[Actually] Lee Jae-myung · Yoon Seok-yeol's 'Corona Support'

Ahead of the presidential election, presidential candidates from the ruling and opposition parties are vying for huge pledges of coronavirus aid.

Democratic Party candidate Lee Jae-myung mentioned disaster relief for all citizens.

He said that Korea's subsidy is the lowest in the world, and suggested an additional 300,000 to 500,000 won.

Since the population of Korea is 51.82 million, a simple calculation would cost 15,546 trillion won for 300,000 won and 25.91 trillion won for 500,000 won.

People's Power Candidate Yoon Seok-yeol said that he would not be able to provide support like the National Disaster Relief Fund, and that he would compensate the self-employed who suffered the most losses in the first 100 days of the new government in principle in full.

The amount of support has been specified at 50 trillion won.

We fact-checked the 'war of money' of the candidates who were on fire over the corona fund.

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Candidate Jae-myung Lee made the premise on his SNS on the 8th that the level of support for the corona virus in Korea is the lowest in the world.

He added, "It is absolutely necessary to provide additional support for households and the self-employed through expanded finance."

On the same day, Park Wan-joo, chairman of the policy committee of the Democratic Party of Korea, opened fire with support.

Chairman Park Wan-joo said, "I think we can provide additional subsidies suitable for national dignity," citing the case of the US and Japan implementing high levels of national subsidies.

First of all, it is necessary to compare the level of disaster aid in Korea with that of other countries.

The International Monetary Fund (IMF) has consulted a report that periodically monitors the financial situation of the G20 countries.

The International Monetary Fund (IMF) carefully analyzes the size and use of each country's coronavirus budget and issues a report on a regular basis.

The SBS fact-finding team directly compiled the IMF analysis of each country's GDP as a percentage, and the state of medical and non-medical financial expenditures.

As of last month.

When looking at the ratio of fiscal spending to GDP, the United States has the highest at 25.5%.

UK 19.3%, Australia 18.4% and Japan 16.7%.

South Korea's coronavirus-related budget spending was 6.4% of GDP, ranking 11th among G20 countries.

As shown in the table above, the IMF categorizes the medical sector and the non-medical sector, and general corona subsidies are collectively referred to as the non-medical sector.

We need to look at the non-medical sector separately.

Non-medical support in Korea was 5.7% of GDP, which was also 11th among G20 countries.

Overall, it is an intermediate level, 'the lowest level in the world' is unreasonable to say, but it is a low level compared to the developed countries that we often compare.

This time, we looked at where the 10 developed countries that spent more on non-health care than we did.

The non-medical sector is divided into two major policies: fiscal spending and tax cuts.

They were organized according to two criteria.

It can be seen that a number of countries have implemented similar policies.

The World Bank made a similar analysis.

Most countries have usually adopted 8 to 12 policies in a similar combination.

The most common policies in all countries were healthcare spending, extended loans and tax payments to businesses, direct cash assistance, and temporary policies for households.

most countries and country groups implemented 8-12 types of measures, and often a similar mix.

The most common measures were typically found in all country groups and include general health spending, loans and deferral of tax payments for businesses, and direct cash transfers and supplementary ad-hoc programs for households.

- World Bank, <A Review of Fiscal Policy Responses to COVID-19>, p. 14, January 2021.

However, there are also differences between countries. The only countries that have implemented a cash payment policy for all citizens are the United States, Japan, and Korea. The United States spent $861 billion in three rounds of household cash aid (EIP), or KRW 1,016 trillion in Korean money. Japan also paid 100,000 yen per person, 1.03 million won in Korean money. Although not listed in the table above, Singapore is also a national cash aid country.

On the other hand, with the exception of these countries, it is also true that many countries, including Europe, are using selective support policies.

According to the British government website, the UK is a self-employed income support system for the self-employed and small business owners, and it is said that 80% of the average monthly profit is paid every three months. We also temporarily increased the amount of benefits for the Unified Benefit (UC), a social security benefit system for the underprivileged. In Germany, emergency aid of up to 15,000 euros, a total of 13.6 billion euros, was provided to struggling self-employed people. It is said that a one-time special subsidy of 150 to 300 euros was given last year and this year to households raising children in the form of subsidies for child rearing.

In other words, it can be classified into a method that provides universal cash to all citizens as in the United States and a method that provides intensive support to the underprivileged as in Europe. .

However, there are different contexts for each country.

Since the United States is a producer of the key currency, the dollar, it is possible to reduce the burden of financial deterioration by sprinkling cash.

In particular, there was an evaluation that the welfare system was insufficient compared to Europe, so the mass cash payment was used appropriately.

On the other hand, Europe with a well-established social safety net already has a universal welfare system in place, so there is relatively little reason to dwell on additional lump sum and universal payments.

There is also the trauma of the financial crisis that originated in Greece in 2010, and there is an interpretation that a lot of attention was paid to financial soundness.

The National Assembly Legislative Investigation Agency has analyzed this context well.

The United States is the only country with global credit that can handle huge debt, and it can be seen that the so-called 'helicopter money' is being used as a policy, and it is responding effectively but not efficiently.

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Countries in the Euro area…

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The reason why the cash aid was limited to the low-income class and the socially disadvantaged is because there are concerns that a large-scale direct payment policy such as the United States may cause deterioration in fiscal soundness in the future and a reduction in financial space to respond to new changes.

