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South Korean President Moon Jae-in presides over the Blue House’s second emergency economic council for discussing ways of dealing with the financial impact of the novel coronavirus outbreak on Mar. 24. (Blue House photo pool)

On Mar. 24, Moon unveiled a plan containing 100 trillion won (US$81.29 billion) in financial support, promising, “We won’t let any healthy companies close their doors because of a temporary liquidity shortage resulting from the COVID-19 shock.” By concentrating support on companies in crisis, Moon hopes to take preemptive action to interrupt the vicious cycle of corporate bankruptcy, unemployment, contraction of domestic demand and economic recession.

Moon made these remarks while presiding over the second emergency economic council at the Blue House on Tuesday. “The government will serve as a sturdy sea wall blocking the waves in the terrible crisis that has struck our companies. We are greatly expanding the 50 trillion won (US$40.65 billion) in emergency financial measures that we adopted in the first emergency economic meeting to 100 trillion won, which we will be using to provide corporate relief,” he said. This move doubles the size of the livelihood and financial stability package adopted in the first emergency economic meeting, just five days earlier.

“We will be giving an additional 29.1 trillion won (US$23.68 billion) in management assistance to small businesses and middle-market enterprises to provide them with some financial relief. If necessary, we will make the chaebol eligible [for loan assistance] to prevent them from collapsing because of a temporary funding shortage,” Moon added. During the same meeting, Moon announced plans to set up a 20 trillion-won (US$16.27 billion) bond market stabilization fund and a 10.7 trillion-won (US$8.71 billion) equity market stabilization fund.

There was no specific discussion during the meeting on Tuesday about a disaster allowance or other forms of cash payments. But Moon did ask officials to “prepare for reaching a swift decision about effective measures of livelihood support, taking into account the total fiscal demand, in the third meeting,” which is scheduled for the beginning of next week. This raises the possibility that the government may discuss whether to provide a disaster allowance or some other form of emergency livelihood assistance and, if so, what the scope of that allowance might be.

“The idea is to reach a decision about which method should be used to support households, whether cash assistance should be provided universally, to all citizens, or selectively, to vulnerable groups. There’s a vigorous debate even in the Blue House about the most effective way to use our finite fiscal resources,” said multiple officials in the Blue House.

By Seong Yeon-cheol, staff reporter

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