Seoul: The government's recent decision to reorganize its economic ministries has sparked concerns about the diminished role of a central command center for economic policy. The Democratic Party introduced a revision to the Government Organization Act, resulting in the division of the Ministry of Economy and Finance into two separate entities: the Ministry of Finance and Economy, and the Budget Office.

According to Yonhap News Agency, the initial proposal aimed to transfer budget responsibilities to the newly formed Budget Office, while shifting policy authority from the Financial Services Commission to the Ministry of Finance and Economy. This setup was intended to preserve the ministry's status as the central economic command. However, challenges faced in the National Assembly's Political Affairs Committee led the government to abandon this plan. Consequently, with budget authority now moving under the prime minister's office, the restructured ministry risks becoming primarily a tax agency.

The reorganization has notably weakened the deputy prime minister's powers. While the finance minister retains the deputy prime minister title, the elevation of the science and ICT minister to the same rank has diluted coordination efforts among the economic ministries. Historical precedents suggest that such a reduction in the deputy prime minister's authority often results in decreased cooperation from other ministers. This marks the third instance where Korea has diminished its economic command center's role, following similar actions during the tenures of Presidents Kim Dae-jung and Lee Myung-bak.

Under Kim Dae-jung, the post was abolished in 1998, only to be restored two years later due to coordination failures. Similarly, Lee scrapped it in 2008, opting instead to rely on the presidential office, a strategy that proved unsustainable. Although the current administration has retained the post nominally, the removal of budgetary power limits its capacity for effective coordination.

Immediate concerns about practical implications are evident. When the Budget Office was first established under Kim Dae-jung, it led to budget lobbying among ministries, while the Ministry of Finance and Economy's influence waned. The potential for bureaucratic turf wars remains, posing a risk of fragmented policymaking. This restructuring occurs amidst heightened external pressures, such as U.S. tariff threats, demands for substantial Korean investments, and a volatile won-dollar exchange rate. In such a climate, expecting direct economic coordination from the presidential office or prime minister is deemed unrealistic.

Splitting ministries without reinforcing the central command exacerbates policy uncertainty. Strengthening the deputy prime minister's authority is seen as the most viable solution, though the revised law will only take effect in January. At the very least, the government must activate the Economic Policy Coordination Council to avert policy leaks. Most importantly, the president must offer decisive support to the deputy prime minister. If ministries view the deputy as lacking power and resist coordination, the nation's economic stability could be at risk.