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(LEAD) Parliament passes extra budget for coronavirus relief funds

All News 00:55 April 30, 2020

(ATTN: RECASTS headline, lead; UPDATES with more details throughout)

SEOUL, April 30 (Yonhap) -- The National Assembly on Thursday approved a 12.2 trillion-won (US$10 billion) extra budget to fund emergency handouts for households to cope with the economic impact of the coronavirus outbreak.

The supplementary budget is larger than the government's original proposal, worth 7.6 trillion won, as the scope of the recipients increased from the bottom 70 percent of the income bracket to all households.

It is the second extra budget related to the fallout from COVID-19, following an 11.7 trillion-won one created in March.

The government plans to provide 1 million won to households with four or more members, 800,000 won to three-person households, 600,000 won to two-person households and 400,000 won to single-person households.

On April 16, the government proposed an extra budget bill meant to provide relief funds to households below the top 30-percent income bracket.

But rival political parties promised to pay money to all people in the runup to the April 15 parliamentary elections, citing potential severe impacts of the virus outbreak on the economy.

The government initially opposed the idea of expanding the recipients of the aid package to all households due to concerns about the financial soundness of state coffers.

But the ruling Democratic Party (DP) and the finance ministry later agreed to provide the emergency aid to all people and will instead encourage high-income earners to give all or part of their share back as a donation.

To finance the emergency fund payment, the DP and opposition parties agreed to allow the government to issue deficit-covering bonds worth 3.4 trillion won.

With the budget bill passage, households are expected to be granted the money no later than in mid-May.

President Moon Jae-in instructed government officials last week to prepare a third extra budget that experts anticipate could reach nearly 30 trillion won.

Describing the potential fallout of the pandemic as an "economic war situation," Moon told a Cabinet meeting Tuesday that the third extra budget, if created, would be spent to boost sluggish domestic demand.

South Korea's economy shrank 1.4 percent in the first quarter from three months earlier, the sharpest contraction since the fourth quarter of 2008, as the pandemic crippled consumer spending and industrial output, central bank data showed.

The National Assembly holds a plenary session to vote on a 12.2 trillion-won (US$10 billion) extra budget and other bills on April 29, 2020. (Yonhap)

sooyeon@yna.co.kr
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