SOUTH KOREA yesterday unveiled the fourth round of relief package worth 19.5 trillion won (US$17.3 billion) to financially support millions of small businesses hit by the COVID-19 pandemic.

To fund the aid package, the government proposed a supplementary budget worth 15 trillion won, according to the Ministry of Economy and Finance.

The extra budget bill, or the country’s third largest ever, will be submitted to the parliament Thursday for approval.

The country’s finance ministry said total government spending would increase to a record 573 trillion won this year, up 11.9 percent from last year, while expected tax revenue is seen growing just 0.3 percent.

That is set to worsen the debt-to-GDP ratio by 8.4 percentage points to a record 48.2 percent in 2021, versus 43.9 percent last year.

“We want to make sure there are no blind spots left when it comes to using support funds for small businesses, compared to how we spent them before,” said Ahn Do Geol, the deputy finance minister for the budget.

The government has urged conglomerates to share some of their profits with smaller businesses that have borne the brunt of the pandemic while big exporters enjoyed a rapid recovery.

On Friday, the government said it would extend social distancing rules for two weeks nationwide, including a ban on private gatherings of more than four, to blunt the virus spread.

The spending unveiled yesterday adds to pandemic-fighting stimulus of about 310 trillion won since last year, when the economy shrank 1 percent, the most since 1998.

Beside the extra budget funds, 4.5 trillion won will be allocated towards job-keeping funds and childcare subsidies from the existing budget.

More than half the extra budget will provide cash handouts to mom-and-pop stores and people laid off, while another 4.1 trillion won will go to virus treatment facilities and vaccine purchases.

To finance the extra stimulus, the finance ministry will step up treasury bond issuance by 9.9 trillion won and rework other spending plans to make up the rest, it said.

South Korea’s factory activity expanded at its fastest pace in nearly 11 years in February, a private survey showed yesterday, as the strongest growth in over a decade in production and new orders drove the recovery in the manufacturing-heavy economy.

The IHS Markit purchasing managers’ index (PMI) jumped to 55.3 in February from 53.2 in January, marking the strongest level since April 2010 when it stood at 57.1.

“Both output and new orders expanded at the fastest pace in close to 11 years in the latest survey period,” said Usamah Bhatti, economist at IHS Markit.(SD-Agencies)