Shin Hyun-sung, Governor of the Bank of Korea, stated on October 23 that while the oil price cap has effectively lowered consumer price inflation, it is not a sustainable long-term measure due to fiscal burdens.
During a comprehensive audit session of the National Assembly's Planning and Finance Committee, Shin responded to a question from Democratic Party lawmaker Kim Nam-jun regarding the effects of the oil price cap. He noted, "It has prevented the transfer of costs to other prices and is estimated to have lowered the inflation rate by about 0.6 percentage points."
However, Shin expressed caution regarding the sustainability of the measure. He remarked, "The issue is sustainability; how long can it last?" He added, "South Korea's fiscal situation is relatively sound, so there is some capacity to maintain it a bit longer," but concluded, "It does not seem to be a long-term system."
The government is also considering the fiscal burdens associated with extending the measure. Park Hong-keun, Minister of the Ministry of Economy and Finance, who attended the audit session, acknowledged the positive contributions of the price cap but also highlighted the fiscal burdens and increased gasoline consumption that could arise from its long-term implementation. He stated, "We will discuss with relevant departments, taking into account market conditions and fiscal burdens."
He further noted, "This year's contingency fund and next year's budget have accounted for the losses incurred this year," and added, "We will consult with related departments to address concerns if the system continues."
* This article has been translated by AI.
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