Korea’s liberal party embraces Hungary's approach to depopulation

A nurse checks newborn babies at the infant unit of Ain Hospital in Incheon, Feb. 26. Newsis

The liberal Democratic Party of Korea (DPK) is embracing Hungary's approach to the birthrate crisis, reviewing the idea of offering loans to newlywed couples with the promise that the debts will be forgiven once they have three children.

The policy idea of offering 100 million won ($70,000) loans to all newly married couples, regardless of their income levels, is now reportedly under review by the DPK as officials work to finalize policy priorities ahead of the June 3 presidential election.

The party introduced the idea during last year’s campaign for legislative elections as one of its pledges to address Korea’s persistently low birthrate. If one of the party’s contenders wins the presidential race, this cash-for-kids proposal could quickly become actual policy through legislation, given that the DPK holds a majority in the National Assembly.

Under the plan, all newly married couples would be given 100 million won. If they have one child, they would be relieved of paying interest on their loans. If they have a second one, the principal would be reduced by half to 50 million won, while a third child would eliminate the debt entirely.

Known as the Hungarian model, it was credited with some success in reversing that country’s decreasing birthrate. Its total fertility rate ― the average number of children born per woman ― increased from 1.21 in 2010 to 1.56 in 2022.

During last year’s election campaign, the DPK said such a policy would cost the government 3 trillion won ($2.1 billion) to 5 trillion won annually, or 0.4 to 0.7 percent of Korea’s annual fiscal budget of 677.4 trillion won for 2025.

Rep. Na Kyung-won of the conservative People Power Party was the first major politician to promote the Hungarian approach. While serving as the vice chairperson of the Presidential Committee on Ageing Society and Population Policy, she proposed the introduction of such a scheme in Korea, calling for a drastic solution.

However, her plan was ultimately derailed by the presidential office, which publicly stated just three months after she took the post that it did not align with the administration’s policy direction. Still, the idea appears to have inspired her rival party.

After joining the presidential race, Na vowed to implement a similar policy under which each newly married couple would receive a low-interest loan of 200 million won that would be partially forgiven as they have children, with the debt eliminated if they have four children.

According to the presidential committee, Korea’s total fertility rate last year was 0.75, a rise from a record low of 0.72 in 2023. The figure is estimated to reach 0.79 this year. Yet, it would still be the world’s lowest and far below the replacement level of 2.1, which is needed to maintain a stable population without immigration.