Many recommendations have been applied and promoted
Speaking at the opening of the conference, Deputy Minister Vo Thanh Hung affirmed that payment for public expenditure is a key content of public financial management. In addition to the achievements, through public expenditure assessment, we also recognize the limitations, difficulties and challenges for public financial management, trends in changes in the structure of overall budget expenditures as well as in some areas.
The Public Expenditure Assessment Report has made specific recommendations to support policy making for the allocation, management and use of the state budget resources in an effective manner, contributing to socio-economic development.
According to Deputy Minister Vo Thanh Hung, the Public Expenditure Assessment Report 2014 is the fourth time that the Ministry of Finance has coordinated with ministries, government agencies, donors and localities for implementation. The Ministry of Finance cooperated with the Ministry of Education and Training, the Ministry of Health, the Ministry of Transport, the Ministry of Agriculture and Rural Development, the Ministry of Science and Technology with the localities of Lao Cai, Hai Phong, Quang Nam, HCM City and Can Tho.
The report includes three main content groups: an overview of public expenditure assessment, public expenditure assessment in five key sectors (transport, agriculture, health, education and training, science and technology), public expenditure assessment of the five above-mentioned provinces and cities.
Through the analysis and evaluation of scientific methods by domestic and international experts, the report shows Vietnam’s achievements in the 10-year period (2004-2014).
|Deputy Minister of Finance Vo Thanh Hung speaks at the conference.|
“Notably, although the global and domestic economy is affected by financial and monetary crisis in the 2009-2011 period, Vietnam still maintains growth and increases revenue by restructuring budget revenues, revising tax administration policy in a simple manner, enhancing transparency, and preventing revenue loss. The State budget expenditures were restructured in the direction of supporting growth, saving recurrent expenditures, ensuring social security, gradually renovating management in the direction of increasing financial autonomy, and improving efficiency of state budget expenditures,” Deputy Minister Vo Thanh Hung said.
However, Vietnam suffered from difficulties and challenges in development. The report also makes 68 recommendations to help the Government, ministries, government agencies and localities consider and select priorities in public financial management reform to increase efficiency.
After announcing in 2017, the Prime Minister assigned the Ministry of Finance to lead and coordinate with ministries, central and local government agencies implement recommendations, and periodically report on the results to the Prime Minister.
Many recommendations of the report have been legislated and put into practice, promoting efficiency in the development of the 5-year national financial plan, the medium term public investment plan, and the three-year national financial plan, the new Law on Public Debt Management and guiding documents, state financial statements, the legal framework, and creating favorable conditions for attracting foreign investment resources, focusing on investment in transport corridors, key roads, highways, and clearing congested areas.
“Currently, 96% of the 68 recommendations have been implemented, of which, over 60% of these recommendations have been completed, and only 4% of those are studied to apply in line with the Vietnam’s political and economic status,” the Deputy Minister said.
The report also promoted the efficiency in advising the Government on management policy making, and reform of public finance.
Improving quality and efficiency of public investment
At the conference, Steffi Stallmeister, Operations Manager for the World Bank in Vietnam said that the Vietnamese economy is still highly resilient, but the economy has also been affected by the fourth outbreak of the pandemic.
Vietnam has experienced the largest economic shock over the past 40 years. In 2021, Vietnam’s GDP is forecast to reach only 2-2.5%, lower than the previous growth rate, said the World Bank’s representative.
According to the World Bank’s representative, the economic recovery will be the top priority in the near future, of which a high vaccination rate plays an important role in economic recovery. However, tight fiscal policy, sharp reduction in recurrent and investment expenditures has affected economic recovery.
The government has launched fiscal stimulus packages. However, these packages have not always been efficient. Therefore, Ms. Steffi Stallmeister said that there needs to be stronger fiscal support measures. The public financial management system needs to be developed in a more harmonized and unified manner.
“The good news is that Vietnam has enough fiscal space to do that, for example, public debt is at 44% of GDP, lower than the target of 60% set by the National Assembly. Therefore, the Government can spend more and spend more effectively,” Ms. Stallmeister said.
To do this, the World Bank representative offered some suggestions. First of all, the social security system needs to be strengthened. This is an important task for handling the aftermath of the pandemic. The support level in social support programs should be increased, ensuring that those affected by the Covid-19 pandemic as well as natural disasters are fully supported.
“Secondly, before spending more, it is necessary to improve the quality and efficiency of public investment so that fiscal policy can have a positive impact on economic recovery. The disbursement of capital of the public sector in three quarters only reaches 50%”, Ms. Stallmeister said.
According to Ms. Stallmeister, Vietnam’s limitation is not fiscal space but its rigidity in efficient capital use. The improvement of flexibility in the use of capital should be a priority, and approval processes need to be more harmonized and unified. It is necessary to speed up the planning, bidding and disbursement of public investment capital.
She said that the institutional reform has not yet been implemented effectively, Vietnam may not achieve the goal of becoming a high-income economy by 2045.