Analysis of the characteristics of public financial management; comparison and application of public financial management in the state management of thuy nguyen district, hai phong city

Authors: Bùi Anh Tuấn Sweden Supervisor: PhD .Hans Blomkvist LocalSupervisor: PhD.Nguyễn Phú Hà Time o f completion: Decem ber 2014 O bjective:This research aims to improve the aggreg

íinancial management ỉn the State Management of Thuy

Nguyen District, Hai Phong City

Author: B ùi A nh T u ấn

Supervisor: P h D H an s B lom k vist

LocalSupervisor:P hD N guyễn Phú Hà Class: M P P M IN T A K E 7

H a n o i, J a n u a ry - 201$

ĐẠI HỌC QUỐC GIA HẢ NỌl TRUNG TẦM THÒNG TIN THƯ V»ÊN _— - -rm

Ơ Ĩ D 5 { C T O J i ũ ^

I woulđ like to sincerely thank District party committee o f Thuy Nguyen District People’s Committee for granting me a great opportunity to participate in Master Program o f Public Management which jointly trained by ưppsala University

o f Sweden and University o f Economics and Business - Vietnam National University; I am also deeply indebted to Dr Hans Blomkvist from Uppsala University (Svveden) and Dr Nguyen Phu Ha from ưniversity o f Economics and Business - Vietnam National ưniversity for their enthusiastic supports and valuable suggestions during the study and completion o f this thesis

I gratefully acknovvledge the experts and leaders o f Thuy Nguyen district, district and commune departments, leaders o f enterprises who supported me in the process o f conducting research, survey and verification o f infomiation, as well as readily gave their time for joining the interview and provided me with necessary information to íuỉlìll alỉ the steps o fth e thesis

My deep gratitude to Uppsala University (Sweden) and University o f Economics and Business - Vietnam National University and protessors o f the Master Program o f Public Management Council for giving me a chance to prescnt this thesis and I would appreciate your comments that will hclp ĩurther improve my thesis

Respectfully,

Bùi Anh Tuấn

T itle:A N A LY SIS OF TH E CH A R A C TER ISTIC S 0 F PUBLIC FINANCIAL

FINANCIAL M A N A G EM EN T IN TH E STATE MANAGEM ENT OF THƯY NGUYEN DISTRICT, HAI PHONG CITY

Level: Finalassignm entfor M aster Program inPublic Management.

Authors: Bùi Anh Tuấn

Sweden Supervisor: PhD Hans Blomkvist

LocalSupervisor: PhD.Nguyễn Phú Hà

Time o f completion: Decem ber 2014

O bjective:This research aims to improve the aggregate íìscal discipline, allocative efficiency and operational efíìciency on the basis o f enhanced transparency, accountability, predictability and participation in public íìnancial management o f Thuy Nguyen district, Hai Phong City

M ethodology:

Based on the theoretical fram ework for good govemance associated with the objectives o f public iìnancial m anagem ent, the thesis mainly used secondary data obtained from the docum ents reílecting the results o f the State budget expenditure

in Thuy Nguyen district in 3 years from 2011 to 2013, compared with plan assigned to see the strengths and vveaknesses in the State budget expcnditure

m anagemcnt in Thuy Nguyen district The thesis also applied the the concept oi'the

“ladder o f citizen participation” with eight levels developed by Sherry Am stein (1969) to evaluate the levels o f participation This model is considered a tool to identify levels o f participation o f organizations as vvell as citizens in three main categories: Non-participation, Dcgrees o f tokcnism and Degrees o f citizen power

In addition, so that the causes o f the weaknesses in the State budget expenditure m anagem ent could be deeply analyzed, the author conducted in-depth intervievvs with a num ber o f leaders o f district People’s Committee, and officials o f division o f planning and íinance, division o f education, division o f health at district level as vvell as som e chainnen and accountants at commune level

allocated budget after three years.

