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Political funding in reserve for vulnerable people amid rising rates

This file photo taken on Wednesday shows bank officials consulting with customers about loan schemes with a lender in Seoul. (Yonhap)

South Korea on Friday announced plans to provide political funding worth 68.3 trillion won ($51.4 billion) this year to small traders and other vulnerable people in a bid to ease the burden of rising borrowing costs.

The move follows the 125 trillion won measure that was unveiled on Thursday to support those troubled by high inflation and interest rate hikes as part of the central bank’s monetary tightening.

The government plans to offer political financing worth 43 trillion won to small traders hit hard by the pandemic, according to the Ministry of Finance.

To this end, the country plans to ease the burden of interest payments and restructure the debt.

The remaining 25.3 trillion won will be spent on young people and people from low-income households.

The Bank of Korea on Wednesday announced an unprecedented 0.5 percentage point rate hike to rein in high inflation, marking the sixth rate increase since August last year.

High inflation and rising interest rates have raised fears that they will weigh on the economy as they could aggravate the financial burdens of many indebted people and dampen consumption. (Yonhap)