President's envisaged debt relief policy includes 2,000 foreign nationals

Rep. Kim Jae-sub of the People Power Party speaks at a press conference at the National Assembly in Seoul, Dec. 11, 2024. Korea Times photo by Ko Young-won

The inclusion of roughly 2,000 foreign nationals in President Lee Jae Myung’s debt relief program has ignited political controversy, as critics question the use of taxpayer money to write off debts held by non-citizens.

According to Rep. Kim Jae-sub of the main opposition People Power Party (PPP), data obtained from the Korea Asset Management Corp. (KAMCO) shows that roughly 2,000 foreign nationals are among those benefiting from the program, with their total debt amounting to 18.2 billion won ($13 million). KAMCO added it does not have statistics on the nationalities of the foreign debtors.

The program is aimed at forgiving long-term, small-scale delinquent loans held by vulnerable groups, including small business owners.

A key campaign promise by the president, the program involves a government-backed financial adjustment mechanism led by KAMCO to purchase and cancel or restructure individual debts under 50 million won that have been in arrears for over seven years.

The government estimates the total amount of forgiven or restructured debt to reach 16.4 trillion won, with projections of around 1.13 million people eligible for the program. The money is a part of the administration's extra budget bill.

The disclosure of the inclusion of foreign nationals in the program has sparked a debate over the allocation of public funds and the definition of “citizen” in social welfare policies. Beyond the immediate 18.2 billion won cost, the controversy taps into wider public concerns about fairness, national priorities and the perceived strain on taxpayers.

“How is it considered 'public welfare' to cancel 18.2 billion won worth of debt held by about 2,000 foreigners whose nationalities are unknown?” Kim wrote on social media. “What justification is there for writing off their debts using taxpayer money, especially when the government is pushing for an extra budget to support this?”

Kim also voiced concerns about the broader implications for public trust.

“At a time when South Korea is facing structural crises like low birthrates and an aging population, forgiving foreign debtors' loans runs counter to public expectations. Using taxpayer money to cancel such debts without clear criteria undermines the legitimacy of national fiscal policy," he said.

Rep. Na Kyung-won, a senior PPP lawmaker, echoed the criticism, describing the policy as reverse discrimination against Koreans.

“Foreigners get their debts forgiven while our citizens are locked out of loans? This is a textbook case of reverse discrimination," she said.

PPP floor spokesperson Park Sung-hoon also issued a statement, warning that some of the debts held by foreign nationals may have originated from gambling or nightlife-related expenses.

“While Korean citizens pay taxes, face lending restrictions and struggle to buy homes, foreigners dodge regulations, get their debts canceled and buy up real estate. Is this the Lee administration’s idea of ‘livelihood policy?’ Who is this policy really for?" he said in the statement.

Financial Services Commission Chairman Kim Byoung-hwan said he would look into the foreign debtor situation. "We've provided financial support for foreign nationals in other programs, but this time it is about writing off debts, so we'll review the support criteria again," he said at a National Assembly session Monday.