HCMC – Vietnam’s financial and budgetary management decentralization is still complicated and inefficient, said experts at a conference recently held in HCMC by the National Assembly (NA) Finance and Budget Committee.
The “Decentralization of socio-economic and State budget management in Vietnam” was part of the “Boosting decision making and budget supervision capacity of Vietnamese elected bodies” project sponsored by the United Nations Development Program (UNDP).
According to Nguyen Van Thuan, former head of the NA Law Committee, the regulations on economic, financial and budget management are unclear and overlap with each other.
Citing the 1992 Constitution as an example, he said the Government is the only body to “manage the building and development of the national economy” as stated in Article 112. On the other hand, the NA has a similar mission of “deciding on the country’s socio-economic development plan” under Article 84.
Moreover, the authorizing of the NA to make decisions on the national and monetary polices as regulated in Article 84 of the Constitution is unworkable. In reality, many issues relating to monetary policy like money in circulation, currency value, exchange rate, inflation, foreign reserves and monetary market management are decided by any of the NA, the Government and the central bank.
Thuan said the NA now decided on the State budget estimates and settlements at both local and central levels, leading to overlap and making things complicated.
Regarding budget planning, Vo Hong, chief of the economic and budgetary department of the People’s Council of Quang Nam Province, said a trick which local authorities often resort to in order to dodge the regulation is to set a highly achievable growth target.
This practice is ascribed to the current budget management mechanism. If a province’s budget revenue surpassed the approved target, it would add 50% of the surplus to its budget and use the other half for wage reform.
This explains why most provinces often record excessively high revenues, 20-30% above targets, causing a State budget deficit.
In addition, the State budget revenue planning in the provinces is still heavily depended on the revenues brought by decentralization, and the available revenue sources such as land and mineral resources.
Hong said such revenues were unsustainable as natural resources would become depleted and the environment would deteriorate.
