Annual Disclosure of Budget Management Scores by Ministry... Close Monitoring of Yoon Administration's National Projects

'Financial Project Performance Management Promotion Plan' Reported at Cabinet Meeting
45 Ministries Set and Disclose 105 Performance Indicators
Focused Management of 12 Core Financial Projects Reflecting Yoon Government Vision

[Asia Economy Sejong=Reporters Kim Hyewon and Lee Junhyung] Going forward, the Ministry of Economy and Finance will set the per capita Gross National Income (GNI) and the ratio of managed fiscal balance to Gross Domestic Product (GDP) as representative performance indicators and disclose annually to the public whether these targets have been achieved.

The Ministry of Education will manage the total private education expenses for elementary, middle, and high schools; the Ministry of Agriculture, Food and Rural Affairs will manage the farm income growth rate; and the Ministry of Health and Welfare will manage the relative poverty rate. In total, 45 ministries will directly manage 105 representative performance indicators. This can be seen as the financial operation "report card" of each individual ministry.

On the 3rd, the Ministry of Economy and Finance reported this content at the first Cabinet meeting held this year as part of the "2023 Fiscal Project Performance Management Promotion Plan."

Based on the five-year "2022-2026 Fiscal Project Performance Management Basic Plan" established last August following the revision of the National Finance Act in December 2021, the Ministry of Economy and Finance has released the first annual plan this time.

This year's fiscal project performance management will focus on four major areas: ▲performance target management ▲project performance evaluation ▲core fiscal projects ▲infrastructure expansion.

First, performance target management, which sets representative performance indicators by ministry and publicly discloses the results, targets the 45 central administrative agencies under the Government Organization Act. Regarding the selection criteria, the Ministry of Economy and Finance explained, "Among 58 ministries, we considered the nature of their work and budget size." So-called power institutions such as the Presidential Secretariat, Presidential Security Service, National Assembly, Supreme Court, Constitutional Court, Board of Audit and Inspection, and Corruption Investigation Office for High-ranking Officials were all excluded.

Each ministry submitted 1 to 5 representative performance indicators to the Ministry of Economy and Finance after review by their own evaluation committees, resulting in a total of 105 indicators. Data such as performance indicators, responsible persons, target and actual values, overseas comparisons, and related statistics will be disclosed as infographics. The Ministry of Economy and Finance Minister is required to report the results of performance target management, including achievement rates by ministry, at the Cabinet meeting in the first half of this year.

To minimize administrative burden and make it easier to understand each ministry's performance, the total number of performance indicators across all ministries will be reduced from about 1,000 to fewer than 500. Performance indicators per program, which were previously 2 to 3, will be reduced to 1, and the average number of performance indicators per ministry will be cut from 18 to 8 or 9.

Jung Heegap, Director General of Fiscal Management at the Ministry of Economy and Finance, said, "If each ministry publicly discloses about 3 to 5 representative performance indicators, the general public will be able to easily understand the actual report card of the ministry." He added, "We tried to reflect the ministries' priorities as much as possible during the process of finalizing the representative performance indicators, and in discussions with the Ministry of Education, almost all performance indicators were changed."

The project performance evaluation system currently operated by six ministries will reduce overlap under the principle of "one project - one evaluation." Evaluations of job projects (Ministry of Employment and Labor) and small business support projects, which overlapped with fiscal project self-evaluations, will be excluded from the self-evaluation targets starting this year.

However, a "common evaluation item" will be introduced into the individual evaluations of the six ministries. Essential items for fiscal project evaluation will be designated as "common items," while items reflecting the purpose of individual evaluations will be reorganized as "individual items."

To strengthen budget feedback based on evaluation results, the evaluation unit will be unified from "unit projects" to "detailed projects." This aims to resolve the issue of "discrepancy between evaluation results and budget allocation," where budget cuts are applied to detailed projects with good performance within unit projects rated as unsatisfactory. Director Jung said, "Overlapping evaluations by ministries are burdensome, and in other ministries, budget feedback is not working well. To properly implement feedback, evaluation cycles and methods must be commonly applied."

The principle of restructuring expenditures for a certain percentage of total evaluated projects, previously applied only to fiscal project self-evaluations, will be expanded to all evaluation systems. Additionally, if a project receives an unsatisfactory rating for two consecutive years, it must submit a plan for institutional improvement, and if it receives unsatisfactory ratings for three consecutive years, the project will, in principle, be abolished. This strengthens management of annually underperforming projects.

The three major areas and 12 core fiscal projects reflecting the Yoon Seok-yeol administration's national vision will be closely managed for five years starting this year. Key themes include "eliminating social insurance blind spots for vulnerable workers (artists, special-type workers, etc.)," "supporting youth employment and asset formation," "supporting semiconductor workforce training, technology development, and commercialization," "improving working conditions for military personnel," and "climate change response official development assistance (ODA) projects."

To support this, dedicated performance management teams composed of private experts, the Ministry of Economy and Finance, and relevant ministries will be formed for each project. Over the next five years, they will conduct full-cycle intensive management including execution monitoring, resolving difficulties, performance management, and budget allocation to achieve early results. However, while core projects will be prioritized for performance management, they may be replaced by candidate projects depending on changes in management effectiveness and other circumstances. Performance information will be disclosed annually through the "Open Finance" website.

Director Jung said, "The 12 core fiscal projects are characterized by year-round performance management over five years, deriving investment directions and feeding back into the next year's budget."

This content was produced with the assistance of AI translation services.