83531 The World Bank PREMnotes 2013 NUMBER 28 Special Series on Performance Budgeting in the Republic of Korea Nowook Park The government of the Republic of Korea piloted performance budgeting in select ministries in the late 1990s. Although the first attempts failed, the country learned from its mistakes. In 2003, the government introduced a broad package of public financial management reforms, which succeeded in integrating performance management into the budget process. The experience of performance budgeting reforms in Korea underscores the importance of: (i) strong support from top decision makers; (ii) customization of performance budgeting system to accommodate the country’s cultural and socioeconomic characteristics; and (iii) organizational restructuring and capacity building to support the new systems and processes. Korea embarked on a comprehensive perfor- countries with limited time. This approach carries mance budgeting (PB) reform program in the with it benefits and risks; it can create irrevers- mid-2000s after unsuccessful attempts to intro- ible momentum for reform, but requires huge duce PB in the late 1990s and early 2000s. Ko- resources that many countries lack. This study rea’s experience can offer several lessons for other shows how PB reform was implemented as one countries. First, Korea provides a benchmark case component of a PFM reform package. of PB reform and is considered a model country Third, although PB can also be used for pro- with an effective public financial management gram improvement, Korea adopted a PB system (PFM) system. The country is known for its focused on resource allocation. Its PB system can sound fiscal condition, with records of complete be used as a model for other countries trying to recovery from two recent financial crises. In par- develop a system focused on improving allocative ticular, Korea’s reformed PB system is known for efficiency. its effective integration into the regular budget Fourth, Korea’s experience shows that techni- process. The country’s experience has drawn cal assistance and capacity building are essential the attention of many emerging and developing elements of PB reform. Few disagree with the goals economies because they share similar traits: ex- of PB reform, but the difficulties of PB design periences with economic development planning, and implementation have created many skeptics. frequent and regular rotation of civil servants, a Korea’s example illustrates how to overcome this recent transition to a democratic society, and a skepticism with technical assistance and capacity lack of capacity among civil servants. building. Second, Korea’s approach may also provide Fifth, Korea did not succeed overnight; previ- useful lessons for developing countries that are ous efforts at PB reform failed in the late 1990s considering implementing a PB reform program and early 2000s. In the early stages of its second within a short time frame. Relatively quickly, attempt, the country still had not come up with a Korea was able to develop a comprehensive PB comprehensive blueprint. But through a process system with reasonable success. Thus, its “big of trial and error, the Korean government devel- bang” approach may offer policy lessons for other oped its customized PB system. FROM THE POVERTY REDUCTION AND ECONOMIC MANAGEMENT NETWORK Korea’s PB System and targets are assigned to each performance and project The Korean PB system consists of three different layers: goal. The annual performance plan also contains strategies monitoring, review, and in-depth evaluation. The monitor- to achieve the stated goals and an outline of outside factors ing system, called the Performance Goal Management Sys- that are expected to affect the goals. tem, gives the first feedback on the performance of budget- The monitoring system is the starting point for man- ary programs, drawing attention to programs that may not aging the performance of budgetary programs. First, it be meeting their goals. The strategic review system, or the helps identify redundancies and deficiencies in existing Assessment of Budgetary Programs, collects comprehensive policy portfolios. By analyzing and developing a hierarchical information on the performance of budgetary programs policy structure, officials can examine whether a particu- and prioritizes the programs based on their ratings.1 The lar program is properly designed to serve a policy goal, or monitoring applies to every program, and strategic reviews conversely, whether a particular policy goal is served by a apply to one-third of all programs, every year. In contrast, proper policy portfolio. Second, the monitoring system the In-Depth Evaluation of Budgetary Programs system provides a comprehensive list of performance indicators in only selects a small number of programs. Figure 1 shows relation to policy goals. The system works like a traffic signal, the performance budgeting system framework. warning when the performance of budgetary programs may be falling short. Although it may not be able to provide suf- Monitoring: Performance Goal Management System ficient M&E information for decision-making purposes, the The monitoring system requires that line ministries sub- system serves as a platform to initiate discussion about the mit annual performance plans and reports, which became effectiveness of budgetary programs. mandatory with the enactment of the National Finance The engagement of top administrators is key in utiliz- Act in 2006.2 Line ministries submit these reports to the ing this M&E information. The basic overview generated Ministry of Strategy and Finance (formerly the Ministry of by the monitoring system is widely available to top deci- Planning and Budget), which, in turn, submits them to the sion makers and middle managers in the organization, National Audit Office. Finally, the reports are passed on to to politicians in the legislature, to outside experts, and the National Assembly. to civil