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Ministry of Planning and Budget
Ministry of Planning and Budget

The Problem

Solution and Key Benefits

 What is the initiative about? (the solution)
Since 1994, the Korean government has introduced and operated various systems for fiscal management innovation including National Fiscal Management Plan, Top-down Budgeting System, and Fiscal Performance Management System. So far, it is difficult to evaluate their performance, however, in terms of fiscal innovation performance for the people, it is obvious that the performance should be evaluated by the people.

The Ministry of Planning and Budget (MPB), a fiscal authority in Korea, has established the Budget Misuse Reporting Center, which accepts reports regarding budget misuse by the people and deals with them. Now, 309 reporting centers in central ministries, local governments and public entities are operating to receive budget misuse reports. The Budget Misuse Reporting Center is the result of the government’s hard work for fiscal management innovation, which make the people feel the innovation not only in a direct way, but also in the field that the real budget is spending.

Furthermore, the budget misuse cannot be prevented solely by the government through Budget Misuse Reporting Centers. Saving the budget is a duty of the government, however, if the people do not accept the government’s efforts reasonably, it is no different from meaningless. Therefore, the MPB has promoted people’s active participations to revitalize budget misuse reports through a variety of public relations and campaigns, and searched cases with high possibility of budget misuse by connecting with civil organizations doing budget watch activities. At the same time, by holding forums regularly in cooperation with civil organizations and examining the reported cases with the joint research team, the MPB focuses on its efforts in devising fundamental improving plans from the public’s perspectives by sharing budget misuse cases and developing improvement plans. At the Cabinet meeting in November 2006, the MPB reported and confirmed the fundamental measures to prevent replacement of sidewalk blocks at the end of the year, which is called ‘December fever’ in Korea.

To continue to support the government’s efforts in preventing budget misuse and civil organizations’ activities in watching the budget, the ‘Budget Waste Zero System through the People’s Participation: Sebaro’ is established based on the cooperation between the government and civil organizations.

In addition, to encourage the people’s participations, the reward system is introduced from this year, and it provides incentives within 10% of the saved amount to those who contributed to the budget reduction or revenue increase through reporting the budget misuse cases. Earlier this year, ten million won (KRW) was rewarded to the person for the first time.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
Dec. 2004 Established the Fiscal Efficiency Improvement T/F in the MPB, and reported the analysis of budget misuse cases mentioned in the media to the Presidential Blue House twice

May. 2005 Accepted the people’s reports on the budget misuse and investigated the cases, and established the budget misuse prevention system to prepare improvement plans
- The Fiscal Efficiency Improvement Division was established in the MPB and 309 online budget misuse reporting centers were opened in central ministries, local governments and public entities

Jun. 2005 Held the joint forum regarding countermeasures for budget misuse with civil organizations doing budget watch activities (Citizens Action Network, Citizens` Coalition for Economic Justice, etc.)

Aug. 2005 Investigated the misused cases of budget with the person who reported and members in the civil organizations

Jan. 2006 Opened the Budget Misuse Reporting Call Center (82 2 1577 1242) in the MPB and appointed 11 former government officials with rich experience in formulating the budget as expert advisors

Feb/ Aug. 2006 Held the joint forum with civil organizations including the Citizens Action Network, the Citizens` Coalition for Economic Justice, the Korea Taxpayers Association, and the Green Korea United

Nov. 2006 Held the joint forum with the local government (Incheon City) and the local civil organizations

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
Recently, the expectation of the government’s active role in finance such as meeting the people’s basic needs for welfare and preparing countermeasures to the population aging and low fertility has been increasing in Korea. Meanwhile, the tax increasing rate is reduced in accordance with consistent and stable growth of revenue, and it is urgently needed to manage the finance more effectively due to the limit of tax revenue increase by reining in not essential and urgent expenditures and intensive restructuring of programs with poor performance, etc.

Furthermore, the government’s budget misuse cases have been constantly mentioned by the media, civil organizations, and National Assembly. In the Citizens Action Network, they awarded prizes by the name of ‘The jar with a hole’ to the wasteful fiscal projects about 30 times since 2000, and some media reported the article, ‘National budget, we cannot leave it as it is’, 23 times in 2004.

According to the surrounding cases of misused budget that we can easily find such as regular replacement of sidewalk blocks at the end of each year and upscale government buildings, citizens felt great disappointment over the government’s fiscal management. It is directly connected to fiscal credibility of the people to the government, therefore, developing the detailed and practical improvement plan for wasteful expenditures is as important as innovating the fiscal systems.

