SEOUL - SOUTH Korea President Lee Myung Bak yesterday sacked his finance minister and top policymaker on North Korea amid a worsening economic downturn and frosty ties with the North.

Mr Kang Man Soo, who was severely criticised by the media for his handling of the economic crisis, will be replaced at finance by Mr Yoon Jeung Hyun, President Lee's spokesman said.

Unification Minister Kim Ha Joong will be succeeded by Mr Hyun In Taek, an academic who helped MrLee draft the policy of linking major economic aid to the North to progress on its denuclearisation.

Mr Yoon is a former chief of the decision-making Financial Supervisory Committee (FSC) and the watchdog, Financial Supervisory Service.

'The government expects his nomination and appointment will bring about confidence in the market that will help us get through this economic crisis,' the spokesman said.

Mr Kang was under fire for his public utterances, which critics said weakened market confidence, and for alleged inconsistency.

Initially, he encouraged a weaker won to promote exports, but when the currency nosedived against the dollar, the authorities had to try to prop it up.

Unification Minister Kim was replaced just when the North was showing increasing impatience with Mr Lee's hardline policy. It had earlier cut off dialogue and imposed tight border controls.

Analysts said the appointment of Mr Hyun indicates Mr Lee will maintain his firm policy towards Pyongyang.

Also replaced yesterday were the chief of staff for the prime minister and the FSC head. Fifteen vice-ministers or vice-ministerial level officials will also be replaced.

AGENCE FRANCE-PRESSE, ASSOCIATED PRESS, REUTERS