society organizations. However, because further The annual performance plan includes a hierarchical communication and information, in addition to the moni- structure of the budgetary programs in each line ministry: toring reports, are needed to make effective decisions, the their mission, strategic goals, performance goals, and project monitoring system is best suited to internal management. goals. The mission corresponds to the highest goal of each Top decision makers within each organization can use the line ministry: strategic goals match the office-level goals; monitoring system to effectively initiate internal com- performance goals link to bureau-level goals; and project munications and to guide their management decisions. goals correspond to team-level goals. Performance indicators So far, the annual performance plan and report from the Figure 1. Korea’s PB System Framework COMPONENT PURPOSE Performance Goal Management System Monitoring—all programs (Strategic and Performance (Annual Performance Plan Goals Program) and Report) Strategic Review—one-third Assessment of Budgetary Programs of programs (over 1,400 subprograms) (Checklist) Program Evaluation—about 10 In-Depth Evaluation programs per year of Select Programs (In-Depth Evaluation) Source: Author’s illustration. 2 PREMNOTE monitoring system serve informational purposes and have implementing the review process. The members of the not been used in a systematic way. other teams sometimes participate in the review process, but their participation is not mandatory and depends on Reviewing: Assessment of Budgetary Programs the decision of the bureau head. The operation of the Of the three PB oversight layers, the review process is the monitoring and review systems is supported by the Korea most actively and systematically used for decision-making Institute of Public Finance, a public research institute. purposes. As mentioned, data from the monitoring system The institute provides research, training, and consulting does not provide enough information to guide the central services to the government. The Center for Performance budget authority in decision making. At the same time, Evaluation and Management was established within the since In-Depth Evaluation covers only about 10 programs institute to support PB in the government. In the review each year, its systematic impact on budget allocation is process, the center conducts the first review of the line limited. ministries’ self-assessment results. The Assessment of Budgetary Programs is a review First review results are then submitted to the Ministry process consisting of a checklist developed by the central of Strategy and Finance and disseminated to each line min- budget authority. The checklist contains questions on pro- istry. A line ministry can appeal to the Ministry of Strategy gram planning, management and results, and each question and Finance if it does not agree with the first review results. requires evidence. The review process usually takes about The Ministry of Strategy and Finance responds to the line four months to complete, and one-third of government ministry’s appeal and provides feedback. If no agreement programs are evaluated every year. After the central budget has been reached after two rounds of communications, a authority issues review guidance, line ministries complete final face-to-face meeting is held between the Ministry of the checklist for their programs and submit them to the Strategy and Finance and the line ministry, with experts central budget authority with supporting evidence. The from the Korea Institute of Public Finance or universities central budget authority then reviews the submissions and also attending. assigns each program a rating: effective, moderately effec- The review results are summarized in table 1. The tive, adequate, ineffective, or very ineffective.3 central budget authority has stipulated in the budget prepa- Within the Ministry of Strategy and Finance, the ration guideline for line ministries that, in principle, at least Fiscal Management Bureau is responsible for the review a 10 percent budget cut should be considered for ineffective process. The bureau consists of nine teams that handle programs. The review reports are open to the public and performance monitoring and management systems, ex available on the Web site of the central budget authority. ante evaluation of large social overhead capital projects and research and development projects, and public pri- Program evaluation: In-Depth vate partnership programs. Each team consists of about Evaluation of Budgetary Programs 10 civil servants. The performance management team The program evaluation process seeks to measure rel- within the bureau plays a central role in designing and evance, efficiency, and effectiveness. Although ad hoc Table 1. Summary of Self-Assessment Results by Rating (number of programs [%]) Moderately Ineffective/ Year Total Effective Adequate effective very ineffective 2005 555 (100) 28 (5.0) 100 (18.0) 340 (61.3) 87 (15.7) 2006 577 (100) 30 (5.2) 94 (16.3) 388 (67.2) 65 (11.3) 2007 585 (100) 69 (11.8) 143 (24.4) 342 (58.5) 31 (5.3) 2008 384 (100) 11 (2.9) 44 (11.5) 226 (58.9) 103 (26.8) 2009 346 (100) 5 (1.4) 14 (4.0) 257 (74.3) 70 (20.2) 2010 473 (100) 0 (0) 22 (4.7) 335 (70.8) 116 (24.5) Source: Author’s calculation from the original data. Note: The share of ineffective programs increased after 2007 due to stricter review standards introduced by the Ministry of Strategy and Finance. Stricter standards were motivated by the decision of the ministry to use the review results for budget allocation. PREMNOTE 3 evaluation activities previously existed in the central Success Factors and budget office to cope with major policy questions, there Policy Implications was no systematic or rigorous evaluation system prior to The reform of public finance in Korea was dramatic, and PB. Thus, the In-Depth Evaluation of Budgetary Programs achieved in a relatively short