Budget system 3

Pursuing Fiscal Contraction (1981 to 1987)

Between 1981 and 1987, the budget system continued to evolve and change. The budget of 1981 was based on a thoroughgoing review of general costs, with a view to eliminating all signs of incrementalism. Beginning in 1982, budget-drafting organizations were required to submit their budget requests along with estimates of the mid-term financial resources likely to be required over the subsequent five years. The policy change was meant to overcome the shortcomings of single-year budgeting by introducing multi-year projections. In 1983, ministries and departments began to prioritize the unit projects for budget spending. They were also required to analyze the impact of these unit projects, and thus practice the zero-based budgeting principle (Park, 2002: 379-380).
                  The Appropriation Committee was set up in 1985 to allow related ministries and departments to discuss and negotiate major budget projects and items before drafting budget requests. Beginning with the budget of 1987, ministries and departments were required to submit, along with budget requests, plans on how they intended to operate and spend their budgets.
 
<Table 3-19> Changing Features and Standards of the Budget System (1961-1980)
 

Fiscal Year	Description
1962	A performance-oriented budgeting system (POBS) was adopted to enhance the efficiency of administrative management. A business accounting system was adopted to ensure the rational budget operation of public corporations. The budget for overhead costs was set at 80 percent of the 1961 budget.
1963	Budgets were now to be decided within the parameters of the five-year plan. The scope of the POBS was expanded. The operating budget was set at 80 percent or less of the 1962 budget, while the general office supplies cost was set at 70 percent or less of the 1962 budget. The Minister of the Economic Planning Board (EPB) determined budget ceilings for all ministries and departments, and notified the heads of those organizations by June 26, requiring them to submit budget plans by July 10 in response.
1967	The budget ceiling for each ministry or department in 1967 was set at up to 150 percent of the 1966 budget.
1968	The budget ceiling for each ministry or department in 1968 was set at up to 130 percent of the 1967 budget, and the deadline for budget requests was May 31.
1969	The budget ceiling for each ministry or department in 1969 was set at up to 150 percent of the 1968 budget.
1970	The budget ceiling for each ministry or department in 1969 was set at up to 120 percent of the 1969 budget.
1975	The EPB was required to determine the ceiling on the 1975 standard budget for general costs, and inform all related officials and organizations by the end of April.
1976	The general cost budget was to be determined by the end of April within the parameters set by the standard budget, notified separately.
1978	The general office supplies budget was to be determined within the parameters of the standard budget, notified separately, by April 30, 1977. Items exceeding or falling short of the standard were required to be described and explained in detail. The budget request of 1978 was not to exceed 130 percent of the 1977 budget, and was to be submitted to the EPB Minister by May 31, 1977.
1979	The operating budget was to be prioritized by project and could not exceed 120 percent of the 1978 budget.
1980	The operating budget was to be prioritized by project, and all efforts were to be made to prevent it from exceeding the budget size set in the previous year.

 
<Table 3-20> Changing Features and Standards of the Budget System (1981-1987)
 

Fiscal Year	Description
1981	The operating budget was given a thoroughgoing review.
1982	Ministries and departments were required to submit their budget requests along with estimations of mid-term financial resources and needs (for 1982 through 1984).
1983	Ministries and departments were required to submit impact analysis tables on their unit projects. In submitting budget requests, the heads of central agencies were required to prioritize the unit projects on which the authorized budgets were to be spent.
1985	The Appropriation Committee was set up to allow ministries and departments to discuss and negotiate budget plans and contents with respect to major budget projects before proceeding with drafts and requests.
1987	Heads of central agencies were required to submit budget requests along with detailed plans on how they intended to utilize the funds given to their organizations.

 Source: Korea Institute of Public Administration. 2008. Korean Public Administration, 1948-2008, Edited by Korea Institute of Public Administration. Pajubookcity: Bobmunsa.