Contextual Conditions of the Case
The central government of Korea introduced fundamental budgetary reforms in the late 1990s and the early 2000s under the name of the Four Major Fiscal Reforms. The reforms aimed to promote the effectiveness of performance-oriented management of expenditure programs and enhance long-term fiscal sustainability of Korea. The reforms comprise the medium-term expenditure framework known as the National Fiscal Management Plan, the Top-Down Budgeting System, the Performance Management System, and the Digital Budget Information System. The performance evaluation systems of government expenditure programs are related to the Performance Management System.
The adoption of these performance evaluation systems started in 1999 when the Ministry of Planning and Management renamed as the Ministry of Strategy and Finance launched the pilot projects with 16 selected central ministries. The ministry introduced a series of subsystems such as the Performance Goal Management of Budgetary Programs in 2003, the SABP in 2005, and the In-Depth Evaluation of Budgetary Programs in 2006. The main objectives of the SABP were to link the performance of government expenditure programs with the amount of budget assigned to the individual expenditure programs. The MOSF amended SABP and adopted the IESGP in 2016 ##3D_LAYER##Park (2012)##3D_TEXT:Performance management system of budgetary programs in Korea##3D_LINK:https://www.kdevelopedia.org/Resources/economy/performance-management-system-budgetary-programs-korea--04201306130126667.do##3D_LAYER_END##. [Table 1] summarizes the four phases of the performance management system in Korea.
[Table 1] Four Phases of the Performance Management System in Korea
In order to provide the legal foundation for performance evaluation of government expenditure programs, the central government of Korea enacted the Framework Act on Government Performance Evaluation (Act No. 6347, 2001), the National Finance Act, and the National Act Enforcement Decree. Based on these acts, MOSF evaluates the performance of all expenditure programs launched by the central government of Korea (Liu, forthcoming).
The central government of Korea introduced SABP as a practical tool to evaluate the performance of expenditure programs. The government benchmarked PART of the United States. Both SABP of Korea and PART of the United States are “self-assessment” programs, in which the ministries that are responsible for the expenditure programs evaluate the performance of their own expenditure programs. SABP was designed to review all major expenditure programs launched by the central government over a three-year cycle, one-third of the programs per year. SABP benchmarks PART but added some innovations. Different from PART, the Korean SABP system encourages active participation of external experts in the evaluations. For this purpose, each ministry organizes a self-assessment committee in which external experts participate. The consultation from the external experts is reflected in the ministerial evaluations. After the ministries evaluate the performance of their expenditure programs, the Ministry of Strategy and Finance double-checks the ministerial self-assessments and uses the performance information for budgeting.
One of the major objectives of these self-assessment systems was to provide performance information so that MOSF might assign budget to all expenditure programs based on their performance. After its introduction in 2005, the central government of Korea found that SABP should be amended in several ways. The central government of Korea updated SABP and introduced IESGP in 2016. The In-Depth Evaluation of Budgetary Programs was also adopted to examine the performance of government expenditure programs comprehensively. External experts were invited to examine the performance of the government expenditure programs with analytical and scientific methods (Park, 2012).