time frame.6 Important actors institutionalized this type of evaluation into the PB sys- from within the administration joined academics, public tem.4 Every year, an evaluation panel is created for each finance experts, and international organizations to build of the 10 programs chosen for evaluation. Panel members consensus and resolve stakeholder concerns; eventually are selected for their expertise; most come from public re- even the National Assembly played a role in improving and search institutes and universities. With the support of the institutionalizing PB reform.7 The story of initial failure, Ministry of Strategy and Finance and line ministries, the followed by success, offers lessons in both persistence and evaluation panel collects data, conducts surveys, analyzes change management. the data, and writes a report. Since many stakeholders are involved in any given program, the evaluation panel holds Trial and error frequent meetings to collect feedback. The panel submits The first lesson may be that policy failure can set the stage its completed evaluation report to the central budget for eventual success. Initially, the Korean government was office, which decides whether to reflect these results in not convinced of the effectiveness of incorporating PB resource allocation changes or program consolidation. The into the budgeting process. The Ministry of Planning and summaries of evaluation reports are available to the public, Budget started PB as a pilot project for a limited number of but the disclosure of full reports is not universal. This is ministries and agencies in 1999, but failed to institutional- because the Ministry of Strategy and Finance recognizes ize it for decision-making purposes. Three major factors that the details of evaluation results may be sensitive for contributed to the demise of the pilot project: (i) lack of some stakeholders. However, there is strong pressure for attention from high-level officials, (ii) absence of a clear- open data in the government, and a full disclosure policy cut way of incorporating PB into the budget process, and may be introduced in the future. (iii) redundancy, with a similar performance management system in the Prime Minister’s Office. PB system features Despite this failure, the new government initiated an- The PB system in Korea has several context-specific fea- other attempt to introduce PB in 2003. During this second tures. First, its focus on linking performance information attempt, the redundancy issue was addressed from the start and budget allocation is mainly driven by the fact that the by clarifying that the focus of this new review process was budget authority is confined to budgeting functions, while on the management of the budgetary programs rather than the Prime Minister’s Office and other ministries perform overall policy management. However, the administration general policy and personnel management. Given the still did not know how to incorporate the review process scope of its mission, the budget authority works hard to into decision making. Thus, the second attempt began use performance information in actual budget allocation, with a framework very similar to that of the first attempt: otherwise, it cannot justify running a performance manage- a monitoring system with an annual performance plan, and ment system. For example, the budget authority issued the a report consisting of performance goals and indicators. guideline that a budget cut of at least 10 percent could be Why did the Ministry of Planning and Budget embark imposed on the programs rated “ineffective” by the Assess- on this second effort, considering its lack of confidence in ment of Budgetary Programs review. Second, like other PFM PB? One answer is political pressure. The widespread sup- reform measures in Korea, PB is implemented mainly by port for PB from experts and academics in Korea clearly the budget authority within the executive branch, without influenced policy makers. The reform was initiated by a much consultation with the legislature. However, the voice Director General who later became Minister of Planning from the legislature has become stronger, and the nature and Budget. He acknowledged that PB was included in PFM of PB has evolved accordingly.5 Finally, Korea’s PB focuses reforms despite the administration’s skepticism because of on producing useful information for decision making. In outside stakeholders’ support for PB. Another answer is the practice, that means applying the review process at the inclusion of PB within broader policy changes. It appears subprogram level. Since external factors are more active that policy makers worried less about PB itself because it on the program level, and also because whole programs are was included as one component of PFM reforms: the focus too big for prioritization based on performance informa- was on the medium-term expenditure framework (MTEF) tion, Korea’s central budget authority conducts PB at the with top-down budgeting. The rationale that PB was a subprogram level. necessary accountability scheme in return for the increased 4 PREMNOTE autonomy of the line ministries under the new top-down of a budget cut, although the significance and strength of budgeting seems to have helped line ministries accept the this correlation varies over time.11 Second, performance extra work and new constraints brought in with the new information is reflected at every stage of the budget process. system. If the policy makers’ interest had been solely on PB, It is used by the line ministries, the central budget authority, they might have been hesitant in trying it again without a and the legislature.12 The patterns of interaction may be clear blueprint. Ironically, as a secondary and comparatively changed in the future as the legislature increases its engage- familiar component of the PFM reforms, PB was largely ment, but the link between performance information and accepted. A third and important