However, despite repetitive indications from the outside, the government kept its passive actions such as transmitting the work to the line ministries rather than improving it fundamentally and actively due to the negative image of budget misuse, ambiguous concept of misused, etc. Thus more comprehensive improvement plan was urgently needed, but it faces many difficulties.
Accordingly, the Korean fiscal authorities not only reformed the current budget formulation work and fiscal management system, but also established budget misuse prevention system at the government level to make the nation feel that the government is executing the budget in a transparent way and with a sense of responsibility. 309 online budget misuse reporting centers were opened in the central ministries, local governments and public entities to accept and manage the people’s reports at all times. In addition, the booklet for budget misuse prevention including the judgment standard in misused budget, acceptance of reports, and transaction process was distributed to handle the reports without delay and reasonably. The MPB opened the Budget Misuse Reporting Call Center, and appointed former government officials with rich experience in formulating the budget and varied experience in finance, construction, etc. as the expert advisors for report consultation, examination of cases with the person who reported, and preparation of improvement plan.

With the government’s efforts to prevent the budget misuse, though the cooperative relationship with civil organizations watching the budget, budget misuse cases have been detected and improvement measures are developed, shifting away form its initial passive countermove.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The purpose of budget misuse prevention is to decrease not required and urgent expenditures, increase the efficiency of fiscal execution by finding out waste factors and handling them, and improve the efficiency of fiscal policy by gaining the nation’s trust that the budget is executed in a transparent and effective way.
Firstly, the elimination of waste factors, which cause the nation’s distrust in finance, even they are a small amount. Most citizens find out the misused budget around their lives such as repetitive replacement of sidewalk blocks in front of their houses, upscale government buildings, and regular local festivals that only few people participate. These expenses may take a small part of the total budget, however, the nation will have distrust and antipathy in the national finance. Therefore, the fiscal innovation that the people can feel will be achieved by preparing and implementing the fundamental and feasible improvement plan.

Secondly, the revitalization of the people’s participation. Korea has managed various fiscal systems to prevent the budget misuse by stages. When the people report the misused case, the fact is verified through the examination and the retrieval budget will is returned to the national treasury. Furthermore, it will be reflected to the budget formulation of next year to prevent a repetition, and decrease the future expenditure by re-verifying the feasibility of fiscal programs, etc. Some of these processes will be performed with the people and all results of implementation will be opened to the public immediately to encourage the nation’s participation in fiscal management and improve the fiscal transparency.

Thirdly, the reduction of budget. During this year, the government saved about 130 billion won from the budget and future expenditure through the budget misuse reports. For instance, highway extension works between Yeoju and Yangpyeong, and overlapped budget in the bridge building. If the people participate more active and the government’s efforts to find out the misused cases will be continues, the reduced size of budget will be more increased, and the government will not stop these efforts until achieve the ‘Zero’ point in the budget misuse.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
The MPB implemented following gradual strategies to prevent the budget misuse and enhance the nation’s trust in finance.

First, the MPB opened to 309 online Budget Misuse Reporting Centers and established the Fiscal Efficiency Improvement Division in the ministry to take a leading role in managing the budget misuse cases, developing improvement plans, etc. In the Fiscal Efficiency Improvement Division, they make policies for prevention of budget misuse, handle the reports comprehensively and systematically, manage the reward system for the people’s active participation, and plan the connection with civil organizations. In addition, for more professional and systematic management, they appointed the expert advisors and established the Budget Misuse Reporting Call Center (82 2 1577 1242).

Next, the MPB strengthened its connection with civil organizations across the nation, which are performing budget watch activities. Through the regular forums with the Citizens Action Network, the Citizens’ Coalition for Economic Justice, the Korea Taxpayers Association, etc., a cooperative discussion including exchanging opinions about the misused cases of budget and considering improvement plans has been progressed. As a result, the problem of local governments to attract the location for TV dramas was suggested, thus some are rejected in the local assembly through economical efficiency examinations. Furthermore, it contributed to decrease misunderstandings with civil organizations by conducting the verification of budget misuse cases together, etc.

