South Korea is mulling another set of extra budget if the level of social distancing goes up a notch, enforcing a lockdown, according to the chief fiscal policymaker.

“The rise in the coronavirus cases and implementation of stricter social distancing level would work as key variables in drafting the fourth extra budget,” Deputy Prime Minister and Finance Minister Hong Nam-ki said at a press briefing held Thursday.

“If the situation reaches Level 3, then (the lockdown’s) impact on the economy will be much more severe.”

The government raised social distancing rules to Level 2 -- of the three-tier system -- on Aug. 16 for an initial two-week period, but decided Friday to maintain the level for an extra week. The Level 2 rules were announced as daily virus cases started surging to triple digits earlier this month and eventually soaring over 400, in nearly six months, on Thursday.

Hong’s latest remarks marked a shift in tone, as he has previously expressed reluctance against allocating another extra budget. The minister said earlier on Tuesday it may be premature to call for a fourth extra budget, pointing out that the government is still in the process of handling the third extra budget.

So far, the National Assembly has passed three extra budgets worth some 60 trillion won ($49.7 billion) combined, since the COVID-19 outbreak here earlier this year, to minimize economic risks stemming from the pandemic. But this has been spurring concerns of rattling the nation’s financial stability.

While Hong showed a shift in stance, he stressed caution in the possible new budget allocation.

“With the new resurgence of the COVID-19, there has been voices calling for the fourth extra budget, but we have already secured investments and projects for emergency situations via the third extra budget (of 35 trillion won),” he said.

In line with buzz over the fourth extra budget, officials have been expressing concerns of burgeoning economic costs that the country will have to deal with under a Level 3 and new lockdown measures.

“Several developed economies had to suffer from side-effects of draconian lockdowns against the coronavirus,” Vice Finance Minister Kim Yong-beom said at a separate economic meeting held Friday.

He said that while the measures managed to resolve pressing issues, it is difficult to make the problems go away.

With the resurgence of the virus, Korea faces key decisions to keep its economy afloat, as growth is forecast to see a sharper-than-expected contraction of 1.3 percent this year, the Bank of Korea said. The 1.3 percent contraction would be under the premise social distancing levels would remain at Level 2, and the figure could plummet to minus 2.2 percent under a worst-case scenario, it added.

By Jung Min-kyung (mkjung@heraldcorp.com)