President Lee says it's time for gov't to spend: 20.2 trillion KRW spending supplementary bill explained

South Korea has drawn up its first extra budget under the brand new government with the ultimate goal of stimulating economic recovery.

The budget also includes cash handouts to all citizens.

Our correspondent Kim Do-yeon starts us off.

The second round of a supplementary budget bill this year, the first of its kind under Lee Jae Myung's presidency, has been drafted and is set to go to the National Assembly next week.

President Lee, presiding over a Cabinet meeting on Thursday, took a final look.

The size of this supplementary budget is 30.5 trillion Korean won, or a bit more than 22 billion U.S. dollars.

15.2 trillion of that will be going into boosting the economy through stimulus.

5 trillion will be going to stabilizing people's livelihoods.

10.3 will be for revenue adjustment, for the nation's fiscal situation.

This means, 20.2 trillion will be for direct spending by the government with 19.8 trillion being debt.

Going into the details 15.2 trillion for economic stimulus will consist of 10.3 trillion of that being cash relief to everyone, in a different form of the recipient's choosing.

1 trillion will go into boosting discounts and other needed aspects.

2.7 trillion will go into support for the construction sector as it's currently one of the hardest hit industries with close links to the employment of working-class citizens.

President Lee has been pushing for cash relief to everyone for some time now, since his lawmaker days.

The conservative government had been saying a universal payout is not right due to the financial pressure on the nation's fiscal status, and selective support is better.

This draft did go with a universal payout but for those who need it, the more they will receive.

The top 10-percent, approximately 5.12 million people, will receive a one-time payment of 150,000 Korean won, or around a 100 U.S. dollars.

And the biggest group of citizens of around 43 million people will receive the first payment of 150,000 Korean won, but will get an additional 100,000 in the second round.

The lower levels will receive more in first-time payments, with the social welfare recipients later getting 500,000 in total

As for stabilizing livelihoods, money will be spent on debt relief for small businesses as well as boosting employment and taming inflation.

Now, the ball is in the National Assembly's court with the government's draft being transferred on the 23rd.

Lawmakers will be reviewing the bill, but with the ruling Democratic Party holding the majority on the floor, the bill won't face many obstacles.

Now we have our Kim Do-yeon in the studio to give us more details on this supplementary budget bill.

Do-yeon, so the spending vouchers for everyone as you mentioned, had been a hot topic for the nation as it affects every Korean national.

Right, Dami. It's something as I've said in my report that President Lee has been pushing for since his opposition leader days.

And, as we heard, he believes strongly in the government spending more during these hard times with benefits going to everyone.

Also, this is to boost domestic spending.

One thing to clarify is that it's not in the form of cash.

It's spending vouchers.

So there are three ways to receive them.

Local district vouchers, a prepaid check card, or directly to your credit or check card.

Now, it will be to boost domestic spending, so it's not for those who are going to travel abroad.

Also, while the specifics aren't yet set, they're going to have an expiration date.

So far, the government has said four months, but that detail will be decided at the National Assembly.

On top of this, there will be other discounts to make sure people spend more in Korea.

"We aim to achieve both goals: providing swift support through phased payments and tailoring assistance based on income levels. An additional 600 billion won will also be allocated for local gift certificates, bringing the total issuance to a record-high 29 trillion won. The discount rate when purchasing these certificates will also be raised—from a maximum of 10 percent to 15 percent."

Now, let's focus on the government's financial status.

Some people may be worried about the additional debt.

What does the government have to say about that?

The government did admit that the debt had risen, and the fiscal balance rose.

But take a listen to the 2nd Vice Minister for Economy and Finance.

"However, looking at past cases and international comparisons, we don’t see the current level as posing a serious risk just yet. Efforts to ensure fiscal sustainability will continue in parallel."

The government says it tried to be careful with the financing for this supplementary budget.

It secured 5.3 trillion won by reshuffling spending priorities and another 5.5 trillion won by tapping into available funds and adjusting how much will be issued in foreign exchange bonds.

That allowed them to keep additional bond issuance to 19.8 trillion won—minimizing the burden on taxpayers.

Still, despite those efforts, the fiscal deficit widened from 3.3% to 4.2% of GDP, and the national debt ratio also inched up.

But the Finance Ministry argues that what's more important right now is responding to urgent economic needs.