[Reporter’s Notebook] Will Splitting the Ministry of Economy and Finance Strengthen Policy?

Interest within the government is heating up over the possible reorganization of the Ministry of Economy and Finance following the election of President-elect Lee Jaemyung. Initially, most observers believed that splitting up the ministry would not be pursued immediately. However, as the president-elect has clearly expressed his intention to push for restructuring, there is now a growing sense that changes may materialize soon. Since a reorganization would affect not only the status and authority of the ministry but also individual career advancement paths, it is naturally a matter of keen interest.

At the early stages of the discussion, the main focus within government circles was on the future of the vice-minister-level policy line, often referred to as the "policy line." In departments such as the Budget Office within the ministry, many believe that even if the organization is split, the core areas of responsibility will remain largely unchanged, so their situation would not be significantly affected regardless of where they end up. The policy line, however, is a different story. Because these officials are responsible for identifying policy tasks through coordination, persuasion, and negotiation both inside and outside the ministry, they are particularly sensitive to whether the budget function will be separated.

One official from the ministry commented, "The policy line has to persuade other ministries, so whether it moves together with the Budget Office or is separated can have a significant impact on work efficiency." If the Budget Office is separated and placed under the Prime Minister's Office or the Presidential Office, the policy line would lose one of its bargaining chips for persuading other ministries. If the Budget Office is indeed separated as recent reorganization forecasts suggest, it is inevitable that the efficiency of policy work will decline.

That said, there is also little enthusiasm for returning to the old Economic Planning Board model, where policy and budget functions were housed within the same ministry. This is due to concerns that the policy function could become excessively subordinate to the budget function. Another official from the ministry noted, "In reality, the Budget Office could end up absorbing the policy function," adding, "The ability of the policy line to see the big picture and shape policy through issues beyond just fiscal matters could be weakened."

There is a wide range of internal opinions regarding the division of the organization. Some are hopeful that splitting the ministry could open up career advancement opportunities that have previously been blocked. The key question, however, is whether dividing the ministry will actually enhance the country’s capacity for economic policy planning. Naturally, any organizational change will entail various costs as new systems are established and defined. On an individual level, staff members will inevitably expend a great deal of energy focusing on their career paths. Even now, the ministry is known for its particularly intense internal interest and competition over personnel matters compared to other ministries, especially ahead of annual appointments.

It remains unclear whether the benefits of splitting the organization would outweigh those of maintaining the current structure. A senior official from the ministry recalled, "When the ministry was launched as an organization combining tax, budget, and policy functions, I remember that first-level officials found it very efficient and favorable for making decisions on national fiscal input and policy direction." This is because the organization was structured to allow for organic communication and decision-making regarding how much fiscal input to provide, how much government bonds to issue and whether the market could absorb them, how much tax revenue to expect, and what tasks each ministry was facing. Government organizations can change according to the policy direction of an administration. However, it is important to carefully weigh the pros and cons, as well as the associated costs, before implementation.