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the MPB specifying objectives, strategies, and indicators. However, these were implemented on the basis of a State Council decision, not law.

3. Legal basis for the establishment and the powers of the actors in the budget system

3.1. The executive and the legislature

3.1.1. Overview

Korea is a unitary State with a central government and two tiers of local government. It has a presidential system, in which the President is the head of State. The Constitution states that executive power is vested in the executive branch headed by the President (Art. 66). The legislature (the National Assembly) has one chamber and its main functions are to oversee executive power and enact laws, including approving the annual budget. The National Assembly, however, has a limited role in amending the draft budget since the Constitution bars the National Assembly from creating a new expenditure item or increasing the budget estimates without the consent of the executive.

3.1.2. Roles and responsibilities of the State Council and individual ministers

The Constitution establishes the State Council9 as the highest decisionmaking organ in the executive (Constitution, Art. 88). The State Council, whose head is the President, comprises the Prime Minister, the Minister of Finance and the Economy (MOFE), the MPB and other ministers (no more than 30 and no less than 15), and deliberates on important fiscal policies that fall within the power of the executive including draft budgets, settlement of accounts, basic plans for disposal of State properties, and contracts incurring financial obligations on the State (Constitution, Art. 89; Government Organisation Act, Art. 12). Ministers are individually responsible – they are not legally required to take collective responsibility for decisions of the State Council.

3.1.3. Establishment of ministries and executive branch agencies

Central government organisations, including ministries, are established and their roles are defined according to the provisions of the Government Organisation Act 1948 (GOA), as amended. Reorganisation of existing central government organisation is also governed by the GOA. Therefore, the National Assembly has strong authority over the establishment or reorganisation of government ministries. Within the executive, the responsibility for fiscal management and control is shared between three ministries: the MPB, the MOFE, and the Ministry of Government Affairs and Home Administration (MOGAHA). MPB is primarily responsible for budget formulation, management

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and execution. MPB also oversees and co-ordinates the privatisation and restructuring programme for State-owned enterprises (GOA, Art. 23). MOFE is responsible for preparing the macroeconomic outlook and revenue projections (GOA, Art. 27). The execution of the central government budget during the course of the year is controlled by the budget apportionment plan set by MPB and the monthly financial plan by the MOFE, while the Treasury Bureau of MOFE is in charge of releasing the necessary funds. The MOGAHA is responsible for local government finance and administration (GOA, Art. 33).

Line ministries are responsible for preparing their own budget proposals, submitting them to the MPB and executing the budget approved by the National Assembly and apportioned by the MPB, under the provisions of the GOA and the BAA. During the preparation of budget proposals, they are required to co-ordinate their policy priorities within the guidelines for budget preparation provided by the MPB. Line ministries have very limited managerial discretion to shift budgetary outlays from one budget category to another.

The Act Related to the Establishment and Operation of Executive Agencies 1999, as amended provides special rules for executive agencies, whose objectives are to enhance administrative efficiency and the quality of administrative services. In 2004, 26 executive agencies had been created under this Act.10 Agency chiefs are recruited by open competition, and autonomy is provided to them for personnel, organisation and budget operation. They are guaranteed independence in running the organisation while obliged to bear responsibility for their performance. An agency chief is provided with a considerable degree of latitude in appointing and transferring employees, hiring contracted employees and making decisions on bonus payments. To secure budget autonomy, the executive agencies are run under the Executive Agency Special Account, which features corporate budget accounting methods and a more flexible budget execution than those for other general administrative organisations. An agency chief is required to report its operation plan to the parent ministry, but is not obliged to submit its performance report to the National Parliament.

3.1.4. Responsibilities of senior civil servants

The responsibilities and roles of all civil servants are governed by the National Civil Servant Act 1949 as amended. There is no special law pertaining to responsibilities and roles of senior civil servants. The civil service system is based on the merit principle (Art. 26). Appointments of civil servants are made in accordance with their knowledge, skill and ability, through examinations, performance records and professional qualifications. Any civil servant is required to carry out his/her duties in the interest of the public and exert his/ her utmost effort in the performance of his/her duties. They are not allowed to hold positions in private companies or other profit-oriented organisations or