1. Budget Control and the Role of the National
Assembly Budget Office in Korea
Dr. Jhungsoo Park
Director General for Budget
Analysis
NABO, Korea

2. contents Introduction Government Spending and Budget Control
Executive vs Legislative Power of the Purse
Details about the NABO in Korea
Conclusion

3. 1. Introduction 1-1 New budget policy in Korea
Medium-term expenditure framework
Top-down budgeting system
Performance management
Digital budget and accounting system
Structure of Korean government and the budget process
Focus on the issue “Can legislature gain an effective voice in budget policy?”
Weak role of National Assembly in budget process, traditionally

4. 1. Introduction
1-2
The budget process and the decline of control capacity
Today’s process is a layering of various processes developed over time
Significant development
Budget committee (standing, but special)
NABO
The decline of independence and control comes from three external
development
The rise of disciplined political parties
The enormous escalation in public spending
The rise in interest groups and corporatist political arrangements

5. 1. Introduction 1-3 New roles requires
Legislators have to define a new role
Promoting fiscal discipline
Improving allocation of public money
Stimulating administrative entities to manage their operations more efficiently
Fulfilling these new roles requires
Enhancement of legislative capacity and resources
Changes in both executive and legislative budgeting
New tools for reconciling long term commitments
Redefinition of relationships with the government

6. 1. Introduction 1-4 Characteristics of legislative budgeting
The legislature participates with the government in developing budget
policy
Still vote estimates
Setting out a medium-term framework
Sectoral allocation policies
Statements of policy

7. 1. Introduction
1-5
Three restrained characteristics of legislative budgeting
Budgets limit what the legislature may do with public money
Budgets intrude on other legislative functions, such as law-making
Budgets have the potential to turn legislative work into a technocratic
exercise
Focus on three subjects
Government Spending and Budget control
Executive vs legislative power of the purse
Role of the National Assembly Budget Office

8. 2. Government Spending and
Budget Control
2-1
There are three major causes for the fiscal outcomes
General performance of the economy
The political commitment to fiscal discipline
The institutional arrangements for budgeting
Current legislative work on the budget
To discipline public finance by constraining the fiscal aggregates
To enlarge the legislature’s role in revenue and spending policy

9. 2. Government Spending and
Budget Control
2-2
The seven institutional features that the OECD recommends
Medium-term budget frameworks
Prudent economic assumptions
Top-down budgeting techniques
Relaxing central input controls
Focus on results
Budget transparency
Modern financial management practices

10. 2. Government Spending and
Budget Control
2-3
The theory of bureaucracy by William Niskanen
… want more for their agencies and programs
Anthony Downs
“Why the government budget is too small in a democracy?”
… voters are consistently misinformed
Gordon Tullock’s theory
growth of the bureaucracy is self-generating
William Riker’s theory
Rulers are trapped in a system of exchange of benefits
The larger government grows, the more policies become their own causes

11. 3. Executive vs Legislative Power of the Purse
3-1
Legislative roles and information needs
Transformative Legislature
Informed Legislature
Emerging Legislature
Rubber Stamp Legislature
Role in Policy Making
Need for Information

12. 3. Executive vs Legislative
Power of the Purse
3-3
Heart of executive-legislative relations
The Budget Process
Accounting
System
Cash/Debt
Management
Budgeting
Managerial
Reporting
Internal
Audit
CONTROLS
INTERNAL
Financial
Independent
Audit/Evaluation
Public Accountability
Planning
Revenue &
Expenditure

13. 3. Executive vs Legislative
Power of the Purse
3-4
Legislative powers to amend the budget
Rights
Number of
countries
Unlimited powers to amend the budget 32
Reductions of existing items only 17
May reduce expenditure, but increase only with permission of government 4
Increases must be balanced with commensurate cuts elsewhere 13
Rights not specified 15
Total 81

14. 3. Executive vs Legislative
Power of the Purse
3-5
In practice, does the legislature generally approve the budget as presented by the government?
With no
changes
With minor
changes only
With significant
Australia X
Austria
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
With no
changes
With minor
changes only
With significant
Korea X
Mexico
The Netherlands
New Zealand
Norway
Poland
Portugal
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
Total 6 17 4
Percent of total
22%
63%
15%

15. 3. Executive vs Legislative
Power of the Purse
3-6
Comparison of the growth rate of GDP and
government budget in Korea
Comparison of the Changes of GDP and
Government Budget
-20
-10 10 20 30 40 50 60
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Growth rate
Year
Changes of Government Budget
Changes of GDP

16. 3. Executive vs Legislative
Power of the Purse
3-7
Legislative influence
Explaining the differences
Presidential vs parliamentary systems
Design of parliamentary powers to amend the budget
Party political dynamics
Legislative budget research capacity
Access to relevant information
Legislative committees as the engine room for financial scrutiny
Time for scrutiny and the timing of the budget process

17. 3. Executive vs Legislative
Power of the Purse
3-8
Strengthening the capacity of the legislatures
Responsible and effective legislative action on the budget depends on
adequate information concerning the activities financed with public
funds and the results ensuing from government programs.
The supply of information has enriched by building the capacity of audit
offices and independent budget office to assist the legislature.
To make effective use of the avalanche of information, modern
legislatures have added staff, invested in IT, and professionalized their
operations.
Examples in the US and in a number of other countries (Philippines,
Uganda, Poland, Georgia) establish that a nonpartisan, independent,
objective, analytic unit can provide budget information without polarizing
the relationships between the executive and the legislature.

18. 4. The National Assembly Budget Office
in Korea
4-1
General information
NABO was created by the National Assembly Law (Article 22-2) on
October 20, 2003
Mission
Conduct research and analysis on budget and fund, settlement of
accounts, and performance of fiscal operations
Estimate costs for bills
Analyze and evaluate national programs and medium/long-term fiscal
requirements
Conduct research and analysis on the requests by committees or members
of the National Assembly

19. 4. The National Assembly Budget Office
in Korea
4-2
NABO’s organization and staffing
NABO has about 92 full-time staffs
Chief appointed by the Speaker and approved by the House Steering
Committee
Chief appoints all NABO staff, in case of higher level approved by the
Speaker, based solely on professional competence, not political
affiliation
90+% of NABO professional staff hold advanced degrees in economics,
public policy, accounting or related fields

20. 4. The National Assembly Budget Office
in Korea
4-3
Five objectives which the NABO pursuits
Set its status as a specialized organization with authority supporting
fiscal control
Make sure the national budget is well spent by making analyses of
budget and economic policies
Analyze budget and economic issues based on public opinions
Produce reliable research results through enhancing its expertise
Establish a reputation as a world class budget analysts and policy
evaluators.

21. 4. The National Assembly Budget Office
in Korea
4-4
Job philosophy
Impartiality
Timeliness
Responsiveness
Expertise
Excellence
Reliability
Activeness

22. 4. The National Assembly Budget Office
in Korea
4-5
Organization of NABO

23. 5. Conclusion
5-1
The success of reforms and innovations in budgeting will ultimately be
determined by the cooperation of the legislative body
The importance of talking full advantage of the opportunities offered by
developments in IT system
Rather than as controllers of public finance, legislatures should aim to
promote fiscal discipline, improve the allocation of public money and
stimulate public bodies to manage their financial operations more
efficiently
In order to do this, it is necessary to enhance the legislative capacity to
deal with budget issues.

24. Thank you
for your attention