Park Hong-keun calls for seamless support from low-income finance to self-reliance, eyes additional budget

Minister of Planning and Budget Park Hong-keun on Monday stressed the need to identify gaps in the financial support system for low-income households, saying the government must ensure there are no breaks in assistance "from the moment people begin using low-income financial products all the way through to regaining self-reliance" during a period of rising interest rates.

Park made the remarks at a policy roundtable held at the Central Low-Income Finance Integrated Support Center in Jung-gu, Seoul, where he met with officials from related ministries, public institutions and private organizations. "We will work with related ministries to review the difficulties and improvement suggestions raised on the ground and fill the gaps in the system," he said.

"Those facing hardship should be given a chance to get back on their feet, while those who are faithfully repaying their loans should be able to move toward greater self-reliance," Park said. He added that the government would flesh out supplementary measures based on feedback from the field, and that any items requiring additional funding would be reviewed during the National Assembly's deliberation of the 2027 budget.

The roundtable examined operational limitations in the policy finance and debt restructuring systems and discussed ways to improve the support framework so that financial assistance can lead to genuine economic independence.

The government plans to sharply increase next year's budget for low-income financial support, from 500 billion won ($374 million) this year to 1.6 trillion won, aiming to improve financial access for low-income, low-credit borrowers and help long-term delinquents make a fresh start.

As a first step, 527.4 billion won will be channeled into the Haetsal Loan Special and Youth programs, expanding the loan supply from 2.63 trillion won this year to 2.78 trillion won next year. The government will also launch a new "K-Livelihood Protection Loan" worth 600 billion won, funded jointly by the public and private sectors.

A special debt restructuring program will be introduced for small business owners hit by COVID-19, covering 5.4 trillion won in unsecured long-term delinquent debt. The program will target loans that fell into arrears before June 2023, prior to the official end of the COVID-19 crisis. For unemployed youth, the government will create a new "Youth Opportunity Fund" offering 450 billion won in low-interest loans, with interest waived during the job-search period.

Participants at the roundtable pointed out that eligibility criteria and application conditions vary so widely across products that people struggle to identify the right program for their situation. They also noted that even borrowers who repay diligently rarely see their interest rates reduced or gain access to follow-on funding. Concerns were also raised about insufficient links between debt restructuring programs and government support projects aimed at helping people return to economic activity.

In response, the government plans to strengthen the step-by-step support framework by easing the interest burden on diligent borrowers and tightening connections to follow-on financial assistance. It is also reviewing measures to provide support tailored to each borrower's repayment capacity and financial circumstances, and to strengthen coordination among relevant agencies so that counseling and comeback support continue even after debt restructuring is completed.

"It is just as important to make sure that people who need help can easily learn about and use these programs as it is to secure the support budget," Park said. He urged related agencies to work together to explain eligibility and application procedures in plain terms and to connect financial support with government employment and welfare programs.