Lastly, to maintain the integrated cooperation relationship between the government and civil organizations for the prevention of budget misuse, the MPB promoted the project with a brand name. The brand name is ‘Budget Waste Zero System through the People’s Participation’ and the brand logo is ‘Sebaro’ with a primary meaning of ‘Spend the budget in a right way’. The brand mission is ‘Economy and Efficiency with our Engagement: 3E’ and its code of conduct is ‘ESCape from Waste’, which are representing Essential (spend the budget in the essential place), Saving (save the budget without waste), and Common (spend for all). The slogan for ‘Sebaro’ is decided as “Click! Sebaro, Enter! Developed Korea’ from the public subscription of 14, 253 people

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The four performance indices (ARTS) in the Budget Waste Zero System were created and it is measuring the performance periodically in regard of Awareness of Sebaro, increasing rate of Reports in the misused budget, Trust in finance, and Saving through decrease of fiscal expenditure and revenue increase. The awareness and trust are measured by the professional polling agency every year, and the increasing rate of reports and size of reduced expenditure are checked every month by the government representative (Fiscal Management Inspection Group).

By later this year, the performance indices already exceeded the initial target. In the awareness, the initial target of 20% is achieved from 2% of last year, and 84% is recorded among experts in finance. The increasing rate of reports is rose from 80.9 reports in 2005 to 130 reports this year exceeding the initial target of 97 reports (20% increase). In terms of trust in finance, it is enhanced from 5.1% last year to 13.6% in 2006 in excess of 10% of its target, and the size of decreased expenditure significantly exceeded its initial target amount of 70 billion from 3.68 billion in 2005 to 130 billion in 2006.

The view of civil organizations on the government has been improved. Earlier this year, when the Budget Misuse Reporting Call Center was launched, the civil organizations appeared to be skeptical about the cooperation with the government. However, after several joint forums and investigations of the cases, they commented, “It seems like the MPB played the role of civil organizations instead” (Aug ’05, The Citizens Action Network in the joint forum). Furthermore, those who reported the cases sent letters of thanks for quick process and notification as a response to the minister’s appreciative letters with the result of their reports.

Until now, it is difficult to say that tangible results are produced, but many efforts are taken in the government constantly to prevent the budget misuse.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
The MPB established the Fiscal Efficiency Improvement Division in the ministry (July ’05) for permanent and constant implementation of budget misuse prevention work. Accordingly, the government can proceed with its comprehensive and responsible duty including unified management of the people’s reports and development of improvement plans.
In addition, through the ‘Budget Waste Zero System through the People’s Participation: Sebaro’, the systems for cooperation with civil organizations were prepared such as forums by quarters and joint investigation of reported cases.

It is unusual in overseas countries that providing the unified contact point for budget misuse report and its management by the government, and improving systems to prevent a repetition. In most countries, it is showed that budget watch activities are leaded by the civil organizations and there is no example of constant cooperation between the government and civil organizations (July ’05, Joint Case Studies of Foreign Developed Countries in Budget Misuse, Maeil Business Newspaper).

It is expected that foreign countries will adopt this policy for reduction of wasteful expenditure and enhancement of the nation’s trust through the people’s direct participation and the government’s constructive efforts.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
The success of the ‘Sebaro’ depends on how to improve the people’s participation and interest.

The budget misuse reports has increased after opening the Budget Misuse Reporting Call Center in January of this year and due to promotions at the appropriate time to the newspapers and radios. However, report cases began to decrease at the end of the year after the PR was finished, therefore, more active public relations and incentives for the people is required.
Increasing the awareness of ‘Sebaro’ is set as the first thing to implement, and the MPB promoted it by broadcasting on TV for the first time. Moreover, the reward regulation is established and executed to provide a 50 thousand won gift certificate for those who reported right cases.

Results of ‘Sebaro’ public relations showed that the number of reports increased in proportion to PR. 20% of reports was recorded in the intensive PR period (TV PR, June). Along with opening of the Budget Misuse Reporting Center, the annual PR plan was established with the limited PR budget (1.6 billion won) for effective execution, however, it placed more emphasis on the high priced TV rather than its even distribution.

Therefore, it is planned to increase the PR budget (500 million won) and implement the policy PR through a variety of media besides TV in regard of budget misuse prevention for effective promotion by ages and social classes from next year.

Contact Information

Institution Name:   Ministry of Planning and Budget
Institution Type:   Government Department  
Contact Person:   Ho-Sung Park
Title:   Deputy Director  
Telephone/ Fax:  
Institution's / Project's Website:  
E-mail:   omarhs@mpb.go.kr  
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