Chapter

Reforming The Fiscal Management System in Korea

Youngsun Koh

in Fiscal Policy and Management in East Asia

Published by University of Chicago Press

Published in print November 2007 | ISBN: 9780226386812
Published online February 2013 | e-ISBN: 9780226387062 | DOI: http://dx.doi.org/10.7208/chicago/9780226387062.003.0010
Reforming The Fiscal Management System in Korea

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The Korean government has maintained a strong fiscal discipline since the early 1980s, keeping its budget more or less in balance and its debt at low levels. The fiscal balance showed large deficits after the economic crisis of 1997, but returned to surplus in 2000 thanks to the buoyant economy and the resumed consolidation efforts. The surplus has continued since then. Fiscal soundness is a characteristic common to many East Asian countries. Little has been known, however, about the working mechanism of fiscal policies in these countries. Korea is an interesting case in this regard because there is an indication that its fiscal discipline, which was firmly established under the authoritarian government of the early 1980s, is weakening these days with the democratization of Korean politics. This chapter reviews the development of public finance in Korea since the 1970s and how the country addressed the persistent budget deficit. It discusses the country's economic crisis and ballooning budget deficit, explains the Korean fiscal management system, outlines the recent reform efforts, and proposes ways to improve on these economic reforms.

Keywords: Korea; fiscal management; fiscal balance; budget deficit; public finance; economic crisis; economic reforms

Chapter.  17235 words.  Illustrated.

Subjects: Business and Management

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