Korea Chamber of Commerce and Industry Chairman Park Yong-maan said Monday that the supplementary budget currently being discussed at the National Assembly should be expanded to 40 trillion won ($33 billion) as the coronavirus damage is likely to continue for a considerable period of time.

“This is the time for bold policies,” Park pointed out in an unscheduled press briefing, adding that “the country should drastically expand the extra budget to change the direction of the slumping economy.”

The parliament has been reviewing a 11.7 trillion won in the extra budget to counter the coronavirus outbreak. In the extra budget, the government has set aside 2.3 trillion won to enhance the prevention system for infectious diseases, 2.4 trillion won to recover small businesses, 3 trillion won to stabilize people’s livelihoods and employment and 800 billion won to revive the local economy and commercial sectors.

Park explained that 11.7 trillion won is only a 0.2 percentage point increase in the nation’s gross domestic product. With the COVID-19 crisis, Korea’s economic growth rate is forecast to drop up to 1 percentage point this year, he said.

“We need 40 trillion won in funds to raise the economic growth rate by 1 percent. With the current extra budget being discussed, it is difficult to see any policy effects,” he said.

He also stressed the need to simplify financial support procedures for companies that are having difficulty raising finances due to the COVID-19 outbreak.

“Financial institutions may be passive in lending for fear of insolvency. The government and the Bank of Korea should step up and expand the (financial) pipeline,” he said. 

By Shin Ji-hye (shinjh@heraldcorp.com)