Vietnam makes comprehensive strides in public financial management reform

Vietnam has achieved significant milestones in its public financial management (PFM) reforms, earning praise for its comprehensive progress across multiple areas. Source: Internet

The PEFA framework serves as a tool to measure performance, assess the strengths and weaknesses of a country’s PFM system, and support sustainable development. Vietnam conducted its first national-level PEFA assessment in 2013. Since then, the country has achieved notable milestones, particularly in institutional reforms, with the synchronized issuance of legal documents governing public financial management.

Highlights of this legislative overhaul include the promulgation of laws on the state budget, law on accounting, Law on state audit, law on public procurement, public debt management, law on management and utilization of state capital invested in enterprises, laws on management and use of public assets, law on tax administration, and law on public investment.

To evaluate the outcomes of these reforms and identify the strengths and weaknesses of central government PFM over the past decade, the Prime Minister authorized the Ministry of Finance to lead a repeat PEFA assessment. This effort aligns with updated international standards for PEFA evaluations and involves collaboration with ministries, central agencies, and local authorities.

The PEFA assessment was conducted with technical and financial support from the PEFA Secretariat, the Swiss Government, the Canadian Government, and the World Bank under the framework of the Public Financial Management Advisory and Analysis Program in Vietnam.

The report highlights significant and wide-ranging improvements in Vietnam’s PFM system, particularly in the following areas: enhanced fiscal discipline has resulted in reduced arrears in expenditures; the availability of more comprehensive expenditure commitment information has led to more effective treasury operations; improved access to fiscal information has strengthened budget transparency.

The report also emphasizes the comprehensiveness of budget coverage, aligning it with international standards. It highlights advancements in state budget management, which have improved the efficiency of public resource utilization through modern PFM tools.

Despite the progress, the assessment flagged several ongoing challenges, including the scale of off-budget revenues and expenditures at the central government level; limited fiscal risk monitoring across the public sector; weak connections between medium-term financial planning and public investment planning.

In response to these findings, the Ministry of Finance is working closely with ministries, agencies, and local authorities to address these challenges. By proposing targeted solutions, the government aims to further enhance resource management, safeguard national financial security, and support macroeconomic stability.

These efforts also seek to improve Vietnam’s sovereign credit rating, attract investment, and promote sustainable economic growth. The comprehensive reform of Vietnam’s PFM system not only strengthens the nation’s fiscal foundations but also positions it as a competitive and transparent economy on the global stage.