S. Korea proposes personal debt relief to encourage birth

Na Kyung-won, head of the Presidential Committee on Ageing Society and Population Policy [Source : Yonhap]

The South Korean government is seeking to write off person debts for newlyweds who give birth to children as part of efforts to tackle the country’s low birth rate, said Na Kyung-won, head of the Presidential Committee on Ageing Society and Population Policy.

South Korea is facing an impending population crisis, with its total fertility rate at less than 0.8, the world’s lowest. No other country showed a fertility rate, the average number of children born to a woman over her lifetime, below 1. Asia’s fourth largest economy is expected to become an super-aged society by 2025, where 20 percent of the population is aged 65 and over, if the current trend continues.

“Now is the absolute last chance to take action on the demographic crisis. Economic instability and housing issues are the main reasons to prevent young people from getting married,” Na, a four-term lawmaker, said during a New Year’s press conference held on Thursday.

“The Ministry of Land, Infrastructure and Transport is offering low-interest loans and housing benefits for newlyweds, but this is not enough. So we are looking at whether we can provide bolder support such as writing off some amount of loans for married couples who give birth to children.”

The committee estimates that about 12 trillion won ($9.5 billion) would be needed per year for the proposal. The committee plans to discuss the measure in detail with the land ministry.

The idea is similar to a program called “baby expecting loan” introduced in Hungary in 2019. The program for newly married couples offers a HUF10 million ($26,800) loan with a low interest rate, and half of the loan is forgiven for the first birth, and the full loan for the third birth. Through this preferential loan program, the marriage rate was up by 20 percent in Hungary, the committee said.