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Finance chief opposes increasing extra budget

All News 09:02 July 12, 2021

SEOUL, July 12 (Yonhap) -- Finance Minister Hong Nam-ki has said it is not easy for the government to increase the size of an extra budget currently under review at parliament as politicians made the request amid the fourth wave of the pandemic.

In late June, the government proposed an extra budget of 33 trillion won (US$28.7 billion) to fund another round of COVID-19 aid packages for people in the bottom 80 percent income bracket and small merchants hit hard by the pandemic.

But politicians raised the need to increase the size of this year's second supplementary budget as the country is reeling from the fourth wave of the pandemic with the greater Seoul area under the toughest virus curbs.

Health authorities on Monday began implementing the Level 4 distancing rules, the highest level in its four tier scheme, in the greater Seoul area for two weeks amid spiking virus cases.

This computerized image shows the government's proposal to create an extra budget of 33 trillion won (US$28.7 billion) to support vulnerable people. (Yonhap)

"It is not easy to increase the size of the supplementary budget," Hong told reporters in Venice, Italy, on Saturday (local time) on the sidelines of the Group of 20 (G-20) meeting of top financial and economic officials.

"As virus situations have changed, we need to consult with the National Assembly. To increase the extra budget, the government should sell more bonds, but it is not a situation where we can do so," he noted.

But Hong also said the government is open to further supporting small merchants if the current virus curbs will be extended for a long time.

Without a debt sale, the government had a plan to fund the extra budget with excess tax revenue of 31.5 trillion won. It also plans to spend 2 trillion won repaying part of the country's national debt with a surplus in tax revenue.

Hong said if the government cancels a plan to repay the sovereign debt, it will have a negative impact on the bond market.

The minister also voiced optimism that the government could attain the economic growth target of 4.2 percent this year despite the resurgence in coronavirus cases.

Some experts raised doubts over whether the Korean economy could grow more than 4 percent as the toughest virus curbs are likely to dampen domestic demand.

"Under the premise that the pandemic would be brought under control with the strongest distancing rules, the government will be able to achieve the 4.2 percent growth target," Hong said.


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