answer is found in the budget allocation will likely be maintained. Third, there president’s support for the reform package. His broad en- is a tendency to move away from incremental budgeting. dorsement of the MTEF, and of PB in particular, provided Park (2012) also found that once programs are subject to momentum to the reform effort. The president showed his the review process, the size of their budget changes is bigger strong support for PB by requiring ministers to use objec- compared to changes for programs that did not go through tive performance information in their annual plans and the review process. This suggests that budget officials be- reports. His insistence convinced government officials that come more aggressive in budget adjustments when they there would be no turning back under his administration. have new performance information at hand. Despite their initial skepticism, budget officials within Budget ties and effective implementation the line ministries are beginning to rely on the new per- Important to reform success was finding a way to incorpo- formance information. According to a survey conducted rate PB into the budget decision-making process, despite by the National Assembly Budget Office, 70 percent of weak interest in PB from politicians and bureaucrats. budgeting personnel in line ministries responded with Although PB began with program performance goals and neutral or positive answers to the question, “Are assessment indicators, policy makers soon realized they needed to go results from Assessments of Budgetary Programs useful even further to find new ideas and develop an action plan, in the preparation of budget requests?” Considering their and therefore a dedicated PB team was created within the negative attitude toward any M&E activities imposed by Ministry of Planning and Budget. It included public officials outside stakeholders, line ministries show quite a high sat- and experts from the public research institute.8 Research isfaction level with the process. Many budgeting personnel was delegated to the Korea Institute of Public Finance to in line ministries indicated that the availability of assess- find a way to make PB reform work. ment results made their job easier, because performance The study by the Institute of Public Finance found information facilitates communication between them and that PB needs a prioritization process to be an effective program managers. decision-making tool. Fortuitously, the United States had Not only do line ministries utilize results from self-as- developed the Program Assessment Rating Tool, and the sessments in their budget formulation, but they also change Ministry of Planning and Budget benchmarked this tool, their program management to enhance the effectiveness of with Korea-specific adaptations.9 By using a standardized service delivery (box 1). Although PB in Korea is still in the checklist, each program was given a rating that was used to early stage, it is gaining momentum and changing program guide budget allocation. management within line ministries. In developing the prioritization process, called the As- sessment of Budgetary Programs, the Ministry of Planning Implications for future reforms and Budget realized it could incorporate multiple tools that Korea’s experience offers lessons for other countries. First, would serve unique purposes in the review process. The strong support from top decision makers is crucial in draw- ministry found that the annual performance plan and re- ing attention of stakeholders, such as the central budget port could be used for monitoring, and the self-assessment office and line ministries. These top decision makers could fill the role of periodic reviews. The ministry also should include those who deal with issues across minis- realized that the existing ad hoc program evaluation could tries, such as the president, prime minister and Minister be a part of the PB system, providing in-depth evaluation of Finance, in order for PB to cover the entire government. for selected programs. As a result, the Korean government In Korea, the support of top decision makers was crucial is now equipped with a three-layer PB system. in sustaining the second attempt at PFM reform all the The introduction of PB brought about many changes.10 way through to the institutionalization of PB. In contrast, First, performance information now affects budget alloca- Korea’s first effort toward PFM reform failed without such tion: programs with poor ratings are more likely to receive endorsement. budget cuts. Park (2012) empirically showed a significant Korea’s experience also underlines that cultural and ad- correlation between a program’s rating and the probability ministrative aspects of the government must be considered PREMNOTE 5 was very cautious in its implementation of PB until top Box 1. Use of Performance Information in Line decision makers supported the reform. Ministries: Pilot Project of Welfare-to-Work Program in the Ministry of Health and Welfare Opportunely, the Ministry of Planning and Budget em- braced innovations that were not in their initial blueprint. Since 2000, the Ministry of Health and Welfare has The ministry developed a prioritization process and found been running a program designed to provide assis- a way to formalize an existing in-depth evaluation process tance to unemployed low-income families. However, for budgetary use. These actions helped the PB system be- less than 3 percent of recipients were found to have come well integrated into the budget process and resulted become “economically independent” through the pro- gram. Once such poor performance was highlighted, in greater depth of performance information. In turn, the particularly after the introduction of PB, the ministry high stakes of budgeting and the usefulness of performance began to reform the program. More significantly, on information have enhanced its perceived value. If reformers their own initiative, ministry