[Editorial] Don’t let public opinion sway economic policies

The government and the People Power Party (PPP) put a hold on a planned hike in electricity and gas charges for the second quarter. The suspension is mainly an idea of the governing party. Public utility suppliers have been extending massive losses as they were restricted in raising fees despite the spikes in energy imports and generating costs.

Korea Electric Power Corp. (Kepco) incurred an operating loss of 32.66 trillion won ($24.8 billion) last year, costing the company the debt interest of 3.8 billion won per day. In December, the government and Kepco decided to raise the electricity bill by 51.6 won per kilowatt-hour this year, which translated into a 13.1-won hike in the first quarter and will require a similar rise in energy prices in the second quarter.

Gas rates demand similar rationalization. The Korea Gas Corp.’s deferred payment, in other words, losses, is expected to surge to 12.9 trillion won ($9.8 billion) by the end of this year from 8.6 trillion won ($6.5 billion) a year ago. Such losses require an interest payment of 470 billion won ($356 million) a year. The cheap utility fees compared to international rates have been worsening the trade deficit for the country heavily relying on imports for energy sourcing.

The PPP opposes a hike in utility fees in light of the sufferings of the people’s lives from inflation. The governing party has a duty to consider people’s economic hardships due to high-interest rates, inflation and the slowed economy. It also demands more aggressive restructuring in public energy companies.

Still, the delayed rationalization for utility fees can only be suspected of a populist motive ahead of the parliamentary elections next year. PPP policy chief Park Dae-chul agreed to the need for a rise in electricity and gas bills. The party and government will decide on the hike after a further study of public opinion.

If policymaking is swayed by the election, other challenging reforms in pension, education and labor cannot take place. Political reasoning must not sacrifice the economy. If votes matter more than the country’s future, there is no chance to save the struggling economy, let alone winning the election.