Ensure the consistency between sectoral plan, strategy and budget

1. Ensure the consistency between sectoral plan, strategy and budget PRSP Forum, April 2006

2. Introduction • Vietnam has developed and announced its CPRGS. Affirming Vietnam’s commitments in mainstreaming poverty reduction in economic development.

3. Ten-year Development Strategy CPRGS Five-year Plan National Targeted Program Public Investment Program Annual Plan The relationship between the Ten-year Development Strategy, CPRGS and Development Plans 1.1. Relationship chart:

4. 1.2 Ten-year Development Plan 2001-2010 The Vietnamese government has developed its ten-year socio-economic development strategy2001-2010: • Strategy on people’ s health; • National strategy on clean water and rural environment hygiene; • National strategy on reproductive health; • Strategy on Vietnam’s population; • National strategy on nutrition; • Master program on public administration reform; • National strategy on Vietnam’s women progress to 2010; • Strategies in education, science and technology and environment protection 2001-2010; • …

5. 1.3 Elaborating strategic goals of CPRGS in the five-year and annual plans for implementation. • The Five-year Plan for the whole national economy is developed by MPI based on the overall socio-economic development strategy, development strategy of sectors and fields with close cooperation of Central Ministries and agencies. • The Five-year Plan has received various opinions from Ministries, sectors, donors, international organizations and the public.

6. 1.4 Develop National Targeted Programs to concentrate resources on important goals, especially poverty reduction. Program on population and family planning; • Program on poverty reduction and employment; • Program on clean water and rural environment hygiene; • Program on the control and prevention of some social diseases, dangerous epidemics and HIV/AIDS; • Cultural Program; • Education and Training Program; • Anti-crime Program.

7. Programs supporting people in escaping from poverty : • Program on socio-economic development in disadvantaged, mountainous and remote areas; • Support program on eliminating cottage classrooms and building houses; • Support program on building houses for ethnic minority people, poor people in Central Highlands, mountainous areas, Mekong River Delta, etc.

8. 1.5 Public Investment Program is part of the Five-year Plan. • Public Investment Program is the State’s Investment Program consisting of investment projects within the state plan and funded by the state budget or credit. • Main objective of the Public Investment Plan is to build economic and social infrastructure to facilitate organizations, individuals inside and outside the country in expanding production, business and eliminating poverty.

9. 2. State budget is linked to socio-economic development plan aiming at economic growth and poverty reduction • Vietnam’s main plans are the socio-economic development plan and annual budget plan. • Budget plan is developed based on socio-economic development targets identified in the socio-economic development plan. 2.1 Estimate revenue based on projections for economic growth (GDP), price indices, related targets; legal regulations on state budget revenue.

10. 2.2 Estimating annual state budget expenditure in implementing the proposed socio-economic targets. • Allocate the annual state budget towards the direction of: • Development objectives of each sector and field; • Allocating budget for prioritized poverty reduction, national target programs and projects contributing to the restructure and reform of economic structure; • Focusing on the relationship between the construction of new investment works and maintenance costs; • Prioritize education, training, vocational training, science and technology, healthcare and environment protection; • Prioritizing national key construction works, socio-economic infrastructure to create a favorable investment environment to attract capital.

11. 2.3 Developing criteria in budget allocation • Developing criteria and levels in allocating the state budget for development investment activities in line with general objectives and orientations; • Objectives by sector and region are specified in the socio-economic development strategy 2001-2010, five-year plan 2006-2010, planning, development orientations by sector and field approved by the state and the annual plan.

12. 2.3 Developing criteria in budget allocation (cont’d) • Increase in expenditure on development investment compared to the total budget expenditure has to be higher than the increase in regular expenditure and development investment expenditure of the previous year • Ensure the reasonable balance between investment in economic infrastructure and investment in social infrastructure. • Prioritize building infrastructure for socio-economic development in poor regions, narrowing the gap between poor regions and developed ones, focusing investment in focal economic regions and centers.

13. 2.3 Developing criteria in budget allocation (con’t) • Ensure sufficient capital to implement programs and investment projects within the state budget. In line with the general criteria in budget allocation, MPI is now developing specific criteria in allocating investment capital to support localities.

14. 3. Achievements • Vietnam has made significant achievements in implementing socio-economic development objectives 2001-2005: All objectives in the five-year plan are met, some even exceed the targets: • GDP of the following year is higher than that of the previous year, GDP in 2005 reached 8.4%, the average growth rate of the five-year period is 7.5% reaching the targets. • State budget revenue/GDP equals 23.8% (the target is 20-21%). The total budget revenue in the five-year period reaches 18.3% on average, higher than the economic growth rate combined with price increase. Financial resources have been ensured to implement important socio-economic development objectives and efficient economic restructuring.

15. 3. Achievements (cont’d) • Total budget expenditure increases 18.3% on average, in which expenditure on development investment accounts for nearly 30% of the total budget expenditure, equivalent to 8.5% of GDP. • Expenditure on education and training increased from 15% of the total budget expenditure in 2000 to 19% in 2005. • Expenditure on health care, culture and social activities increased 2.2-2.5 times compared to 2000. • The percentage of poor households all over the country decreased from 17.5% in 2001 to 7% in 2005. The average decrease in the number of poor households is by 2-2.5%, equivalent to 300-310 thousand households.

16. Conclusion • The process of designing socio-economic development plan has had many reforms specifying the objectives mentioned in the socio-economic development strategy in the five-year and annual plans. • However, the socio-economic criteria for some sectors and fields are not suitable to resource capacity so the implementation process still faces difficulties. • Vietnam is piloting with making medium-term financial and expenditure plans within the framework of the Public Administration Project to be applied when possible to all sectors, fields and localities. • In the near future, Vietnam will improve the quality of making socio-economic development plan, of developing the state budget estimate and of linking more tightly the socio-economic development plan with the state budget estimate.

17. Thank you!