Concerns have been raised that the separation of the Ministry of Economy and Finance from the Ministry of Finance and Strategy (MOEF) and the Budget Office starting next year could undermine the consistency of macroeconomic policy implementation. In particular, the functional duality in handling economic policy makes it difficult to respond swiftly in times of crisis, and it is pointed out that the expansionary fiscal policy of the Lee Jae-myung government may proceed with only the Budget Office's review, potentially harming fiscal soundness.
The government and the ruling party confirmed the government reorganization plan to separate the Ministry of Economy and Finance into the Ministry of Finance and Strategy and the Budget Office during a high-level government party council on the 7th. This reintroduces the organizational structure that separated policy and taxation from budgeting and fiscal functions during the former Roh Moo-hyun administration.
President Lee Jae-myung has pointed out since his candidacy that the powers and functions of the Ministry of Economy and Finance are excessive, pledging to separate these functions. This reorganization plan is a concretization of that pledge.
The core of the Ministry of Economy and Finance's reorganization plan is the duality of the Ministry of Finance and Strategy and the Budget Office. The Ministry of Finance and Strategy will oversee economic policy, the national treasury, taxation, and financial affairs. The Budget Office will manage budgeting tasks. Currently, the first vice minister line will be transferred to the Ministry of Finance and Strategy, while the budget office, which is the second vice minister line, will go to the Budget Office.
Political circles, centered around the ruling party, have criticized the Ministry of Economy and Finance for exerting control over other ministries based on its budgeting authority. Expressions such as 'a giant ministry' and 'the country of the Ministry of Economy and Finance' have emerged. This reorganization is interpreted as focusing on separating budgeting functions in response to those criticisms.
◇ Function separated, but the Ministry of Finance and Strategy has become more powerful in financial functions
However, there are concerns that the separation of functions could decrease the ability to respond to crises, as the Ministry of Economy and Finance has operated the nation's budgeting and economic policy in an integrated manner while playing a role in macroeconomic adjustment. There is a concern that as budgeting and economic policies run separately, policy coordination may fail, increasing social expenses.
The background behind the 2008 merger of the Ministry of Finance and Strategy and the Budget Office by the Lee Myung-bak administration reflects this concern. The then-government pointed out that 'the distribution of fiscal functions such as budgeting, the national treasury, and taxation made control over fiscal soundness weak.' Especially since the Lee Jae-myung administration aims for expansionary fiscal policy, concerns about fiscal soundness are expected to rise.
Seok Byeong-hoon, a professor at Ewha Womans University, stated, 'Economic policy and budgeting need to be closely connected, but if the ministries are separated, the speed of response and policy synergy may decrease.' He further noted, 'Placing the Budget Office under the Prime Minister may weaken the Ministry of Finance and Strategy's function to manage fiscal soundness.'
Concerns about rising administrative expenses and duplicated work have also emerged. This is because additional administrative procedures are necessary to reallocate personnel and separate systems during the process of organizational separation.
With the transfer of the financial policy function of the Financial Services Commission to the Ministry of Finance and Strategy, voices are also being raised that the authority of the Ministry of Finance and Strategy has actually increased. Woo Seok-jin, a professor at Myongji University, evaluated, 'Although the reorganization aimed to disperse power, the inclusion of financial policy in the Ministry of Finance and Strategy has rather strengthened its authority.'