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Gov't finalizes reorganization plan to dismantle prosecution

Published: 07 Sep. 2025, 19:18

YOON SO-YEON
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Democratic Party (DP) policy chief Han Jeoung-ae, center, and Minister of Interior and SafetyYun Ho-jung, second from left, brief reporters on the results of a high-level meeting of the DP and government officials at the Seoul Government Complex in Jongno District in central Seoul on Sept. 7. [NEWS1]

A plan to reorganize the government under the Lee Jae Myung administration was finalized to divide the existing Ministry of Economy and Finance into two bodies — one for strategy and budget, and the other for finance and the economy — officials said Sunday. The existing headquarters of the prosecution will also be dismantled and replaced by new agencies, according to officials.

The announcement was made during a high-level meeting of the Democratic Party and government officials at the Seoul Government Complex on Sept. 7.

Under the plan, confirmed on Sunday evening, one ministry will oversee the budget and strategy affairs of the state, while another ministry will be in charge of taxes, finance, the economy and national treasury. The former Budget Ministry will be placed under the prime minister.

This will be the first time in 17 years since the Ministry of Planning and Budget and the Ministry of Finance and Economy was unified in 2008 by the Lee Myung-bak administration, citing efficiency. The merged ministry was named the Ministry of Economy and Finance in English, but the Korean name in its direct translation is known as the Ministry of Strategy and Finance.

Financial watchdogs will also see major overhaul.

The Financial Services Commission (FSC) will cede its domestic financial policy responsibilities to the Finance Ministry and be restructured to be responsible exclusively for financial oversight, after longstanding criticism from experts that placing both financial industry promotion and regulation under one roof has made the system more vulnerable to financial misconduct.

The Ministry of Strategy and Finance building [MINISTRY OF ECONOMY AND FINANCE]

The Financial Supervisory Service (FSS) will also be divided into two separate agencies: one for macroprudential oversight and another for consumer protection. As a result, Korea’s financial policy and regulatory framework will be split among four agencies: the Ministry for Finance and Economy, the new Financial Supervisory Commission, the existing FSS and the new consumer agency — up from two under the current system.

The Ministry of Trade, Industry and Energy will also see its responsibilities scaled back and transfer its energy policy functions to the Ministry of Environment. The Ministry of Environment will be renamed the Ministry of Climate and Energy, and take on broader responsibilities for climate and energy policy.

The overall aim is to divide economic and financial bodies, which have been considered too large and expansive compared to other ministries, into smaller bodies governing smaller, more detailed roles.

Administrative bodies also faced a major makeover.

The prosecution service will be scrapped and two new agencies will be created to separately take on the prosecution's indictment and investigative powers.

The move comes as part of Lee's drive to reform the prosecution, which the DP says is intended to curb prosecutors from abusing their powers and end politically motivated investigations.

BY YOON SO-YEON, YONHAP [[email protected]]