The document discusses performance budgeting in Korea, outlining its history, structure, and implementation challenges. It highlights the dual-track approach that incorporates government performance assessment into budgeting, while addressing lessons learned and obstacles such as the development of measurable performance indicators. The Ministry of Strategy and Finance plays a crucial role in monitoring performance and facilitating transparency within government agencies.

1. Performance Budgeting : Lessons and Challenges from Korea
Jangro LEE
Ministry of Strategy and Finance
2014. 11. 24.

2. 1. Overview of Performance Budgeting in Korea
2. Lessons and Challenges from Korea
T able of contents
1) Structure
2) History
3) Background
1) Lessons
2) Challenges

3. A dual-track approach to performance management frameworks :
Government Performance Assessment and Performance Budgeting
Gov’t Performance Assessment vs. Performance Budgeting
Gov’t Performance Evaluation
Performance Budgeting
Legal Framework
Gov’t Performance Evaluation Act
National Finance Act
Entity in Charge
Prime Minister’s Office
Ministry of Strategy and Finance
Target Programs
Policy initiatives of 44 central administrative agencies
Budgetary programs of 52 central gov’tagencies
(Legislative, Judiciary and Executive)
Use and purpose
▪Applies results to the evaluation of
organization and personnel performance
▪ Evaluates budgetary programs and feeds results into budget allocations
Relations with the National Assembly
Reporting to related committees
Obligation to submit
annual performance plan and report
1) Structure
1. Overview of PB in Korea

4. Target
Achievement
Further
Work
PGMS
•Performance Plan (Oct. of the Year t-1)
•Performance Report (May of the Year t+1)
BPA
•Annual Review for 1/3 of Projects
•5-Level Evaluation ( Mar-May of the year T+1)
In-Depth Evaluation
•Selection of about 10 Cases in a year
FY(T+2) Budget
From Jul. to Sep.
Feedback
Reflect
1) Structure
1. Overview of PB in Korea

5. 2000 ~ 2002
2003 ~
2005 ~
2007 ~
Performance Budgeting (Pilot Project)
- Developed Strategic Objectives, Performance Goals Performance Indicators
Performance Goal Management System (PGMS)
- Expanded PBB to all ministries and agencies Annual performance plan and report are required
Budgetary Program Assessment (BPA)
- 1/3 of major budgetary activities are evaluated every year
In-Depth Evaluation
- Selected activities are subject to evaluate about 10 sets of activities every year
2014
Enhaced compatibility by matching performance management and budgeting, and adding tax expenditure to the performance management pool
2) History
1. Overview of PB in Korea
2008 ~
Application of performance information to budgeting
Obligation to submit performance plans and reports to the NA
Review and Examination of performance plans and reports by the National Assembly and Board of Audit and Inspection

6. 3) Stakeholders in PB in Korea
1. Overview of PB in Korea
For enhanced transparency and accountability in performance information management
- The MOSF monitors performance plans and reports, and verifies BPA by line ministries
-
The NA reviews performance plans and reports
- The BAI examines performance reports , plans and BPA
Annual Performance Plan
Annual Performance Report
Budgetary Program Assessment
MOSF
National Assembly
Board of Audit and Inspection
Line Ministries

7. Most important is to feed performance data into the budget process for the promotion of performance budgeting among line ministries.
1) BPA - budget cut (more than 10%) for poorly-performed projects
2) In-Depth Evaluation - a plan for efficient spending and its linkage with budgeting
Robust resistance from line ministries at the onset of implementation
(Line minister without a clue of how to define and implement performance budgeting)
1) The Medium Term Expenditure Framework and Top-down Budgeting among the four
major fiscal reforms, provided momentum for performance budgeting
2) Educational sessions on a regular basis for line ministries
Strong will power from the Fiscal Authority
1) Lessons
2. Lessons and Challenges from Korea
The earlier-than-expected success of performance budgeting has a reason
Linkage with budgeting

8. 2) Challenges
2. Lessons and Challenges from Korea
- A time lag between performance output and budget formulation
- A tool for routine- check of performance data under development
Timely integration
- The Gov’t Performance Evaluation and Performance Budgeting systems have
overlapping elements, placing a greater burden on line ministries
- Additional tools required to ease their burden, such as a share of evaluation data
Overlapping features
-
Difficult to develop measurable performance indicators in the public sector
- Questionable if the outcome-based indicators are reliable for performance evaluation
(i.e., as of 2014, more than 60% of performance indicators are outcome-oriented.)
Reliability of performance indicators

9. Thank You