ministry’s requirement that line ministries present outcome information to show program effectiveness.

A second challenge came from within the ministry. It was not easy to convince budget officials in the ministry’s Fiscal Planning Unit to participate fully in the review process, as the new reforms created a particularly heavy burden for them.<sup>11</sup> However, cooperation from the Fiscal Planning Unit was very important, because only Planning Unit officials had dealt with the budget issues of individual programs. Information from the Planning Unit could help to correct asymmetric information problems with line ministries.

To facilitate the cooperation of Fiscal Planning Unit officials, the ministry adjusted the timing of the review process to avoid the budget office’s busy season. However, a lack of incentives made it difficult to fully incorporate budget officials into the review process.<sup>12</sup> Thus, the Performance Management Bureau used its own resources to collect as much information as possible, using information from the Board of Audit and Inspection, the National Assembly, and the National Assembly Budget Office; reports from research institutes and civil society organizations; and media sources.

To overcome the performance information problems, training and consulting services were provided to line ministries. The Korea Institute of Public Finance customized those services and also produced a manual to help line ministries develop proper performance indicators. The manual included general principles of developing good indicators and then, for each program type, listed concrete guidelines and customized examples of indicators.

After the first year, a taskforce for improving the Self-Assessment of Budgetary Programs was formed to identify problems and find ways to improve the review process. The team consisted of officials from the administration, including the Ministry of Planning and Budget and line ministries; researchers from the Korean Institute of Public Finance; and academics. The task force suggested a multi-faceted agenda to guide the next year’s review process. First, the review process for earmarked funds, formerly a separate process, was merged into the Self-Assessment of Budgetary Programs. This reduced administrative burdens on line ministries and the Ministry of Planning and Budget. Second, a re-evaluation process was established to reflect significant changes made to previously reviewed programs. Since onethird of program was evaluated every year, a program should wait for three years to get next evaluation. To reflect significant improvement in a particular program, line ministries could opt for additional evaluations rather than wait for regular three-year evaluation cycle. Third,

> 11 In the previous system, budget officials’ workload was light at the beginning of the fiscal year and peaked during the second part of the fiscal year, when annual budget formulation was in full swing.  In contrast, under the new system, there was no off-season: The beginning of the fiscal year entails creating a medium-term expenditure framework and line ministry budget ceilings and reviewing the performance of government spending programs. Because requests for additional personnel are rarely honored in the government offices, officials complained that the new reform directly multiplied their workload.

> 12 This incentives problem is typical of matrix organizational structures, in which the same employees report on various projects to different supervisors, and there is little top-down hierarchy.  Unless a proper incentive is instituted, people tend to be less than fully cooperative with requests from horizontal organizational units.  In the Korean case, a main task demanded by the vertical Fiscal Planning Unit was developing the annual budget, while the task of completing Self-Assessments of Budgetary Programs was assigned by a horizontal unit, the Performance Management Bureau.  Therefore, it was not easy to induce the budget officials in the Fiscal Planning Unit to participate in the self-assessments.

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