1 / 14

Linking Policy, Planning and Budgeting : Korean Experience and Challenges February 6, 2007

Linking Policy, Planning and Budgeting : Korean Experience and Challenges February 6, 2007 Kang Ho Lee ( klee21@mpb.go.kr ) Director, Growth Strategy Division Ministry of Planning and Budget Republic of Korea. 1. Background of Fiscal Reforms in Korea.

dalia
Download Presentation

Linking Policy, Planning and Budgeting : Korean Experience and Challenges February 6, 2007

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Linking Policy, Planning and Budgeting : Korean Experience and Challenges February 6, 2007 Kang Ho Lee (klee21@mpb.go.kr) Director, Growth Strategy Division Ministry of Planning and Budget Republic of Korea

  2. 1. Background of Fiscal Reforms in Korea • Forecasting on additional spending in the future • Need extra resources, 1,100 trillion won for vision 2030 • Reallocation of expenditure between economic and social welfare resulted in aging and polarization problems • social welfare as % of total expenditure : 9.9% (1980) → 25.2% (2005)  40.0% (2030) • % of the population over 65: 7.2% (2000)  14.4%(2019) 24.1%(2030) • Increasing national debts after 1997’s Korean financial crisis • % of GDP : 12.3(1997)  23.0(2003)  33.4(2006) • Need to enhance the efficiency in public spending

  3. Extra resources in need : 2% of GDP (avg] Total Expenditure More Spending w/oInst. Reform Current System under Vision 2030 1-1. Forecast of Fiscal Resources in Vision 2030 Savings from Inst. Reform 3% of GDP 2% of GDP

  4. 50.0 welfare 40.0 30.0 20.0 10.0 Economy 0.0 2005 1980 1990 2000 2010 2020 2030 ratio of budget 1-2. The Change of Resource Allocation in Vision 2030 • Increase of social welfare expenditure in the budget • : 9.9% (1980)  25.2% (2005)  40.0% (2030) • Decrease of economic spending in the budget • : 26.0% (1980)  19.9% (2005)  10.0% (2030)

  5. Ratio(%) 33.2 30 25 20 15 10 5 0 -5 23.0 33.4 32.9 32.3 31.3 National Budget Support to Economic Crisis(￦49 Trillion) 18.6 12.3 IMF Economic Crisis ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ‘10 1-3. National Debt Ratio of GDP since 1997

  6. System Performance Management Top-down Budgeting Program Budget Legal Frame- work National Fiscal Act in 2006 National Fiscal Management Plan Increased efficiency Enhanced linkage Operation Building an advanced Public Expenditure Management System 2. Framework of Major Fiscal Reforms

  7. 2-1. What organization is responsible for budget reforms? • President has initiated budget reforms in 2003 • MPB has taken actions on budget reforms after that • Congress passed the National Fiscal Act last year • Lots of discussion between MPB and line ministries <History of budget ministry> • EPB (Deputy Prime M), 1960s~1994 • MOFE (Deputy Prime M), 1994~1998 • MPB (Minister), 1998~present

  8. 3. Linking Budget to Plans 3-1. NFMP(MTEP) • Discordance of 2007 budget between ’06~’10 NFMP and’04~’08 NFMP • Difference of total expenditures : 1.8% • Difference of Revenue : 4.4%

  9. 3-2. Program Budgeting • Program budget is a critical “building block” to link NFMP, Top-down budgeting, and PMS in a wholeProcess • For NFMP: provide program initiatives to represent medium-term national priorities • For Top-down Budgeting: provide the consultative bases to decide expenditure ceilings between line ministries and MPB • For Performance Management System: provide the units to link resources and results

  10. 4. Challenges to Performance Management System(1) • Low incentives from performance evaluation • Too focused on the adequate category (85% of 2007 budget) • Difference between evaluating year and reflecting year • Difficulties in building effective evaluation index

  11. 4. Challenges to Program Budget (2) • Align the annual budget classification with the classification in the NFMP • Keep programs within the organizational structure • Combine all activities according to program objectives regardless of revenue sources • Simplify the grouping of object levels

  12. 4. Challenges to MTEF andTop-down Budget (3) • Time constraint on the MTEF • How to meet expenditure ceilings • Mainly focused on the next year budget • Unit in setting expenditure ceilings : program or subsection ⑤ How to harmonize the top-down budget and deliberation process

  13. Thank You

  14. Overall Scheme Vision Korea: New Stride of Hope for New Opportunities Goals Innovative, vibrant Economy Safe, equitable Society Stable, posed Nation Strategy Maintaining Growth Momentum UpgradingHuman Resources New Social Capital All-out Globalization Advanced Social Welfare System Vehicles VisionAction Plan ProactiveInvestment Institutional Reforms Overall Scheme of Vision 2030

More Related