President defends debt forgiveness plan, calls criticism 'irresponsible demagoguery'

President Lee Jae Myung on Wednesday dismissed criticism of his push for aggressive debt forgiveness as “irresponsible demagoguery,” arguing that clearing unpayable debt is what gets people — and the economy — moving forward.

“If someone has debt but no ability to repay it, allowing them to restart through bankruptcy and debt discharge helps society as a whole,” Lee said during a policy briefing by the Financial Services Commission and other agencies at the Blue House in Jongno District, central Seoul. “We need to forgive debt quickly so people can return to normal economic activity, and that's what keeps the economy running properly.”

He added, “In advanced countries, this kind of system operates routinely and quickly, but in our country, it's too difficult.

“No one should be driven to extreme situations or isolated from society and unable to engage in economic activity because of debt they cannot repay.”

Addressing criticism that debt forgiveness encourages moral hazard, Lee responded, “This is not moral hazard — it's irresponsible demagoguery.”

“Who would want to live as a delinquent borrower over a few million won, unable to get a job, unable to open a bank account, unable to secure housing and subject to asset seizure?” he said. “If we fail to do what needs to be done because of criticism or demagoguery, society as a whole suffers.”

Lee added, “It is actually financial institutions' harsh treatment of long-term delinquent borrowers that constitutes moral hazard.”

BY PARK JONG-SUH [lee.jian@joongang.co.kr]