The government said it will write off 700 billion won of the debt of small business owners who are in long-term arrears on loans. It will also expand the regions eligible for a basic income program for rural communities of 150,000 won per month paid to residents in areas with declining populations.
The government approved the "2027 budget proposal" with these details at a Cabinet meeting on the 1st. The focus is on supporting the provinces and vulnerable groups to ease K-shaped polarization.
During COVID-19, banks and policy finance institutions issued 358.7 trillion won in loans to sole proprietors, of which the outstanding balance that has not yet been repaid is 154.7 trillion won. Among these, the share in long-term arrears—borrowers who have not repaid principal and interest for three months or more—is 4.1%, estimated at about 6 trillion won. The budget proposes to write off 700 billion won of this. The specific targets for write-offs will be finalized in the fourth quarter.
In addition, the government will issue 24 million coupons for 5,000 won off on the "win-win" delivery application. The issuance volume of local gift certificates usable only in designated areas and Onnuri gift certificates usable nationwide will increase from 29.5 trillion won to 30.1 trillion won.
To prevent mid- and low-credit borrowers from turning to illegal private lending, the government will create a 600 billion won "K-Livelihood Guard Loan." Under this program, borrowers in the bottom 50% by credit score can borrow up to 1 million won at an annual interest rate of 4.5%. The maturity is 10 years.
The government is paying 150,000 won per month as a basic income program for rural communities to residents of 17 regions with declining populations selected through an open call, and starting next year it will expand the eligible regions to 35. To bolster essential medical care infrastructure in the provinces, it will invest 1.3 trillion won. With this budget, it will launch a local-led program to fill medical care gaps by having local governments design and implement essential medical projects needed in their areas, and it will also provide tuition and housing support to students selected under the regional doctor system.
For households in crisis, such as those falling behind on electricity bills, the government will provide 300,000 won to support living expenses. It will also provide a package of daily necessities worth 25,000 won, including detergent and toilet paper. Starting next year, people not enrolled in employment insurance will be able to receive a childcare allowance of 500,000 won per month for three months.