Seoul - South Korean President Lee Myung Bak on Monday named new ministers for finance and North Korean policy as his country has been hit hard by the global economic crisis and has seen tensions rise with its northern neighbour.

The cabinet shake-up came nearly 11 months into Lee's administration as his government has been criticized in the wake of the economic downturn and worsening relations with North Korea.

Finance Minister Kang Man Soo was sacked and replaced by Yoon Jeung Hyun, former head of South Korean's financial regulatory agency, the presidential office said.

Unification Minister Kim Ha Joong, a former ambassador to China, was also replaced by political scientist Hyun In Taek, a professor at Korea University, as the government's point man on North Korea.

Kim is seen as one of the architects of Lee's foreign policy and has been an important adviser to the president on his North Korea policy.

Kim's appointment came after North Korea's military on Saturday threatened military conflict with South Korea. Its message, read by a military spokesman on North Korean television, said Lee and his "puppet military war hawks" would force Pyongyang's military forces "to take a strong military retaliatory step to wipe them out."

Relations between Seoul and Pyongyang have taken a turn for the worse since Lee's conservative government took power in February last year. Lee has taken a harder line with North Korea than his liberal predecessors although he has also called repeatedly for North Korea's leaders to resume talks with his government.

Lee also named a new chief of staff for the prime minister, Kwon Tae Shin, and a new head of the Financial Services Commission, Chin Dong Soo, now president of the Export-Import Bank of Korea.

Both positions are ministerial-level posts. (dpa)