In recent years, the financial stability of public institutions has been jeopardized as the size of the debt liability has grown. If public institutions cannot amortize the principal with their own profits, the nation will have to support them or take over the debt liabilities with its budget. This situation will eventually become a threat to the financial stability of the nation.
The “Act on the Management of Public Institutions” and the “National Finance Act” require public corporations and quasi-governmental institutions to establish mid- and long-term financial plans to prepare stabilizing countermeasures in the event of a possible financial crisis.
To this end, in 2012, mid- and long-term financial management plans for 41 public institutions were submitted to the National Assembly for the first time. However, only the public institutions with a significant amount of assets were required to establish the mid- and long-term plans. As a consequence, public agencies like the Korean Racing Authority, which has little debt and a huge amount of assets, were asked to submit a plan, while vulnerable public institutions like Jeju Free International City Development Center or Korea Coal Corporation were excluded. Therefore, there must be revisions and amendments to the standards of the plan.
The National Assembly Budget Office evaluated the 13 major public institutions with large debts for their mid- and long-term financial management plans. As was the case with Korea Electric Power Corporation and Generator Subsidiary, or with Korean Railroad Corporation and Korea Rail Network Authority, errors like over-reporting the income and understating expenses when the expense of a public institution is the income of another agency have been corrected. The projected forecast of financial stability has also been re-evaluated. As with the examples previously stated, the National Assembly Budget Office not only pointed out the contradiction of exaggerated financial income and underreported cost estimation, it also evaluated mid- and long-term financial management plans for public institutions including Korea Land & Housing Corp, Korea Water Resources Corp, National Health Insurance Corp, Government Employee Pension Service, and Korea Deposit Insurance Corp.
Public Institution Evaluation Division
The “Act on the Management of Public Institutions” and the “National Finance Act” require public corporations and quasi-governmental institutions to establish mid- and long-term financial plans to prepare stabilizing countermeasures in the event of a possible financial crisis.
To this end, in 2012, mid- and long-term financial management plans for 41 public institutions were submitted to the National Assembly for the first time. However, only the public institutions with a significant amount of assets were required to establish the mid- and long-term plans. As a consequence, public agencies like the Korean Racing Authority, which has little debt and a huge amount of assets, were asked to submit a plan, while vulnerable public institutions like Jeju Free International City Development Center or Korea Coal Corporation were excluded. Therefore, there must be revisions and amendments to the standards of the plan.
The National Assembly Budget Office evaluated the 13 major public institutions with large debts for their mid- and long-term financial management plans. As was the case with Korea Electric Power Corporation and Generator Subsidiary, or with Korean Railroad Corporation and Korea Rail Network Authority, errors like over-reporting the income and understating expenses when the expense of a public institution is the income of another agency have been corrected. The projected forecast of financial stability has also been re-evaluated. As with the examples previously stated, the National Assembly Budget Office not only pointed out the contradiction of exaggerated financial income and underreported cost estimation, it also evaluated mid- and long-term financial management plans for public institutions including Korea Land & Housing Corp, Korea Water Resources Corp, National Health Insurance Corp, Government Employee Pension Service, and Korea Deposit Insurance Corp.
Public Institution Evaluation Division