officials used reform strat- in other countries, like those in Korea, encounter pressure egies grounded in PB. to clearly explain the use of performance information, they Originally, the assistance program was managed need to consider moving beyond simply reporting perfor- without regard for performance. Funds ranging be- mance indicators and targets and find ways to integrate tween US$1.2 million and US$1.9 million were allo- performance information into the budget process. It may cated to each of 242 regional centers; there was only not be feasible for those countries to have a PB system only one center in each locality, and the amount of funds was decided by the number of dependent families. for informational purposes. Thus, there was no competition among the centers, A third policy implication is that organizational and flexibility was very limited. Recently, however, the restructuring and capacity building may be required to ministry began a pilot program based on performance- make PB reforms work. In Korea, it was not initially clear based management. The pilot created a separation that capacity among officials was inadequate; their unwill- between buyers and suppliers: the service provider ingness to adapt was more evident. Thus, organizational (or assistance center) is selected based on submit- restructuring was implemented to overcome resistance ted proposals, and an invitation to become a service from the central budget office and to empower the bud- provider is extended to private firms as well as non- profit organizations. The contract is now performance get offices in the line ministries.13 Since organizational based and the ministry makes fixed payments, pro- restructuring can add confusion in the midst of the PFM portional to the number of families a center serves. In reform process, it should be pursued with caution. When addition, two more incentives have been introduced: adopted with prudence, restructuring may increase mo- (i) if a recipient finds a job meeting a certain standard, mentum for the reform and help the organization fit the a bonus is given to the service provider; and (ii) if a reformed system. recipient moves off the government subsidy, the pro- Before, during and after the reorganization, bureau- vider receives an additional bonus. This reform initia- tive aims to improve the effectiveness of service deliv- crats in Korea received training from the Korea Institute ery. The pilot project produced remarkable results: the of Public Finance.14 In any scenario, capacity building employment rate more than doubled. The pilot pro- among budget officials and program managers is an essential gram was introduced in 2008 and evaluated in 2012 element for PB reform success. Capacity building can be to decide whether to scale it up nationwide—due to achieved by upgrading the budget office with additional its impressive performance, its nationwide expansion personnel and more authority, or by providing consulting was approved. services and training programs, or both. Since PB reform Source: Author’s compilation. requires budget officials and program managers to have planning and evaluation capacity—scarce resources in many governments—serious effort should be put into solving the in any reform effort. In many countries that have adopted capacity-building issue. PB, officials face little pressure to use performance infor- mation explicitly for budget allocation purposes, and it is hard to find evidence that performance information affects Conclusion: Leadership and Change budget allocation. In such countries, M&E information is Perhaps the most important component of Korea’s PB simply used for budget reporting—a passive form of PB. In success was effective leadership throughout the change. Korea, bureaucratic and political culture now exerts signifi- After the demise of the first reform, the Korean govern- cant pressure on ensuring the explicit use of performance ment developed a vision and strategy based on several case information. Recognizing that the right political culture is studies conducted by external public research institutes, essential for reform, the Ministry of Planning and Budget such as the Korea Institute of Public Finance and the Korea 6 PREMNOTE Development Institute. Top administrators understood that About the Author PB reform would require not only administrative capacity, Nowook Park is founding director of the Center for Performance but also analytical capacity within both leading and line Evaluation and Management at the Korea Institute of Public ministries. Thus they assigned to these research institutes Finance. He played a pivotal role in the introduction and the important role of supplementing and developing this implementation of PB in Korea. Park actively participates capacity. Over time, ministries were expected to build up in international policy exchanges through conferences or- in-house capacity and knowledge regarding PB processes. ganized by international organizations and provides policy However, due to regular rotation of positions among bu- advice to other countries. reaucrats, the role of the public research institutes has remained essential for the implementation of the PB system. In addition, the Korean government created a sense of Notes urgency among the line ministries and scaled up the reform 1. The artificial separation between budgetary and non- program as quickly as possible. The Ministry of Planning budgetary programs is due to a peculiar division of labor and Budget stipulated in the budget guideline that at least a between the Prime Minister’s and the central budget office. 