- National Assembly Legislative Investigation Agency, Kim Jun-heon and Park In-hwan, <Cases and Analysis of Disaster Subsidy Payments by Major Countries>, NARS Pending Analysis No. 214

In the end, the 'world level' that Candidate Jae-myung Lee refers to implies that it is difficult to make a simple comparison because it reflects the specificity of each country.

Of course, it is also a matter of national political choice, but it is necessary to comprehensively consider our welfare level and financial soundness.

The financial soundness issue is also closely related to Candidate Seok-Yeol Yoon's promise of '50 trillion won in loss compensation', which will be fact-checked from now on.

Candidate Seok-Yeol Yoon promised in an interview with a media outlet on the 7th, "In principle, we will fully compensate for the damage caused by the government's business restrictions by investing 50 trillion won during the 100 days after the new government was inaugurated."

The plan is to invest a huge amount of money to compensate the loss for the self-employed.

On the 9th, he said, "We should provide thick support centered on those who have suffered a lot from Corona and are in trouble, and that support should also go to the concept of compensation for damage done."

By the way, if it is 50 trillion won, you need a budget that is twice the maximum amount of the subsidy mentioned by Candidate Jae-myung Lee.

This year's defense budget is equivalent to 50.15 trillion won, or 9% of the total budget.

When asked how the money would be raised, candidate Yoon Seok-yeol heard about budget cuts and the issuance of government bonds.

However, it is clear that there is a limit to simply raising money equivalent to 9% of the total budget through budget cuts, and there is no objection that there is no other way than the issuance of government bonds.

Ultimately, the adequacy of the government's additional debt needs to be weighed.

We also used IMF data.

We checked what the level of debt in our country is.

The IMF analyzes the debt levels of 35 countries, including the G7 and G20 countries and European countries, and predicts the future situation.

For reference, the Ministry of Strategy and Finance calculates Korea's debt-to-GDP ratio as 47%, but the IMF includes not only the government but also non-profit public institutions, so the debt ratio is higher.

Compared with other countries, Korea's debt-to-GDP ratio is not high at 51.3% this year.

The debt of the United States is twice that of GDP, and in Japan, it is well over three times.

However, it is difficult to simply compare the US, the key currency country, and Japan, which owns more than 90% of debt, with Korea.

In particular, high government debt is not a bad thing.

Of course, the government is in debt.

Even more so in today's Corona situation.

The problem is the trend.

After five years, Korea's expected debt-to-GDP ratio is predicted to be 66.7%.

The increase is the highest among these countries.

The International Monetary Fund (IMF) analyzed that the global financial stability is gradually improving, but only points to Korea as a case in which this is not the case.

Favorable interest rates conditions, and economic growth, coupled with projected fiscal adjustments (including a decline in COVID-19-related spending), are expected to slightly reduce the government debt-to-GDP ratio in developed countries to around 120% in 2026. However, the debt ratio is expected to remain largely stable, as in the UK, or continue to rise, as in Korea.

Favorable interest rates and economic growth, along with projected fiscal adjustments (including a decline in COVID-19–related spending), imply that the ratio of gross government debt to GDP for advanced economies is expected to decline marginally to about 120 percent in 2026. However, in some countries the debt ratio is expected to remain broadly stable (United Kingdom) or continue rising (Republic of Korea). - IMF, <Financial Confidence Reinforcement Report>, October 2021

As I explained earlier, the countries that poured the most money because of the corona virus were the United States, Australia, Japan, the United Kingdom, Germany, Canada, Italy, and France in that order.

However, these countries do not have large expected debt growth rates.

The Ministry of Strategy and Finance expects the expected national debt for next year to be 1,068 trillion won, and the additional 50 trillion won that Candidate Seok-Yeol Yoon said is 4.7% of the total debt even with simple calculations.

Moreover, there is a consensus among European countries that, if the financial situation deteriorates, they fill their finances through tax increases.

Unfortunately we can't.

It's hard to bring up the story of the evidence.

Especially before the big elections.

In particular, candidate Yoon Seok-yeol said in his acceptance speech on the 5th, "Malicious populism is tax plunder, and the national debt of more than 1 trillion won is plundering the future."

In order to raise 50 trillion won, there is no other way than to take out debt, but as the government has stated that the national debt is the looting of the future, raising finance through debt will be a big political burden.

It is also true that there is no concrete way to raise funds.

Our fact-finding team continues to fact-check the statements and policies of the candidates during this election period.

I hope the viewers will do the same.

You can request a fact check verification by typing SBS facts on the Internet.

If you request it, we will fact-check it to the best of our ability.

<Main Source>

IMF Financial Monitoring Report, October 2021 (https://www.imf.org/en/Publications/FM/Issues/2021/10/13/fiscal-monitor-october-2021)

National Assembly Legislative Investigation Office, Jun-Heon Kim and In-Hwan Park, <Cases and Analysis of Disaster Subsidy Payments by Major Countries>, NARS Issue Analysis No. 214

IMF, <Strengthening the Credibility of Public Finances> Report,

World Bank

in October 2021

, <COVID-19> A Review of Fiscal Policy Responses to COVID-19 Report, January 2021

German Ministry of Finance (https://www.bmwi.de)

UK Government Statistics (https://www.gov.uk) /government/statistics)