support for the reform package. His broad endorsement of MTEF, and of PB in particular, gave momentum to the reform effort. The president showed strong PB support by requiring ministers to use objective performance information in their annual plans and reports. His insistence convinced government officials that there would be no turning back under the incumbent president.

# **_Budget Ties and Effective Implementation_**

Important to reform success was finding a way to incorporate PB into the budget decisionmaking process, despite weak interest in PB on the part of politicians and bureaucrats. Although PB began with program performance goals and indicators, policy makers soon realized they needed to move beyond goals and indicators. In order to be an effective decision-making tool, PB needed a prioritization process. Fortuitously, United States officials had developed the Program Assessment Rating Tool, and the Ministry of Planning and Budget benchmarked this tool, with Korea-specific adaptations. By using a standardized checklist, each program was given a rating and budget allocation was guided accordingly.

In developing the prioritization process, called the Self-Assessment of Budgetary Programs, the Ministry of Planning and Budget realized it could incorporate multiple tools that would serve unique purposes in the review process. The ministry found that the annual performance plan and report could be used for the purpose of monitoring and the selfassessment could serve the role of periodic reviews. The ministry also realized that the existing ad hoc program evaluation could be a part of the PB system, providing in-depth evaluation for selected programs. As a result, the Korean government is now equipped with a three-layer PB system.

The introduction of PB brought about the many changes.<sup>15</sup> First, performance information now affects budget allocation: Programs with poor ratings are more likely to receive budget cuts. Park (2011) empirically showed a significant correlation between a program’s rating and the probability of a budget cut, although the significance and strength of this correlation varies over time. Second, performance information is reflected at every stage of the budget process. It is used by the line ministries, the central budget authority, and the legislature. The patterns of interaction may be changed in the future as the legislature increases its engagement, but the link between performance information and budget allocation will likely be maintained. Third, there is a tendency to move away from incremental budgeting. Park (2011) also found that once programs are subject to the review process, the sizes of their budget changes are bigger, compared to changes for programs that did not go through the review process. This suggests that budget officials become more aggressive in budget adjustments when they have new performance information at hand.

Notwithstanding their initial skepticism, budget officials within the line ministries are beginning to rely on the new performance information. According to a survey conducted in Korea by the National Assembly Budget Office, 70 percent of budgeting personnel within line ministries responded with neutral or positive answers to the question, “Are assessment results from Self-Assessments of Budgetary Programs useful in the preparation of budget

> 15 For more detailed discussions and empirical evidence, see Park (2011).

22