- District State Treasury has done vvell both in revenue control and cash - on hand íbrecast to timely serve spending neeđs Only at the end o f the year, whendemands for spending are too large, it suffers from shortage o f money

- The participation o f commune authorities in the district activities; o f socio - political organizations in the Party and government activities; o f people in district govem m ent activities was at the same level o f No power (compared vvith eight- level ladder developed by Sherry Arnstein (1969) to describe the process o f citizen participation) This shows that the "abolishment o f district People's Council" has many shortcomings Some activities such as determination o f socio-economic objectives and determination o f budget allocation, etc., were not conducted in accordance with intemational good practices

In terms o f respect for people’s opinions, there was difference in situation between the district level and commune level Comparison between the two levels shovved that the degree o f citizen participation in the activities o f commune level was between the “Degrees o f tokenism” and ‘Degrees o f power” in the 8 - level ladder described by Sherry Am stein (1969) while disírict level only reached “No povver” It proved that commune People's Council has efficiently implemented its function and power, rcpresenting the will and aspirations oí local peoplc Thercby, the level o f rcsponsibility o f authorities for the settlement o f citizens’ claims was higher at commune level than district level

Some recommendations were made for the effective management o f public expenditure management, nainely:

- Strengthening the monitoring and supervision o f the implementation o f íìnancially transparent processes at all levels, especially commune level Public disclosure o f tìnancial performance should be clear, simple, understanđable and timely

- Strengthening the coordination and participation o f stakeholders and citizens to identify key tasks and key investment prọịects in order to avoid spreading - out budget and limit povver abuse, corruption and vvaste

accountability o f budget users The output here is understood as the result o f the activities períorm ed by the organization as assigned.

- Improving self-responsibility o f civil servants, contributing to saving State budget spending Specifying the responsibilities o f each individual in the organization and enhance their self-responsibility wiỉl contribute to improving the efficiency o f State budget spending

Suggestions for íuture research:

Expanding the research scope to other districts o f Hai Phong City will provide a more obịective perspective for assessment

Contribution o f the thesis:

Strengthening public íìnancial management towards openness, transparency, accountability and participation will help Thuy Nguyen effectively use its resources and to be a reliable place to receive investments from the higher levels and private sectors

Key words: Abolishment o f People's Councils, public lìnance, pubiicity and

transparcncy, accountability, participation, predictability

A C K N O W LED G EM EN T

ABSTRACT

TA BLE OF CO N TEN TS

LIST OF TABLES

LIST OF FIG URES

LIST OF CHARTS

ABBREVIATIONS

1 IN T R O D U C T IO N 1

1.1 B ack g ro u n d 1

1.2 Research objectives 2

1.3 Research questions 2

2 TH EORETICAL F R A M E W O R K 3

2.1 Four pillars o f good govem ance 3

2.2 Main Objectives o f Public Finance M anagem ent 3

2.3 Public expenditure m anagem ent and good govem ance 4

3 RESEARCH M E T H O D O L O G Y 9

3.1 Outline o f the research m ethodology 9

3.2 Data collection m ethods 9

3.3 Methods o f data Processing 10

4 DATA A N A L Y S IS 11

4.1 Overvievv o f budget management o f Thuy Nguyen d istrict 11

4.2 Assessment o f accountability in the management o f the district b u d g e t 13

4.3 Assessment o f the budget transparency 20

4.4 Assessment o f the budget predictability 28

4.5 Assessment o f participation in budgeting p ro c e ss 32

5 C O N C LƯ SIO N S 39

6 R E C O M M E N D A T IO N S 41

6.1 R ecom m endations 41

6.2 Suggestion for future research: 41

7 CO N TRIBƯ TION OF TH E TH E SIS 42

R E F E R E N C E S 43

A P P E N D IC E S 45

Table 1 Obịectives o f Public Finance M anagem ent 3

Table 2 Public expenditure management and good g overnance 4

Table 3 Public expenditure management and good g overnance 5

Table 4 Actual budget expenditures vs estim ates 11

Table 5 Investment in Capital construction in 2011-2013 and debts by 30/12/2013 .14

Table 6 Aggregation o f Capital expenditure in 2 0 1 3 15

Table 7 Total expenditure for land clearance in 2 0 1 1 16

Table 8 Actual expenses vs estimates o f the Division o f Natural Resources and Environm ent 19

Table 9 Assessment o f períòrmance o f plans assigned o f the Division o f Natural Resources and E nvironm ent 19

Table 10 General transfers, targeted transfers for district and commune govem m ents 23

