President Lee Jae-myung has reportedly ordered the consolidation of public institutions, and discussions are expected to include the restructuring of policy financial institutions amid concerns over overlapping duties.
According to the financial sector on the 26th, financial authorities are known to be inspecting the overall operations of policy financial institutions under their jurisdiction. As the Lee Jae-myung government plans to promote the consolidation of public institutions, financial authorities are also looking into the operations and expense structure of public institutions under their jurisdiction.
During a national fiscal savings meeting chaired on the 13th, President Lee said, "It seems we need to consolidate public institutions. There are so many that I can't even count them." In response, the presidential office launched a task force (TF) led by Head of Team Kang Hoon to discuss the consolidation of public institutions. The restructuring of policy financial institutions will also be discussed within the TF. Policy Office Director Kim Yong-beom noted at a press conference on the 20th that "there are too many financial public enterprises, and some institutions need functional adjustments."
Discussions on restructuring policy financial institutions are also underway in the political arena. The National Assembly Futures Institute, a think tank of the National Assembly, recently held a policy discussion on the restructuring of the role of policy finance. Professor Han Sang-beom from Kyonggi University, who led the discussion, stated that the current policy finance system lacks connectivity with industrial policy and has resulted in overlapping duties among institutions. He proposed establishing a policy financial holding company to improve this situation, aiming to adjust overlapping functions among institutions and support policy funds for necessary industries.
Professor Han specifically suggested that the policy financial holding company should incorporate the Korea Development Bank, Export-Import Bank, Korea Trade Insurance Corporation, Korea Credit Guarantee Fund, and Korea Technology Finance Corporation as subsidiaries. He mentioned that a management committee should be established under the Prime Minister's Office to operate the policy financial holding company and to adjust overlapping duties among institutions. Professor Han stated that the consolidation of institutions could be executed through the holding company in the medium to long term.
Kim Ki-sik, who serves as the head of the National Assembly Futures Institute, stated at the discussion, "It is time for a fundamental structural reorganization of the overall policy finance system," adding that, "There is an urgent need to enhance the strategic consistency between industrial policy and policy finance and transition to a consistent financial support system that can substantiate the execution of policies." Members of the Democratic Party of Korea, including Park Hong-bae, and People Power Party member Park Soo-min also attended the discussion.
The improvement of overlapping duties among policy financial institutions has been consistently discussed in past administrations. The Yoon Suk-yeol government announced plans to reorganize the role of policy finance early in its term, while the Moon Jae-in administration had pursued a plan to transfer the Korea Credit Guarantee Fund from the Financial Services Commission to the Ministry of SMEs and Startups. However, each time, the reorganization of policy finance was derailed due to disagreements between the relevant ministries and institutions.
As President Lee has expressed his intention to consolidate public institutions, there are forecasts that this time the restructuring of policy financial institutions will be realized in the financial sector.
A relation from a financial public enterprise noted, "It is true that overlapping duties have been raised regarding the Korea Development Bank, Export-Import Bank, Korea Trade Insurance Corporation, and Korea Credit Guarantee Fund," while adding, "First, the government organization reform must be completed before we can consolidate financial public institutions."