South Korea to finalise extra budget to help businesses and self-employed

An extra budget of 14 trillion won (US$11.7 billion) is being planned to support small merchants and the self-employed hard-hit by the pandemic.
By: | January 20, 2022

The extra budget will be funded via the sale of state bonds over periods to minimise its impact on the government bond market.

“The issuance of treasury bonds will be distributed as evenly as possible in a bid to minimise the impact of debt sale on the government bond market,” said Second Vice Finance Minister Ahn Do-geol, adding that the ministry will take timely action if volatility in the bond market increases.

Bond yields recently spiked due to the central bank’s latest rate hike and the extra budget plan. Yields on three-year government bonds increased by 10.4 basis points to 2.148% on Monday, the highest since June 21, 2018. Bond prices move inversely to yields.

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The ruling Democratic Party hopes to convene a provisional session of the National Assembly in February to pass the extra budget proposal by February 11.

The party has called for increasing the budget beyond the government’s proposal to expand both the scope and amount of relief payments, according to Yonhap.