Lee stresses need to restructure unpayable debts of small business owners
President Lee Jae Myung speaks during the "Digital Talk Live" event held at Korea Creative Content Agency's Content Culture Plaza in Seoul, Tuesday. Yonhap
President Lee Jae Myung said Tuesday the government needs to restructure unpayable debts held by small business owners and individuals to help them recover from the economic fallout from the COVID-19 pandemic.
Speaking at a town-hall style meeting, Lee underscored the government's responsibility to support over-indebted people, noting that debts among small merchants and the self-employed surged during the pandemic due to strict business restrictions.
"In our society, once you fall into debt, you are chased by it until death, which is socially not desirable," Lee said during the "Digital Talk Live" event with small merchants and panel participants.
"In advanced countries, unpayable debts are quickly written off and settled. Just as new sprouts emerge once the old stubble is cleared from the field, we should do the same," he added.
Lee suggested a "reformist approach" toward financial policy, saying there is "much room for adjustment" through policy measures.
Addressing public skepticism about debt write-offs, the president said broader understanding that the government should bear the cost of overcoming the crisis would help facilitate debt restructuring.
"While other countries overcame the COVID-19 pandemic crisis by increasing the national debt, we shifted the burden onto powerless individuals," Lee said.
"Their businesses were restricted by government orders such as lockdowns and bans on gatherings, and their debts grew as a result. This is something the government's finances should bear," he added.
In response to criticism that the debt restructuring could lead to moral hazard, Lee said labeling indebted people as delinquent borrowers would only further weigh on the economy.