(2nd LD) S. Korea seeks extra budget, other measures to minimize virus fallout

(ATTN: UPDATES with more details, additional remarks, information in paras 3, 9-14; REPLACES photo)
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 the 6.2 trillion-won budget formed in the face of the outbreak of Middle East Respiratory Syndrome (MERS) in 2015.

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.

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.

"With its policy measures, worth 20 trillion won in total, the government will support efforts to revitalize the economy and overcome the difficulty caused by the outbreak," Hong said in a joint press conference held in Seoul.

"Yet, because there are areas that existing budget and financial support may fail to cover, the government will quickly come up with a bill for an extra budget and submit it to the parliament next week," he added.

On Thursday, Bank of Korea (BOK) Gov. Lee Ju-yeol hinted at the possibility of the local economy shrinking at least in the first quarter.

"We believe there exists the possibility of negative growth in the first quarter because most of the shock from the outbreak will likely emerge in the first quarter," Lee said.

The BOK has slashed its 2020 growth outlook for Asia's fourth-largest economy to 2.1 percent from the previous 2.3 percent.

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, according to the finance ministry.

"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," it said in a press release.

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

The BOK 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
(END)