Populist schemes ahead of the presidential election: DONG-A ILBO


The South Korean government has published its intentions to implement credit amnesty programs for the deletion of overdue cases. Chairman Eun Sung-soo of the Financial Services Commission (FSC) told a conference with executives of financial organizations on Wednesday that there was a need to halt overdue data sharing between financial firms, demanding that this data is not used to calculate credit scores. . His post is apparently aimed at ensuring that the credit scores of those who fail to repay their debts on time remain intact given the COVID-19 situation. It is an innate obligation of the government to lighten the burden on self-employed workers and working class families. However, the government’s disruptive action against the principle of credit with extended financial aid can only be seen as part of populism in view of the upcoming presidential election. Ironically, he is sticking to quarantine measures and subsidy programs to help establishments closed or on the verge of closing with an increasing burden on the shoulders of the self-employed.

It is true that owners of small businesses and factories have become less able to settle their debts than before since the start of the COVID-19 pandemic. When they have lower credit scores, they will likely have a harder time breaking out of the debt circle. However, moral hazards can arise if the government allows them to maintain current credit scores without any clear set of standards in action. In addition, it can inevitably lead to reverse discrimination against those who have done their best to repay their debts on time despite difficult conditions.

Six trillion won of private enterprise debt was canceled at the start of the current administration. After the government granted an additional six months for loan maturities and interest payments to self-employed and small businesses and factory owners last September, it even offered them a further extension in March. At the end of July, the amount with extended debt maturity reached 209 trillion won. Earlier this year, he lifted a requirement that allows self-employed workers to have their debt adjusted only when their business lasts longer than a year. Despite the necessity of all these assistance programs, they are only seen as a quick fix. It is time for the government to take action to minimize the damage to self-employed workers while increasing a range of supports from demolition to taxation to re-employment for those who have closed or are about to close their businesses. .

Carelessness in offering financial support can undermine the nature of the financial business, which is operated on the basis of trust and credibility. It makes good sense that a higher rating be given to someone who repays their debts more faithfully than anyone else. Such a basic principle must be observed to prevent public confidence in finance from being undermined and eroded. If fringe companies fail to pay interest, and owners of small businesses and factories continue to struggle with growing debt, the nation as a whole can be dragged into financial insolvency, which can create an effect. training in the rest of the audience. If so, the economy as a whole will be negatively affected following the end of the COVID-19 situation.

Considering that most presidential candidates scramble to lure voters towards pork barrel financial support initiatives, this is not the right way for the government to adjust its political stance based on the rise of populism before the presidential election. The government should not depend on financial support programs that can damage the roots of a credit-based system, but must come up with reasonable and practical policies to help the working class and the self-employed. If financial support is repeatedly offered without any rules or principles in place, the government will only be criticized for its “politicized finance” tactic.

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