The ruling Democratic Party is considering a new round of COVID-19 emergency cash handouts for all nationals before the Chuseok holiday as social distancing rules have continued to weigh on the local economy, according to party officials Wednesday.

“Another round of universal COVID-19 response stimulus checks backed by a second extra budget is urgently needed,” said Yun Ho-jung, the ruling Democratic Party floor leader. 

“(The party) will kick off a review of fiscal strategies, including a supplementary budget proposal, to reinvigorate the real economy.”

Talks of additional relief aid surfaced last month after President Moon Jae-in mentioned the need for more fiscal support to ensure a strong economic rebound and tackle the income gap that the coronavirus had widened. 

First Vice Finance Minister Lee Eog-weon also hinted last week that the government would look through the nation’s tax revenue conditions and decide whether to implement additional stimulus measures in the second half.

In March, Asia’s fourth-largest economy set an extra budget of 15 trillion won ($13.5 billion) to finance another round of virus relief and offset some of the damage COVID-19 had inflicted on merchants and small-business owners.

Since last year, the country has paid out 46.3 trillion won via four rounds of stimulus checks to counter the economic fallout from the pandemic.

Details of the envisioned extra budget have not yet been confirmed, but the ruling party will introduce the proposal as early as next month with the goal of providing emergency cash assistance to all households ahead of the three-day Chuseok holiday, which starts Sept. 20. 

But the plan, which would include additional assistance for small-business owners, has sparked concern over the growing national debt.

Last year, the country’s national debt surged by 123.7 trillion won on-year to a record 846.9 trillion won. It reached 965.9 trillion won after the extra budget passed in March, driving up the debt-to-GDP ratio to 48.2 percent.
Should another extra budget pass as planned, the debt-to-GDP ratio is likely to surpass 50 percent, industry sources said.

By Choi Jae-hee (cjh@heraldcorp.com)