Seoul: South Korea will offer a debt relief program for small business owners impacted by the COVID-19 pandemic to help improve their financial health, the finance ministry said Friday, amid concerns that they could face heavier debt-servicing burdens following recent rate hikes. Finance Minister Koo Yun-cheol announced the measures during a meeting with relevant ministers, after the Bank of Korea (BOK) raised its benchmark rate by 0.25 percentage point for the second consecutive meeting the previous day to curb mounting inflationary pressures.

According to Yonhap News Agency, Koo Yun-cheol highlighted that the recent increases in the key rate, coupled with rising market interest rates, necessitate the restructuring of debt to aid individuals and small business owners in regaining financial stability. "Through debt restructuring and rehabilitation proceedings, we will aim to help individuals and small business owners quickly get back on their feet," Koo emphasized.

The finance ministry reported that a total of 358.7 trillion won (US$259.6 billion) in loans was extended to individual business owners during the 2020-2023 pandemic period, with 154.7 trillion won, or 43.1 percent, still outstanding. Of these outstanding loans, 6.3 trillion won, or 4.1 percent, has been delinquent for three months or longer.

Koo stated that the finance ministry will release detailed measures after consultations with relevant organizations. He also mentioned that the government plans to announce measures to support people's livelihoods next week ahead of the Chuseok holiday in September, which will include discount programs for agricultural products.