The Republic of Korea : PIM Reform after the Financial Crisis
The financial crisis that hit the Republic of Korea in the second half of 1997 had a devastating impact on its economy, causing the worst recession since the Korean War era. To address the fundamental causes of the crisis and revitalize the economy...
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| Format: | Public Investment Review |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2012/01/23068692/republic-korea-pim-reform-after-financial-crisis http://hdl.handle.net/10986/21049 |
| Summary: | The financial crisis that hit the
Republic of Korea in the second half of 1997 had a
devastating impact on its economy, causing the worst
recession since the Korean War era. To address the
fundamental causes of the crisis and revitalize the economy,
the Korean Government took bold, decisive steps to initiate
comprehensive structural reforms. The major focus of reform
in the fiscal and public sector was to adopt a series of
initiatives for strengthening public investment management.
The Government endeavored to instill a performance-oriented
approach in the system, which implies management of public
expenditure based on the principle of value for money. This
chapter explains the institutional setting for public
investment management (PIM) and the Korean Government s
efforts to develop and manage a comprehensive PIM reform to
further improve value for the money invested. The Ministry
of Strategy and Finance played a leading role by
implementing an effective appraisal and evaluation system to
tighten the expenditure monitoring of total project cost and
introducing a new budgeting system called the Medium Term
Expenditure Framework. An initiative of the preliminary
feasibility study (PFS), introduced in 1999 and conducted
mainly by the public and private Infrastructure Investment
Management Center, has been successful in handling the
pass-or-fail bottleneck of the whole project selection
process. The total project cost management system (TPCM),
strengthened after the crisis, is working satisfactorily by
discouraging the request frequency and the amount of TPC
increases in line ministries. A reassessment study of
feasibility is an innovative tool to control and keep the
total project cost limit in the middle of TPCM. However, the
performance monitoring and evaluation system on PIM still
has room for improvement in Korea. A greater emphasis on
program evaluation is being called for, with the Government
currently establishing a performance-orientation, a greater
use of performance contracts can be encouraged. |
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