10 percent budget cut should be considered for ineffective Despite the presidential system in Korea, the prime minister programs. This shocked line ministries into quick action. plays the role of governmentwide policy coordinator and Another incentive for bureaucrats was public pressure. PB handles performance monitoring and evaluation (M&E) of review results were made available to the public, and the policies. To avoid duplication of M&E activities between media called attention to underperforming programs and these two government bodies, programs consisting mostly agencies. This publicity motivated government officials of salaries are considered policy programs and subject to the to cooperate with the new system and, at the same time, M&E system of the Prime Minister’s Office. helped the reform gain social acceptability among civil 2. The National Finance Act was passed in December, 2006 society organizations and citizens. and became effective in January, 2007. Establishing a dedicated reform team consisting of 3. Initially the rating consisted of four categories: effective, budget officials and policy researchers from the public moderately effective, adequate, and ineffective. In 2008, the institutes allowed reformers to merge expertise on practical “very ineffective” category was introduced to raise review and theoretical issues. The team came up with innovative standards. solutions to integrate performance management into the 4. There are standardized terms of reference that are cus- actual budgeting process. The public institutes hosted tomized to each program evaluation. The core terms of many workshops and meetings to build consensus on policy reference include the summative and formative evaluation direction and coalition among various stakeholders, and standards. also provided training and consulting services to support 5. The legislature can make line item changes to the budget, the line ministries. Communication with stakeholders is a but it can only cut the budget. To increase budget size, it has key element of successful change management. To facilitate to secure consent from the administration. The legislature additional communication with line ministries, an annual in Korea has limited authority compared to the Congress workshop was held to collect their feedback. This feedback in the United States. was taken into account in the following year’s PB process. 6. This section heavily draws from Park and Choi (2013). With the enactment of the National Finance Act in 7. The reform itself was initiated by the administration 2006, PB in Korea gained legal foundation. It continues without involvement of the legislature. Since the enactment to evolve through interactions with internal and external of the National Finance Act, the legislature has become stakeholders. involved in the PB process. Line ministries are required to submit their annual performance plan and report to the leg- Acknowledgment islature. Then, the National Assembly Budget Office, which This note is based on Park (2012) and Park and Choi (2013). provides research service to the legislature, examines and Park (2012) benefited from discussion with participants produces reports on the line ministries’ plans and reports. at many seminars, including the Congress of International The legislature not only exerts oversight and accountability Institute of Public Finance and a Brown Bag Lunch seminar pressure, but also questions the use of performance infor- at the World Bank. Park and Choi (2013) is based upon mation within the administration. interviews with former and current policy makers in the 8. The Center for Fiscal Analysis was established within Korean government. The author is grateful to Keith Mackay the Korea Institute of Public Finance in 2003 to support and Anna Reva from the World Bank for their comments. the PFM reforms. Within the center, a team was dedicated PREMNOTE 7 to PB issues, and it expanded to become the Center for and Budget. To overcome the resistance from the budget Performance Evaluation and Management. office, the Minister of the Ministry of Planning and Budget 9. The checklist was simplified and more detailed criteria changed the name of the budget office and reduced its staff. for assessment developed to produce consistent assessment He also reinforced the reform team. results. 14. The Korea Institute of Public Finance developed 10. For more detailed discussions and empirical evidence, training programs for public officials in line ministries. see Park (2012). Participation in the training program was mandatory in the 11. This approach may be considered questionable, because early stage of PB implementation. The training programs to fix poor performance, more funding may be needed. Poor were gradually diversified: an online course, public forum, performance may come from program irrelevance or from hands-on workshop, and customized onsite programs were an implementation problem. In Korea, poor performance delivered. corresponds to a red signal, and cutting funding was the first reaction from the central budget authority. However, the References 10 percent funding cut rule has exceptions. If the program Choi, Jae-Young, and Nowook Park. 2013. “Achieving the MTEF is important and has to be improved, then the funding cut Reform.” Policy Research Working Paper No. 6342, World is not imposed. Bank. 12. Park (2012) examined the correlation between fund- Park, Nowook. 2012. “Does More Information Improve Budget ing change and program ratings after controlling for other Allocation? Evidence from Performance-Oriented Budgeting factors that may affect funding change. Park (2012) found in Korea.” Working Paper presented at the 68th Annual Con- significant correlation between them at every stage of gress of the International Institute of Public Finance, August budget process, although the strength and significance 16–19, Dresden, Germany. vary over time. Park, Nowook, and Jae-Young Choi. 2013. “Making Performance 13. Choi and Park (2013) provide a detailed description of Budgeting Reform Work.” Policy Research Working Paper No. organizational restructuring in the Ministry of Planning 6353, World Bank. This note series is intended to summarize good practices and key policy findings on PREM-related topics. 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