Preliminary Feasibility Study Overhaul Aims to Capture Value Beyond Numbers

The preliminary feasibility study (PFS) system, born as a byproduct of overcoming the 1999 foreign exchange crisis, has meticulously evaluated some 1,000 projects over the past 27 years, filtering out reckless populist spending. It has served as the "last bastion" safeguarding fiscal soundness. Over a period long enough for mountains and rivers to change nearly three times — a Korean expression for roughly 30 years — Korea's economy grew dramatically, with gross domestic product increasing more than fourfold. Yet the country simultaneously faces unprecedented structural crises of low birthrates, an aging population, and the disappearance of rural communities. No matter how excellent a system may be, it risks becoming an obstacle to sweeping change if it fails to keep pace with the times. Calls are growing louder that the PFS system can no longer adequately reflect rapidly shifting economic and social conditions or on-the-ground demands using outdated and rigid criteria of the past.

The government has decided to undertake a major overhaul of the PFS system. This reform goes beyond simply lowering the screening threshold. It is focused on securing "strategic flexibility" so that fiscal resources can be deployed to where they are needed in a timely manner. Three core strategies have been presented to ensure that the criteria for fiscal investment fully capture "value beyond numbers" — the quality of people's lives and balanced regional development — rather than resting on simple economic feasibility assessments alone.

First, responding to the crisis of regional depopulation and pursuing balanced development have been placed as top priorities. The difficulties of regions that had been marginalized in benefit-cost (B/C) assessments due to population decline are now actively reflected. Specifically, for depopulation areas, the weighting for economic feasibility will be lowered by 5 percentage points while the weighting for regional balance will be raised by 5 percentage points. A new evaluation category called "balanced growth impact" will be established for construction projects including social overhead capital (SOC), allowing close examination of regions' potential for self-sustaining growth. Through the newly created "balanced growth impact assessment," outstanding projects will receive incentives, serving as a powerful engine for locally driven growth.

Second, the government will firmly support the pursuit of core national priorities. Projects directly linked to future growth engines — such as carbon neutrality and responses to low birthrates — will receive strengthened social value assessments to enable swift and timely implementation. Moving away from one-size-fits-all criteria, the government will establish "project-customized assessments" that carefully examine the characteristics of individual projects and capture multifaceted ripple effects across economic, social, and environmental dimensions. In the economic feasibility analysis process, benefits directly tied to "quality of life" will be broadly reflected, so that the PFS becomes not a "hurdle" that holds projects back but a "catalyst" that enhances their completeness.

Lastly, the PFS thresholds will be brought in line with reality. The criteria of "total project cost of 50 billion won and government funding of 30 billion won," maintained for 27 years, will be raised to "total project cost of 100 billion won ($74 million) and government funding of 50 billion won ($37 million)" for SOC projects such as roads and railways, reflecting price increases and the expansion of project scale. For smaller projects, the autonomy of local governments will be respected, while capacity will be concentrated on core national projects to enhance the expertise and speed of reviews. Additionally, projects that simply replace aging systems and equipment will be exempted from the PFS to reduce administrative waste.

Since fiscal resources are limited, they must be used efficiently and with a future-oriented perspective. This reform package is a first step toward meeting the demands of the times while preserving the fundamental value of fiscal efficiency. The Ministry of Planning and Budget plans to revise and implement related guidelines as quickly as possible so that this overhaul can take root swiftly on the ground. We will ensure that the nation's precious tax revenues are deployed with speed to every corner of Korea where they are truly needed.