This study explores methods to improve and reform the current budget system in Korea.
The Korean budget system has seen some improvements over the years, but still serves as a heavy-handed instrument of control by the state. The system is quite resistant to fundamental changes, while the lack of a clear and consistent definition of budget also makes it difficult for the general public to understand the details of given budgets. Although a significant number of legal and legislative reforms have been attempted to improve the budget system, much is still desired regarding its progress.
The Korean budget system fails to meet the management and planning requirements of modern administration. The absence of consistency and coherence among different aspects of and practices implemented in the system also adds to the difficulty of ensuring efficient budget preparations. Moreover, an abstruse budgetary sorting system and a glut of special accounts make it particularly difficult to determine how the government’s budget and fiscal policies affect the national economy.
Budget preparations present, by far, the most severe problem. Budget preparations form the first and most important part of the budget process, and consists of a series of interrelated steps, including preparations, execution, settlement and payment, accounting, and auditing. The Korean government, however, has so far failed to take a principled and methodical approach to budget preparations.
In order to solve the enduring problem of budget preparations, it is important for the government to introduce a more flexible planning system, giving itself some room to update, revise, and supplement plans even while implementing them, so that the budget remains responsive to necessary change. The government, furthermore, needs to begin to make comprehensive budgets that include and outline all the fiscal activities of the government, including items of both general and special accounts and other fund-type activities. The budget system should also be given a more rational and systematic sorting system so that policymakers and the public can easily see the appropriation of tax revenue and expenditure. Finally, the government ought to eliminate all special accounts, except for those concerning the administration of special funds or special accounting practices of corporations and businesses, in order to streamline the budget preparation process.
The current budget system fails to provide long-term estimations and forecasts on the government’s future revenue and spending. We can overcome this only when we begin to develop long-term budget forecasts and/or fiscal plans regarding revenue and spending. The budget structure itself also needs to be simplified so as to facilitate the process of generating comprehensive budgets.
예산제도개선에 관한 연구(Budget system reform)
|Series Title; No||연구보고서 / 제75-02권|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|