As the government intensifies the payment of 'people's livelihood recovery consumption coupons' for debt adjustment expansion and consumption stimulation, small business owners and self-employed individuals are expressing expectations for economic recovery. However, concerns are also being raised that the rapid increase in expenditure could lead to a rise in government debt.
According to the government and the Ministry of SMEs and Startups on the 8th, the second supplementary budget of 925.8 billion won has passed the National Assembly, and the 'debt burden improvement project for small businesses' is also gaining momentum. The project focuses on extending the repayment period of policy funds beyond the existing terms and lowering interest rates to ease financial pressure. In particular, the repayment period is extended to a maximum of seven years, and interest rates are also reduced by 1 percentage point.
Small business owners expect this measure to provide substantial help in recovering sales and normalizing management. The 'small business and self-employed debt adjustment program' led by the Financial Services Commission is also part of this effort. This program targets low-income borrowers with debts of less than 100 million won, offering a principal reduction of up to 90% and extending the repayment period to a maximum of 20 years.
A representative of the Korea Federation of Micro Enterprise (KFME) noted, 'While alleviating debt burdens, the people's livelihood recovery consumption coupons policy will serve as a catalyst for domestic demand activation,' emphasizing that, 'If local governments expand budgets for local gift certificates and conduct events linked to local small businesses, it will create a synergy effect.'
The government has expanded the central government's burden from 10.3 trillion won to 13.2 trillion won for the nationwide distribution of consumption coupons. Including this, there are plans to issue an additional 21.1 trillion won in government bonds to secure a total of 31.8 trillion won for the second supplementary budget. As a result, the government debt is projected to exceed 1,300 trillion won by the end of this year.
The issue is fiscal soundness. While expectations for policy effects are rising given that substantial support for small businesses is being provided, the long-term fiscal soundness issues arising from rapid fiscal expansion remain challenges to be addressed.
Jo Dong-geun, an honorary professor of economics at Myongji University, pointed out, 'Sudden debt relief while the personal rehabilitation system exists could set a bad precedent,' suggesting that 'it would be more desirable to utilize 13 trillion won for infrastructure investments.'
Arguments are also being made that proactive fiscal input from the government is inevitable during this economic downturn. Woo Seok-jin, a professor of economics at Myongji University, explained, 'Currently, this is not a fiscal risk situation that would affect national creditworthiness,' adding, 'The government's role is to support the economy during a contraction.'
President Lee Jae-myung also pointed out in a press briefing on the 3rd, 'The fiscal situation is not abundant,' and stated that there are currently no plans for a third supplementary budget. However, he acknowledged that 'there will be a time to utilize national finances,' leaving room for the possibility of additional expenditures in the future.