WB, Vietnam publish joint Vietnam Public Expenditure Review
Hanoi (VNA) - The
World Bank and the Government of Vietnam on October 3 launched a joint report
titled “Vietnam Public Expenditure Review (PER): Fiscal Policies towards
Sustainability, Efficiency, and Equity”.
The
main purpose of the assessment is to inform fiscal policy decisions and reform
action plans of the Government, particularly in meeting growth, poverty
reduction, and global integration objectives.
The PER was undertaken by relevant
agencies of the Government of Vietnam, led by the Ministry of Finance in
collaboration with the Ministries of Planning and Investment, Education and
Training, Health, Science and Technology, Agriculture an Rural Development, and Transport, other
relevant central government agencies, and selected cities/provinces, including
Lao Cai province, Hai Phong City, Quang Nam province, Ho Chi Minh City, and Can
Tho city.
The review saw WB and international organization experts' contributions to the analysis and recommendations, in particular through sharing
international experience and information on global trends and good practices in
public financial management.
On the basis of a comprehensive analysis
of revenue, expenditure and borrowing policies in Vietnam during the 2011-15
period, the PER identifies state budget revenue and expenditure trends over the
past years, highlights achievements and points to areas for potential
improvement, key fiscal challenges, and strategic directions on fiscal
consolidation, and fiscal policy and governance reforms, in the short, medium and
long terms in Vietnam.
The review is undertaken as Vietnam
is experiencing emerging fiscal challenges, including narrower fiscal space,
rising public debt and concerns about the medium-term sustainability of the
current fiscal position. State budget revenue mobilization, particularly from
tax and fees, as a percentage of GDP has decreased, whilst public spending
needs continue to grow. In addition, the rapid pace of expansion, openness and
decentralization has made the economy more complex to manage.
The review aims to provide empirical evidence to answer three main questions: (i) how to create the fiscal space whilst ensuring fiscal sustainability; (ii) how to best align public spending with national priorities; (iii) how to strengthen accountability for results so that public spending has the greatest impact. Being the first joint review in 10 years, the PER comprehensively covers 15 specific chapters, including 5 cross-cutting topics, 5 heavy-spending sectors (which account for almost 50 percent of total state budget spending), and 5 provincial chapters; and an Overview that consolidates key messages across the chapters.
“In order to ensure fiscal sustainability, the National Assembly
of Vietnam has issued a Resolution requiring the reduction of fiscal imbalances
and thereby of budget deficit to 3.9 percent of GDP during 2016-2020 and no more than
3.5 percent in 2020," said Do Hoang Anh Tuan, Vice Minister of Finance.
"Achieving these targets will require
concerted efforts to boost revenue mobilisation, restructure and enhance
efficiency in spending, and strengthen the management of public assets and
liabilities, and of fiscal risks – at both central and local levels,” said Tuan.
“We
are pleased that this report provides concrete recommendations on policy
options in these regards,” he added.
“This PER comes at a critical juncture when Vietnam faces
important fiscal choices. We hope that the report has been providing a useful
analytical foundation for the Government and relevant stakeholders including
the National Assembly, in further developing its medium-term development,
fiscal and budget plans and priorities,” said Ousmane Dione, Country Director
of the World Bank in Vietnam.
“This process of joint review is in many ways
as important as the report itself. Because it is only through our dialogue that
analysis and ideas can be transformed into action, policies and real results.
Going forward, it will be important to ensure that the knowledge gained is
spread to a wider audience, through effective dissemination activities starting
with today’s launch, and follow-up engagements be taken on the implementation
of the recommendations," he said.
The report recommends 68 specific
policy measures that Vietnam can implement to achieve a gradual fiscal
consolidation while ensuring adequate fiscal space for investment and social
spending; and to improve efficiency of spending through restructuring budget
allocations between central and local government, capital and recurrent spending,
and reallocation within sectors.-VNA