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The Socialist Republic of Vietnam The Public Financial Management Reform Project (PFMRP)

The Socialist Republic of Vietnam The Public Financial Management Reform Project (PFMRP). Presented by Vice-Minister of Finance: Dr. Tran Van Ta. Content. Reform background Project goal Project description summary Sustainability and risk considerations Project progress

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The Socialist Republic of Vietnam The Public Financial Management Reform Project (PFMRP)

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  1. The Socialist Republic of VietnamThe Public Financial Management Reform Project(PFMRP) Presented by Vice-Minister of Finance: Dr. Tran Van Ta

  2. Content • Reform background • Project goal • Project description summary • Sustainability and risk considerations • Project progress • Lessons learnt so far

  3. Reform background • The Public Administrative Reform Master Plan over 2001-2010 sets platform • The revised State Budget Law promotes decentralization, transparency, accountability, and administrative rationalization & streamlining. • The reform areas are recommended from analysis supported by the World Bank and other donors i.e. PER 2000, PER 2004, CFAA 2001, Vietnam Development Report 2003,…

  4. Some weaknesses • Fiscal sustainability concerns: declines in crude oil revenues, mismatch between capital and recurrent expenditures, salary reform pressure, extra-budgetary accounts, non-performing loans to SOEs, and weak prioritization processes • Poor budgetary information: lack of fully consolidated budget, lack of a common accounting structure, lack of integrated, electronic data recording

  5. Identified five areas of reform The PFMRP addresses the first 04 areas of reform: • Budget management • Debt management • SOE fiscal risk management • Public asset management To be addressed by the other 2 important projects: • Revenue management:

  6. The PFMRP’s project goal • Aiming at good governance, contributing to poverty reduction. • Objectives: • to strengthen budget planning, execution, reporting and accountability, • to strengthen the links between budget management and the developmental goals within a medium-term expenditure framework; and • to improve the management of public debt.

  7. Project performance indicators • Improved accuracy, timeliness, relevance, transparency and compliance with international best practices; • Better planning of the State Budget and the Public Investment Program; and • Greater fiscal sustainability.

  8. Project description overview • Component 1: Strengthening Treasury and Budget Management • Component 2: Strengthening State Budget and Investment Planning • Component 3: Strengthening Management of Public Debt and Monitoring of SOE Fiscal Risks

  9. Component 1: Strengthening Treasury and Budget Management • The Treasury and Budget Management Information System (TABMIS) will be operational in all central, provincial and district treasury offices, finance & planning agencies, based on a new, integrated account code structure • Review of policies and business processes in the development of Unified Chart of Accounts/State Accounting regime • Treasury Single Account.

  10. Component 2: Strengthening State Budget and Investment Planning • Technical assistance for the piloting of the Medium-term Fiscal Framework (MTFF) and the Medium-term Expenditure Frameworks (MTEF) • Change management and communication of the new practice • Design and implementation of a budget preparation system

  11. Component 3: Strengthening Management of Public Debt and Monitoring of SOE Fiscal Risks • Technical assistance and capacity building to support strengthening of recording and management of domestic debt • Procurement of systems for recording, consolidation and management of public debt • Inventory of SOE Fiscal Risks

  12. Sustainability & risk considerations • Sustainability: an emphasis on training and ‘learning by doing’, a strong legal framework, making a platform for further development as committed. • Risks: • System risks: costs of supporting and upgrading; Difficulties in the integration of different accounting structures; Network infrastructure preparedness. • Organizational risks: Procurement and implementation capacities; Substantial organizational changes; Acceptance of new technologies, practices

  13. Project progress • Successfully completed the procurement of TABMIS • Reviewing of policies and business processes, organizational preparedness • Developing Unified Chart of Accounts • Studying TSA • Produced MTF&EF documents of good quality for the first time • Established Middle Office, developing Public Debt Management and Mobilization Plan, domestic markets • Training and building capacity

  14. Lessons so far • The flexible project design allows additional interventions and adjustments to be discussed and agreed if necessary • Independent Verification and Validation (IV&V) and other independent consulting services are needed • Leadership oversight is reinforced by regular reports and meetings and an empowered Project Management Unit (PMU) • Change management and well-targeted training activities are even more emphasized during the process. • Early participation of project beneficiaries and all other stakeholders is a prerequisite

  15. Thank you!&The Ministry of Finance looks forward to your cooperation and assistance

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