The government is exploring additional measures to alleviate the burden of high interest rates on vulnerable borrowers, utilizing excess tax revenue as funding. This initiative aims to complement support included in next year's budget in anticipation of prolonged high interest rates.
Park Hong-keun, Minister of the Ministry of Planning and Finance, responded to a query from Democratic Party lawmaker Kim Tae-nyeon during the National Assembly's Finance and Economy Planning Committee audit on October 23, stating, "The President has recently requested that we develop additional measures for vulnerable borrowers and sectors most affected by high interest rates, using excess tax revenue and other resources."
He added, "We are currently in discussions with relevant agencies and will respond in phases."
The government has expanded support in next year's budget based on a plan announced at the end of August to assist vulnerable borrowers. However, Minister Park noted that further responses are necessary due to the potential for increased impacts from rising interest rates.
Park emphasized the need for close cooperation between fiscal and monetary authorities to devise more comprehensive and long-term strategies moving forward.
Bank of Korea Governor Shin Hyun-song, who also attended the session, agreed that returning to an ultra-low interest rate environment like in the past is unlikely. He stated, "We will implement policies to respond to a future of high growth and high interest rates."
Park also indicated the possibility of further bolstering the budget for youth support. He noted that next year's budget for youth initiatives is approximately 43 trillion won, with about 5.1 trillion won allocated for job creation, but he acknowledged, "I still believe this is significantly insufficient." He added, "We are exploring various ways to enhance the budget beyond what is currently proposed for next year."
In response to a proposal to utilize inheritance and gift tax revenues for youth asset formation, Park stated that they would review the feasibility of the policy and consider related proposals in the future.
Concerns were raised by opposition lawmakers regarding the use of the Future Response Fund. They questioned whether allocations such as 100 billion won for public institution reform support, 89.7 billion won for the relocation of central administrative agencies, and 350 billion won for electricity bill welfare exemptions align with the fund's purpose of enhancing future growth drivers.
In response, Park maintained that existing projects could be included in the fund's allocations if they align with its objectives and nature. Despite criticisms regarding the lack of novelty and specificity in new initiatives like local future growth support funds and basic income pilot projects for rural areas, he explained, "It is rare for all funds to be allocated solely to completely new projects when established; we can include projects that fit the fund's character and purpose."
* This article has been translated by AI.
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