(3rd LD) Gov't set to help low-income, jobless people

(ATTN: CORRECTIONS to recipient numbers in para 7)
SEOUL, March 12 (Yonhap) -- The government plans to spend 6.09 trillion won
(US$4.09 billion) to help low income earners and unemployed workers cope with the
current economic crisis, the finance ministry said Thursday.
The comprehensive emergency relief package calls for assistance to people who
have been laid off, direct cash support for senior citizens, and various
subsidies for food, education, and healthcare, the Ministry of Strategy and
Finance said.
The money will come largely from the extra budget the government and the ruling
party are drawing up to boost the slumping economy. The size of the supplementary
budget may hover around 30 trillion won.
The ministry in charge of the country's economic policies stressed that relief
must be given because the economic slowdown may not improve in the near future,
which could jeopardize the livelihoods of people living under or just above the
poverty line.
It said relief will be given as soon as the extra budget bill is approved by the
National Assembly, with plans having been made to start distributing the funds --
including 3.1 trillion won worth of coupons -- from May.
Of the total, just over 5.2 trillion won will be used to directly aid those who
have been the most impacted by the weak economy, the ministry said.
According to the plan, the government will give out cash and coupons worth
830,000 won every month for six months to 400,000 people who have either been
laid off or forced to close their small businesses in recent months. Half of the
funds will be in the form of coupons that can help spur consumption.
Because these people have the ability to work, payment will be given if they
agree to work in various public service works and social infrastructure projects.

A total of 1.1 million senior citizens and physically disabled people will be
given an average of 200,000 won each month for a six-month period.
The plan also raises the number of people who can receive state welfare support
from 1.75 million at present to 4.35 million, and makes it easier for people to
receive critical unemployment insurance payments.
Other support to be offered include giving low interest loans to people who have
almost no income and releasing 15,000 tons of government-held rice to groups that
provide free meals.
South Korea, which managed to pull off 2.5 percent growth in 2008, is expected to
post negative 2 percent growth this year as the worldwide slump continues to
batter consumption, exports, investment and employment conditions.
The International Monetary Fund warned that worldwide growth may edge up just 0.5
percent on-year, with some experts predicting an overall contraction this year.
Finance Minister Yoon Jeung-hyun, meanwhile, claimed that concerns about the
supplementary budget disrupting South Korea's financial market are exaggerated.
"There is adequate liquidity in the market to absorb state bonds that will be
issued, and there are no real worries about any crowding-out effect," the senior
policymaker said. He said that since private funds should be sufficient, there
are no plans for the Bank of Korea to directly buy such bonds.
A crowding-out effect refers to interest rates rising due to increased government
borrowing in the money market to stimulate the economy. A rise in interest rates
hurts private spending and investment that can effectively nullify efforts by the
government to revive economic growth.
yonngong@yna.co.kr
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