[The Golden Age of MOEF]③ Unstoppable MOEF?..."Budget and Policy Functions Should Be Separated"

Ministry of Economy and Finance Oversees Budget, Economic Policy, Taxation, and Foreign Exchange
Largest Control Tower Even Compared to Previous Governments
Experts Say "Need to Decentralize Budget and Economic Policies"

The perspectives of government officials, the National Assembly, and experts on the 'Golden Age of the Ministry of Economy and Finance (MOEF)' are divided. While some argue that a certain degree of authority should be concentrated in the MOEF considering the importance of the economy and budget, others strongly call for dispersing the MOEF's powers to eliminate accumulated side effects. In particular, experts analyze that since having one department handle both budget authority and economic policy coordination is a heavy burden for the nation, discussions on organizational restructuring should begin.

MOEF, the Undisputed 'Mega Economic Control Tower'

Currently, in the government organization, the MOEF oversees all key economic areas including budget, economic policy, taxation, and foreign exchange. Even considering the organizational structure since the establishment of the government in 1948, the current MOEF has relatively concentrated authority. During the Park Chung-hee, Chun Doo-hwan, and Roh Tae-woo administrations, the Economic Planning Board and the Ministry of Finance were separate. Under the Kim Young-sam administration, they were integrated into the Ministry of Finance and Economy but were criticized for failing to properly respond to the 1997 foreign exchange crisis, leading to a split into the Planning and Budget Office and the Ministry of Finance and Economy for ten years.

It was only in February 2008, under the Lee Myung-bak administration, that the Planning and Budget Office and the Ministry of Finance and Economy were merged into the MOEF, with only financial policy functions transferred to the Financial Services Commission. Especially in March 2013, when the MOEF became a deputy prime minister-level ministry, the mega 'economic control tower' was completed, resembling the Ministry of Finance and Economy under the Kim Young-sam administration but without the financial functions. This was the result of a timely reflection that economic policy, national finances, tax system establishment, and fiscal strategy should be operated together to increase efficiency.

Many also recognize that the current organizational structure makes it inevitable for the MOEF to act as the 'keeper of the treasury.' Typically, elected officials such as those in the National Assembly have strong incentives to manage finances loosely for popularity, making the MOEF's authority over budget formulation and coordination crucial. Article 54 of the Constitution stipulates that the government has the right to formulate the budget, and Article 57 prohibits the National Assembly from increasing the budget without government consent for this reason.

Even within the Presidential Office, the MOEF's presence is distinct. A Presidential Office official said, "There are many occasions to coordinate with the MOEF regarding budget or taxation, and it is true that persuasion is not easy." Recently, Sung Tae-yoon, the Presidential Office Policy Chief, appeared on a broadcast mentioning tax reform, and the very next day, Deputy Prime Minister Choi Sang-mok said, "I am the economic policy commander as the MOEF Minister," prompting reactions that he is indeed the real power.

The Larger the Authority, the Greater the Side Effects... Experts Call for Function Dispersion

The problem is that the more authority is concentrated in the MOEF, the greater the side effects inevitably become. Since MOEF alumni have occupied key positions across the government over the past three years, concerns such as 'monopoly over personnel appointments' persist.

It is also problematic that the MOEF handles both budget and economic policy. Park Jin, a professor at the Graduate School of International Policy at the Korea Development Institute (KDI), pointed out, "To formulate a good budget, one must set priorities based on an understanding of all state affairs, but currently, the MOEF holds not only budget but also economic policy functions," adding, "When short-term policies (budget) and long-term policies (economy) are combined, the budget can become a servant to economic growth."

The Korean Association for Public Administration also suggested in a policy research report submitted to the Budget and Accounts Special Committee just before the last presidential election that "by separating the MOEF's planning and budgeting functions from its fiscal and economic functions, it is necessary to decentralize the budget formulation and management system and unify evaluation with government performance evaluation to realize fiscal democratization." In the United States, the Office of Management and Budget (OMB) is established directly under the White House to oversee federal government fiscal management.

In the political arena, the dispersion of the MOEF's role is a recurring topic. Former Democratic Party leader Lee Jae-myung proposed during the last presidential election process to separate the budget function from the MOEF and establish a Planning and Budget Office directly under the President. Also, the Democratic Party's intra- and extra-parliamentary group 'The Saero' held a forum on the 15th, arguing for reducing the MOEF's authority and expanding the National Assembly's powers. Although the directions differ, the shared awareness is the problem of the MOEF's monopoly over budget authority.

However, even if the Planning and Budget Office is re-established or the MOEF's authority is reduced, voices emphasize that budget formulation and execution must be conducted from a neutral perspective. Professor Park said, "The ministry that can take a relatively neutral stance while understanding what other ministries are doing should hold the budget function," adding, "Just as supply chain issues are both economic and security issues, recently, coordination among economy, society, culture, and defense has become more important, so the budget should be combined with a function that makes comprehensive judgments."