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Fiscal chief opposes universal cash relief

Finance Minister Hong Nam-ki (Yonhap)
Finance Minister Hong Nam-ki (Yonhap)

South Korea’s Finance Minister Hong Nam-ki on Friday voiced opposition to a new round of COVID-19 emergency cash handouts for all nationals, promoted by the ruling Democratic Party and the government.

“It is inappropriate to hand out emergency relief funds to people in the upper income brackets. The US government doesn’t even offer tax rebates for the upper class,” Hong said at the National Assembly’s Strategy and Finance Committee meeting.

“Spending money to support small merchants and businesses most affected by the COVID-19 pandemic seems much more reasonable.” 

The DP and the government are currently in talks to submit this year’s second supplementary budget in July, estimated to reach somewhere between 30 trillion won ($29 billion) and 35 trillion won, to fight COVID-19.

The DP has been looking to dole out universal stimulus checks before the Chuseok holiday under the extra budget. 

While not considering cash grants to all residents, the government is discussing ways with the ruling party to broaden the range of recipients as a way to support its expansionary fiscal policy, Hong added. 

Meanwhile, the fiscal chief raised concerns over a possible rate hike, saying “if the central bank raises the benchmark interest rate, debt burdens of households and companies will sharply increase.”

Hong’s remark came after Bank of Korea Gov. Lee Ju-yeol on Thursday suggested the possibility of a rate hike. 

“The current pandemic-era monetary easing is extremely dovish compared with the state of the economy. It is necessary to normalize monetary policy at an appropriate time by the end of the year,” Lee said during a press briefing. 

Concerns are rising over a discord between the government’s financial and monetary policy as the two economic policymakers expressed conflicting stances on monetary policy.

“The Ministry of Economy and Finance and the BOK share roles to promote a balance between the two policy directions. We will try our best to prevent policy discord,” Hong said.

By Choi Jae-hee (