5th Crisis Management Meeting of 2020
15th Ministerial Meeting to Respond to COVID-19 Outbreak
Government to Work on Economic Recovery
Deputy Prime Minister Hong Nam-ki presided over the 5th Crisis Management Meeting of 2020, which is also the 15th Ministerial Meeting to Respond to COVID-19 Outbreak. Plans to help recover the economy was the main topic of discussion. DPM Hong discussed industry-specific support and ways to effectively follow up the outcomes of the 5th Emergency Economic Council Meeting held on the previous day. Deputy Prime Minister Hong commented at the beginning of his keynote address on the 1st quarter GDP released just before the meeting, and talked about the Central Economic Response Headquarters scheduled to take off next week, a meeting to replace the current Crisis Management Meeting.
The following is a summary of DPM Hong’s keynote address.
The Korean economy contracted 1.4 percent from the previous quarter and rose 1.3 percent from a year ago in the 1st quarter of this year.
- Private consumption and service output were hit hard by the COVID 19 outbreak
- Exports improved somewhat, absorbing shocks from the pandemic, but the current slowdown in the global economy will likely affect the country’s exports in the 2nd quarter, hitting employment and the real economy
- The public sector contributed 0.2 percentage points to the 1st quarter GDP growth through supplementary budget spending and frontloaded fiscal spending
Central Economic Response Headquarters
The current Crisis Management Meeting will be replaced by the meeting of the Central Economic Response Headquarters starting next week. The new body is responsible for economic risk analysis, current policy review and new policy development to weather the crisis. Major economic issues will be worked on through the headquarters meetings, such as the employment retention and key industry supports announced at the 5th Emergency Economic Council Meeting, economic policies for the 2nd half of 2020 and the 3rd round of the 2020 supplementary budget proposal.
Topics of discussion
1) Ways to help the economy recover, such as through job support and public sector projects
2) Plans to support the five key industries, such as car makers, airlines, shipping companies, oil refining companies and shipbuilders, which produce around 20 percent of the country’s GDP, account for about 30 percent of exports and provide with 600,000 jobs
- Public sector purchases of around 8,700 cars with the down payment of up to 70 percent of car prices
- Expand special customs duties for car parts
- Give tariff and VAT payment deferrals for up to 12 months
- Extend the cuts in airport charges by three months until August
- Provide as soon as possible the 300 billion won worth of emergency liquidity injection into low cost carriers, and work on extra liquidity support if needed
- Work on aircraft property tax payment deferrals
- Provide with up to 460 billion won worth of new liquidity, including P-CBO support (up to 260 billion won) and corporate bond purchases (100 billion won)
- Expand the ship sale and leaseback program by 200 billion won to 400 billion won, stretch the one year grace period for principal repayment on ship sale and leaseback from 5.28 billion won a year to 288.86 billion won, and increase ship financing support by 100 billion won
Oil refining companies
- Provide tax payment deferrals: Defer the payment of April oil taxes by three months, and the payment of March tariffs and VATs by two months
- Work to expand financial support for shipbuilding and to increase support for refund guarantees provided for shipbuilding contracts
Please refer to the attached pdf