Evaluation of Performance Management System for Fiscal Activities
Published on June 30, 2020
Published by Economic Industrial Program Evaluation Division, Budget Analysis Department
While Korea's revenue condition is not favorable due to weakening growth potential and sapping economic vitality, demand for appropriation is expected to continue to increase due to changes, etc. in demographic structure. In response, the government presented the direction for fiscal innovation with a goal to become an innovative and inclusive country in its “National Fiscal Management Plan” announced in 2019. Fiscal innovation has been promoted through innovation in expenditure, expansion of revenue base, and enhancement of innovation in fiscal management, and expenditure innovation has been carried out mainly around the in-depth evaluation of the fiscal programs as well as the evaluation of key programs overseen by the Ministry of Economy and Finance. In other words, the government has been advancing innovation in expenditure with program evaluation.
However, it is difficult to achieve expenditure innovation by carrying out program evaluation alone. Rather, the effectiveness of the evaluation can be secured only when the evaluation outcomes are reflected in a performance management system that forms a cycle from planning to execution to evaluation to feedback. Against this backdrop, the “National Finance Act,” stipulates that the central government agencies establish “a system for performance management pertaining to fiscal activities.” And the National Assembly Budget Office, aiming to identify the direction of improvement in expenditure innovation focused on program evaluation led by the budget authorities, has assessed central government agencies on how the “performance management system for fiscal activities” has been implemented.
NABO’s evaluation results indicate that the current performance management system of fiscal activities is confined to fiscal programs, rather than the entire budget, resulting in the evaluation and performance management covering only 24.5% of the total budget. In addition, since the performance management system is established separately for fiscal and policy programs, inefficiencies in performance management have been found. To address this issue, policy programs implemented under personnel or basic expenditures need to be included in the performance management system for fiscal activities also, and efforts to establish an integrated performance management system as defined in the “Framework Act on Public Service Evaluation” should also be made.