth quarter will achieve economic growth, South Korea's economic growth rate could reach 0.1% this year.However, The Korean industry also expressed some concern about whether it will add to the financial burden. The provisional state Council said that the additional budget funds, one is through the government adjustment of this year's spending, to save 10.1 trillion won into this round of additional budget. The second is to contribute 1.4 trillion won from the surplus finance of 8 foundations such as the Labor Welfare Promotion Foundation. Third, the issuance of deficit bonds raised 23.8 trillion won. In recent years, The fiscal expenditure of South Korea has been increasing year by year, there are constant doubts about the fiscal soundness, and the previous two supplementary budgets have enlarged the deficit of South Korea, the 23.8 trillion won deficit debt will further increase the fiscal burden of South Korea. The Yonhap news agency reported that South Korea's debt will increase by nearly 100 trillion won to 840.2 trillion won in 2019 from 740.8 trillion won in 2019. The national debt ratio will soar from 37.1% to an all-time high of 43.5%.In response to such concerns, Hong Nanji said that although more national debt was inevitable, it would be painful to adopt a proactive fiscal policy to boost economic development in the short term and thus restore sound finances. Of course, the financial sector should be highly vigilant about the growth rate of national debt and will work to ensure medium-term fiscal soundness.