Achieving Medium Term Expenditure Framework Reform : A Case Study of Korea

Abstract

A medium-term expenditure framework is
 considered an essential element of public financial
 management reform, and this framework has been adopted in
 many countries. However, in terms of implementation in those
 countries, the medium-term expenditure framework continues
 to present a significant challenge within the budget
 process. This case study provides an inside story of
 medium-term expenditure framework reform in the Republic of
 Korea and offers some suggestive evidence about the impact
 of the reform. Drawing on theories of change management, the
 study explores how actors within the Korean government
 created acceptance of reform needs among relevant
 stakeholders, how they handled various challenges throughout
 the reform, how they built capacity among stakeholders, and
 how they institutionalized the reform measures that were
 consistent with stakeholder incentives. The case highlights
 the following implications: (1) having strong support from
 top decision makers is essential to successful medium-term
 expenditure framework reform; (2) finding ways of
 integrating a medium-term expenditure framework into the
 budget process is critical; and (3) making the framework
 stable and sustainable requires both capacity building of
 relevant stakeholders and significant organizational restructuring.