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(LEAD) S. Korea seeks extra budget, other measures to minimize virus fallout

Economy 11:34 February 28, 2020

(ATTN: RECASTS headline, paras 1-4 with updated info; RESTRUCTURES)
By Byun Duk-kun

SEOUL, Feb. 28 (Yonhap) -- South Korea on Friday announced emergency measures worth more than US$16 billion to cushion the impact from the new coronavirus outbreak, while also vowing to push for an extra budget of more than 6 trillion won ($5 billion) to help minimize the economic fallout from the novel virus.

"The difficulties are clearly seen in real economy indicators," said Finance Minister Hong Nam-ki, adding that the government will submit its extra budget bill to the National Assembly next week.

Hong said the bill will be for a budget greater than 6.2 trillion won. The finance ministry said it will work to win the parliament's approval for an extra budget before the end of next month, and implement at least 75 percent of the supplementary budget within two months following its passage to help maximize its impact.

In the photo provided by Songpa Ward Office, quarantine officials carry out disinfection operations in the district in southeastern Seoul on Feb. 27, 2020, to help prevent the spread of the new coronavirus that has infected 55 people in Seoul and 1,595 people throughout the nation. (PHOTO NOT FOR SALE) (Yonhap)

South Korea's local spending has plummeted since the country reported its first infection case late last month and more steeply since Feb. 19 when it began to see clusters of mass infections, according to the ministry.

Last week, sales of major department stores here plunged over 20 percent from a year earlier, while the number of visitors at local lodgings dropped more than 24 percent over the cited period, it said.

Under its latest set of measures, the government will provide up to 16 trillion won in support to people and businesses affected by the outbreak of COVID-19.

The amount will be in addition to over 4 trillion won the government has already spent or earmarked for such purposes, according to the ministry.

To boost local spending, the government will provide up to 2.8 trillion won in gift vouchers and other financial support for households, along with an additional 1.7 trillion won in tax incentives for landlords who temporarily lower their rent for small and medium-sized businesses affected by the virus outbreak, it said.

The second set of emergency support measures comes one day after the country's central bank slashed its 2020 growth outlook for Asia's fourth-largest economy to 2.1 percent from the previous 2.3 percent, mainly citing the slump in local consumption caused by the virus outbreak.

"The government came up with the second set of measures that can be swiftly implemented by the administration and other related agencies to enable more active support for efforts to overcome the damage and revitalize the economy," the ministry said in a press release.

In the photo taken Feb. 27, 2020, professional volleyball players hold a match at a stadium in Gimcheon, some 230 kilometers south of Seoul, where no spectators were allowed to attend as a precaution against the spread of the new coronavirus. (Yonhap)

The package also includes 9 trillion won in financial support to be provided by financial institutions, including the central bank, to local businesses.

The Bank of Korea said Thursday it will provide an additional 5 trillion won to pay for the cost of local lenders that extend special, low-interest loans to small and midsized firms.

The finance ministry also reaffirmed its push for an extra budget.

"It will seek to draw up a supplementary budget as the need for fiscal spending has recently expanded due to the fast spreading of the virus and the steep rise in the number of infection cases in local communities," it said.

As of Friday, 2,022 people have been confirmed to be infected with the potentially deadly virus and 13 people have died from it.

The country reported its first virus case on Jan.20.

bdk@yna.co.kr
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