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Opinion split over efficacy of supplemental budget

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A traditional market in Daejeon is nearly empty on Thursday as many people remain in voluntary lockdown amid the fast-spreading new coronavirus. Yonhap
A traditional market in Daejeon is nearly empty on Thursday as many people remain in voluntary lockdown amid the fast-spreading new coronavirus. Yonhap
By Lee Kyung-min

Opinion is split over the government's plan to spend 11.7 trillion won ($9.15 billion) to keep the economy from crashing due to virus-induced economic fallout.

Many say issuing vouchers to boost consumption is out of touch given people are isolating themselves in voluntary lockdowns to avoid infection.

"It does not even begin to address the concerns," Yonsei University economist Sung Tae-yoon said.

"Few would risk their life ― quite literally ― just to buy things with the vouchers. The idea is beyond nonsensical, to put it mildly."

The government will issue "regional gift vouchers" in the amount of 6 trillion won, double the current 3 trillion, with their discount rate increased to 10 percent, double the current 5 percent.

The vouchers accepted within certain municipalities are issued to spur regional economies by encouraging residents to visit markets there. Most are intended for use at bricks-and-mortar stores.

More troubling is the 1.7 trillion won in loans that will be offered to tackle the hardship of small and medium enterprises (SMEs). The amount is not enough to help SMEs in the businesses of eateries and lodgings.

According to data from the Financial Services Commission, nearly 1.4 trillion won in loan requests were filed between Feb. 7 and 26.

"The amount does not even begin to address the needs of all of those affected," Sung said. "The amount will be far greater now and will continue to increase."

The government plans to offer 3 trillion won in financing to the country's SMEs. Of that, 1.7 trillion won will be used to help small merchants struggling to pay rent, workers' pay and living expenses.

This will be possible as the government will shoulder the interest rate for the state-run banks to lower the borrowing rate to as low as 1.5 percent from 1.75 percent.

The rate cut will be applied across the board regardless of when the money was borrowed.

The supplemental budget passed the National Assembly Tuesday.

The plan passed without a net amount increase as a related parliamentary budget committee agreed to cut previously allocated funds from other state-run projects to give more to Daegu and North Gyeongsang Province, the hardest-hit virus regions.



Lee Kyung-min lkm@koreatimes.co.kr


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