Gov't Seeks To Submit Extra Budget In March

South Korea's finance minister said Tuesday the government is seeking to submit an extra budget bill in early March in a bid to provide targeted support to merchants and businesses hit hard by the pandemic. There is still no indication of increased issuance size to finance the extra budget bill.

• Last year, the country drew up supplementary budgets four times totaling KRW 67tn to cope with the fallout of the pandemic. The ruling Democratic Party and the finance ministry are in consultations over the size of the extra budget, with some DP members reportedly claiming it should be at least KRW 15tn, media speculation that the size of the supplementary budget may top KRW 30tn was dismissed.
• The DP initially sought to provide both targeted support and universal stimulus checks but switched its strategy to selective support for the potential fourth round of relief funds. The finance minister said the government is exploring ways to expand the recipients of more relief funds in a bid to "massively" assist the sectors hit hard by the coronavirus pandemic.
• On a push to legislate a state scheme to compensate business losses caused by the pandemic, Hong said the government may be able to draw up the related bill next month. President Moon Jae-in instructed officials in January to explore ways to compensate smaller merchants and shop owners for losses incurred by virus curbs designed to fight the new coronavirus outbreak.
• Rates in Korea have been under pressure recently after the announcement of further stimulus, though yesterday the space was supported by reports that vaccines had been secured for 23m people.
• Initial budget plans in September 2020 forecast a record issuance of KRW 172.9tn, up from KRW 167tn in 2020. The expected sales will increase expectations for the Bank of Korea, which has refrained from massive debt purchases embarked on by peers, to step up measures to prevent bond yields from surging.