Input 2021.01.31 10:12
“No Review”
As the ruling Democratic Party, the ruling party, introduced a system to compensate for the losses suffered by self-employed persons due to business restrictions and bans, and promoted the payment of the 4th disaster support fund, it is possible to organize an additional budget for the first quarter (additional budget) for the second consecutive year following last year. . It is very unusual to organize an additional budget in the first quarter of this budget. This is because the beginning of the year is the time when budget execution is just starting, and the time difference from the original budget organized in the previous year is small, so there are not many cases where the budget is insufficient.
However, the Ministry of Strategy and Finance, which is the budgetary authority, is in the position that “there is no review” on the possibility of organizing an additional budget in the first quarter. The Ministry of Science and Technology is drawing a line saying, “It is a story that is raised from the political sphere, not our position.” However, it is observed that there is a high possibility that the first quarter supplementary administration will be realized in order to respond to the economic crisis caused by the novel coronavirus infection (Corona 19).
The government has already spent 5.6 trillion won in government reserves to provide 3rd disaster subsidies and vaccines to self-employed people, and the remaining reserves are only 2 trillion won. This is why it is inevitable to pay the 4th subsidy. As for the 4th subsidy, it is said that the method of intensively paying the victims like the 3rd subsidy and the method of paying the whole people at the same time like the 1st subsidy is reported. In this way, it is observed that the inputted finance will be larger than the first and third subsidy payments.
However, officially, the Ministry of Information and Communication has shown the position that “there is no discussion at all” about the organization of the supplementary administration. However, inside the Democratic Party, it is strongly argued that the damages of self-employed persons due to the re-proliferation of Corona 19 should be compensated at the latest in April, and to this end, discussions on the formation of an additional budget may be formalized in February.
In the first quarter, there have been 4 cases of supplementary administration since 1990. From the time of submission of the supplementary bill to the National Assembly, the International Monetary Fund (IMF) in 1998 (February 9) and 1999 (March 31) during the foreign exchange crisis, 2009 (March 30) during the global financial crisis, and last year ( March 5), which is the first time since the IMF crisis when the first quarter of the second consecutive year becomes a reality.
The additional financial resources are expected to be covered by deficit government bonds, and the resulting deterioration in fiscal soundness is a concern. Based on this year’s budget, the projected year-end national debt is 956 trillion won. The ratio of national debt to gross domestic product (GDP) rises to 47.3%. If deficit government bonds are issued at a scale of 10 trillion won for the 4th subsidy payment, the national debt will be 966 trillion won and the national debt ratio will be 47.8%. If a deficit government bond is issued by 20 trillion won, the national debt will jump to 976 trillion won and the national debt ratio will jump to 48.3%.
If the 1st quarter supplementation is realized, there is a possibility that the national debt will exceed 1,000 trillion won within this year. Even if an additional supplement is organized in the first quarter, it is only the first supplement this year, and if the vaccination is delayed, Corona 19 may re-spread again. If this happens, social distancing will be implemented again, and there is a risk of reorganization of an additional supplementary account with discussions about the payment of disaster subsidies.
It is observed that the legalization of the self-employed loss compensation system, which is one of the key reasons for the additional discussion, will not be decided in a short time. It is expected that the main content will be that the state will preserve a certain portion of the losses of self-employed persons who have been damaged by business restrictions or bans to prevent the spread of Corona 19.
However, it is highly likely that the legal definition of government support would be’special support’ rather than’loss compensation’ for the state’s administrative actions. This means that the government’s compensation is not a loss compensation but a subsidy. In this way, it is interpreted that general industries that are not business restricted or prohibited may be excluded from support. Losses subject to compensation for losses are operating losses incurred by an administrative order of the government, and losses resulting from the economic downturn are losses suffered by the whole people and are not subject to compensation.
Regarding this discussion, an official from the Ministry of Science and Technology said, “There is no issue under review by our department for the preparation of supplementary budgets for the provision of the 4th disaster subsidy. Even in the case of the loss compensation system, it is an issue that is being discussed in the political world. There is no position to reveal the position on Korea.” This is in the same direction as President Moon Jae-in mentioned earlier at a New Year press conference earlier this month that the third subsidy is being paid, and said, “I don’t think it is time to discuss the 4th subsidy.”