We aim to identify what are the crucial features of budget systems that matter for fiscal soundness, and what are the factors that determine whether a particular system will be able to perform as originally designed. As such factors, we focus on the legal system, political system and phase of socioeconomic development of a society.
Specifically, we carry out case studies of 4 Southeast Asian countries: the Philippines, Thailand, Indonesia and Singapore. As relatively unfamiliar countries to the Korean audience, we devote additional attention to their historical, political and legal environment. Examined in this study as well are the familiar cases of the US budget system and the EU's New Fiscal Compact, in which we retain a closer focus on budget system laws and fiscal rules.
Legal systems and budget laws per se were found to have limited influence on fiscal outcomes. Rather than any specific features or clauses, it is the combination of such legal elements with other institutional features (political, administrative, or social) that is crucial. Of special importance is the manner in which political systems can influence the incentives of decision makers ― effective budget systems would be those that ensure that, for the overall institutional background given, their design safeguards the centralization of budgeting decisions.
Our analysis of political and socioeconomic factors identifies democracy, in particular, the principle of checks and balances as the crucial factor for budgetary performance. Applying this insight to the Korean institutional environment, we find that the current constitutional features such as budget formulation by the executive, restriction on increases by the legislature, and power of the legislature to reduce the government's budget proposal are in fact ideal for purposes of safeguarding fiscal soundness. Recent proposals to amend such features in favor of the legislature would run the risk of undermining fiscal probity.
- 재정건전성 제고를 위한 재정법체계 개선방향 연구(On improving budget system laws for fiscal soundness)
- 김종면; 홍승현
재정건전성 제고를 위한 재정법체계 개선방향 연구(On improving budget system laws for fiscal soundness)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|