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Reform of the public financial management system in Korea

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Frame of Image m-term expenditure management framework (MTEF) together with a top-down budgeting system in 2003 • MTEF provides for a mechanism to reflect policy priorities in budgeting and facilitate a strategic decision-making. • The budget for FY 2005 was prepared under the new system. The introduction of “program budgeting” and “performance management system” is in progress
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Background of the Reform
Changing environment
• The size of the government spending increased from 57 billion won in 1960 to 118 trillion won in 2004. • The structure of budget is getting more complicated. • There is an increasing emphasis on “autonomy and devolution” and “accountability and performance” as the guiding principles of government.
Limitations of the previous system
• Centered on a single budget year • Relied excessively on a bottom-up approach in budgeting • Focused on the general account
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Limitations of the Previous System
Centered on a single budget year
• Little consideration is given by the central budget office and the parliament to the out-years beyond the budget year. • Medium- to long-term planning is also quite weak in line ministries. • As a result, it is difficult to identify and cope with the trend increase in spending.
− Without a medium-term strategy for fiscal management, public spending has been on a rising trend since the mid-90s.
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Limitations of the Previous System
• The counter-cyclical role of fiscal policy is constrained.
− The current principle of “balanced budget in each


Full Text
Title Reform of the public financial management system in Korea
Similar Titles
Material Type Proceedings
Author(English)

Koh, Youngsun

Date 2005
Pages 21
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding KDI School of Public Policy and Management
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