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(3rd LD) S. Korea rolls out 50 tln won financial aid package for virus-hit small businesses

Economy 16:46 March 19, 2020

(ATTN: MODIFIES headline, 2nd para; UPDATES with press briefing in last 5 paras)
By Lee Chi-dong

SEOUL, March 19 (Yonhap) -- President Moon Jae-in made public a major small business rescue package worth 50 trillion won (US$39 billion) on Thursday in response to the coronavirus crisis during an inaugural "emergency economic council" session.

He said the emergency financing plan is aimed at preventing small and medium-sized firms, tiny business owners and self-employed people from going bankrupt, and easing their financial anxiety amid growing fears of a global recession and credit crunch.

"It's a special emergency financial measure of the scale of 50 trillion won," the president said at the outset of the Cheong Wa Dae session.

President Moon Jae-in (back, C) speaks at the beginning of an emergency economic council meeting at Cheong Wa Dae on March 19, 2020. (Yonhap)

Among the other participants were Finance Minister Hong Nam-ki and Bank of Korea (BOK) Gov. Lee Ju-yeol.

The aid package includes the expansion of financial support for small businesses to 12 trillion won, which will enable them to borrow money at the interest rate of around 1.5 percent from every financial institution in South Korea.

The government will also introduce a 5.5 trillion-won special loan guarantee program and the rollover of debts at all registered financial institutions.

"It is an unprecedented comprehensive measure in both scale and content, representing a finance stabilization package program for people's livelihoods," Moon stressed. "Depending on how the situation develops, (the government) will expand it if necessary."

He said the measure is the result of concerted efforts by the central bank, policy lenders, commercial banks and non-bank lenders.

The government has shifted to an emergency operation mode, he added.

On the emergency economic council meeting, scheduled to be held every week, Moon said it is intended for "decision and action," not just discussion and review.

In his opening remarks, open to pool reporters, Moon made no mention of such politically hot issues as another extra budget program and universal basic income.

President Moon Jae-in (2nd from R) holds an emergency economic council meeting at Cheong Wa Dae in Seoul on March 19, 2020, alongside Finance Minister Hong Nam-ki (3rd from L) and Bank of Korea Gov. Lee Ju-yeol (R). (Yonhap)

Earlier this week, the National Assembly passed an 11.7 trillion-won supplementary budget bill. Moon said the government's proposal on the extra budget is "not an end but a start" in responding to the economic ramifications of the pandemic.

The heads of some local governments have also floated the idea of providing every family with cash or a voucher worth up to 1 million won as a form of universal basic income.

For now, however, Cheong Wa Dae favors a "selective" approach that focuses first on those in urgent need, an informed source said.

Asked about the matter in a background press briefing later in the day, a Cheong Wa Dae official maintained a cautious stance.

"It's an issue to be reviewed in accordance with economic conditions at home and abroad down the road and a degree of people's acceptance," the official said on condition of anonymity. "Anyway, what was discussed today was about supporting the vulnerable class."

He added the BOK will be in charge of dealing with a public call for a currency swap with the United States.

The official made clear that Moon had not instructed a push for a second extra budget during the meeting that lasted one and a half hours.

The finance minister said the government would discuss the matter in the process of pushing for follow-up measures to backstop the sagging economy, speaking to reporters following the session.


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