Party and Government "No Repayment Required for Pandemic Advance Disaster Relief... 570,000 People Eligible"

Household Debt Measures... "Expansion of Long-Term Fixed-Rate Loans Using Covered Bonds, etc."
Full Compensation for Lumpinsky Disease Culling... Expansion of Fund to Reduce Interest Burden for Small Business Owners

The planned recovery measures to be applied to some disaster relief funds (up to 2 million KRW) provided to small business owners and self-employed individuals during the COVID-19 pandemic will be canceled. This is expected to exempt approximately 570,000 small business owners from a repayment burden of about 800 billion KRW.

The government, the Presidential Office, and the People Power Party held a high-level meeting at the Prime Minister's residence in Samcheong-dong on the 29th and announced this decision in a written briefing.

At the meeting, the ruling party, government, and presidential office agreed that the recent business conditions for small business owners and the self-employed are severe, and decided to strongly promote financial burden relief and domestic demand revitalization to ease business difficulties.

The government especially decided to exempt the legal obligation of recovery, considering that the support was urgently provided during the COVID-19 period when there was no sales information, and that neither the administrative authorities nor the small business owners were at fault, as well as the current difficulties in management due to high interest rates. They plan to promptly revise the Small Business Act to implement this.

Additionally, to reduce interest costs for small business owners, the government plans to expand the existing 'Low-Interest Refinancing Loan Program for Small Business Owners' and the 'New Start Fund.'

Furthermore, nationwide discount events such as the December year-end Snowflake Companion Festival, a national consumption campaign to increase sales, will be held, and the purchase limit for Onnuri gift certificates will be specially raised.

Regarding household debt measures, the ruling party and government will closely monitor the effects of the ongoing improvements to the Debt Service Ratio (DSR) system and will push for additional improvements if necessary.

The ruling party explained that these measures were prepared to alleviate difficulties faced by the self-employed and other low-income groups amid increased financial market volatility caused by the U.S. high interest rate trend and Middle East conflicts.

The ruling party, government, and presidential office analyzed that "the household debt ratio relative to GDP has been declining under the current administration, indicating overall stability," but also stated that "since the accumulated household debt is already large, they will carefully manage it to ensure that household debt does not threaten financial stability or structurally hinder growth."

On the morning of the 29th, participants at the high-level party-government-national assembly meeting held at the Prime Minister's residence in Samcheong-dong, Jongno-gu, Seoul, are listening to the remarks of Kim Ki-hyun, the leader of the People Power Party (center left).
[Photo by Yonhap News]

Specifically, for loans with a 50-year maturity, the DSR calculation maturity will be limited to a maximum of 40 years, and financial institutions will be requested to refrain from handling 50-year maturity loans for multi-homeowners and group loans, which are considered to have high speculative concerns. The People Power Party particularly requested measures to improve the high proportion of variable interest rate loans as a way to reduce household debt vulnerability.

In response, the government plans to swiftly introduce a Stress DSR within the year to reduce the proportion of variable interest rate loans and increase the use of covered bonds to expand long-term and fixed-rate loans. Stress DSR is a system that applies a certain level of additional interest rate when calculating the DSR, and covered bonds are dual recourse bonds issued by financial institutions secured by fixed assets such as real estate mortgage loans they hold.

Financial support targeting low-income and real demand groups vulnerable to rising interest rates will also be strengthened. The ruling party requested that the special Bogeumjari Loan support capacity be concentrated on low-income and low-priced housing and that support be provided even if the original supply target is exceeded, and the government agreed to actively pursue this. To this end, they plan to activate financial institutions' own debt restructuring and promptly legislate the Personal Debtor Protection Act, which includes provisions such as limiting overdue interest and reducing collection burdens.

Regarding the spread of the bovine viral disease Lumpy Skin Disease, the ruling party and government decided to pay full compensation for culling regardless of whether farms comply with quarantine rules. Although compensation is reduced by law if quarantine rules are violated, this measure is intended to encourage early reporting of outbreaks by farms. The government plans to complete vaccination of all cattle nationwide by the 10th of next month.

Additionally, the ruling party and government will make every effort to strengthen quarantine management, including enhanced farm surveillance and inspections, in accordance with the special winter quarantine measures announced last September for highly pathogenic avian influenza, foot-and-mouth disease, and other livestock infectious diseases.

This content was produced with the assistance of AI translation services.