Table 11 Budget settlement in 2011-2013 25

Tablc 12 Actual revenues vs estimated revenues 201 1-2013 28

Table 13 List o f construction works with funding withdrawal vvas not in accordance with thc recommendations oí the auditors 30

C P C C o m m u n e P e o p le ’s C o m m ittee

D P C D istrict P e o p le ’s C o m m ittee

M & E M o n ito rin g and E valuation

PEM P ublic E x p en d itu re M an ag em en t

1 IN T R O D Ư C T IO N

1 1 Background

Thuy Nguyen is a northem district o f Hai Phong city, located on important traffic routes connecting to Quang Ninh and Hai Duong In Hai Phong development strategy to 2020, Thuy Nguyen vvas identified as a dynam ic econom ic region atlracting íbreign investment prọịects such as Vietnam Singapore Industrial Park(VSIP) o f Singapore, key projects o f the G overnm ent and o f the city

In recent years, Thuy N guyen has applied the regulations o f ím ancial management towards saving and efficiency Especially the period 2011-2015 is considered as stable budget cycle, Thuy N guyen is applying the regulations in accordance with the resolution o f Haiphong city People’s Council, i.e the city provides balancing subsidy íor district level; the district sets spending limit for commune level

Thuy Nguyen has nine departm ents in the political system o f districts, 37 communes and towns are units o i'th e State apparatus; There are 76 schools and one hospital which belong to public agencies A nnual budget expenditure is from VND

700 to 900 billion

Thus, in ordcr to ensure econom ically and effectively budget spending, it is necessary to ensure transparency in the budget execution The unit vvhich uses the State budget must improve its accountability The level o f participation o f pcople under the motto "people know, people discuss, people do and people check" should also be promoted Predictability in budget planning should be improved to achieve scientitìcness and effectiveness

The government o f Vietnam has four levels: national, provincial, district and commune levels Each level o f govem m ent has an elected body to approve the budget and monitor budget execution Since 2011, at the request o f the M inistry o f Home AtTairs, Thuy Nguyen district piloted the "abolishment o f People 's Council"

model How it affects the objectives o f aggregate fiscal discipline, allocative eữiciency and operational efficiency in budget m anagem ent needs to be studied vvith a vievv to identitying lessons leamed

1.2 Research objectives

- To review the im plem entation o f íollovving objectives: aggregate fiscal discipline, allocative effíciency and effective perform ance o f public lìnancial

m anagem ent o f Thuy N guyen in 2011-2013

- To exam ine the degree o f transparency, accountability and participation in the budget cycle in Thuy Nguyen district

2 T H E O R E T IC A L F R A M E W O R K

The assessment o f public ĩinancial management, vvhich vvas done using new concept o f public management acquired from the Master program held by Uppsala University (Svveden), is summarized as íòllovvs:

2 ỉ Four pillars o f good governance

they can hold ỉt a cco u n ta b le

P red ictab ility

Figure l.F o u r pillar o f good governance

2.2 Main Objectives o f Public Finance Management

Table !.O bjectives o f Public Kinance Management

2.3 Public expenditure management and good governance

Table 2 Public expenditure m anagement and good governance

Fiscal discipline Allocative eữìciency

O p e ratio n alefficiency

A ccountability

Stay within overall budget authority

Achieve required results from programs

Appropriate balance

o f delegation and control

T ran sp aren cy

Publish medium- term economic tbrecasts and fiscal targets

Publish program budgets, targets and results

Audit andlegislative review of efficiency and compliance

Predictability

Detailed plans and budgets within targets

Identiíy and manage físcal risks

to períòrm ance

Maintain cost and cash discipline at input level

P articip atio n

Consult stakeholders

on fiscal targets

Consult on national strategies; enable local decisions on local programs

Enable citizens to complain and obtain redress

Applying the theoretical framework to analyze Thuy Nguyen district budget management, the authors build specific content, as shovvn in the following table:

Table 3.Public expenditure m anagement and good governance

Fiscal discipline Allocative eíĩĩcency O p eratio n al

eíTiciency

A ccountability -Budget estimates

based on allocation norms which have been approved by the Provincial People's Council (PPC)

- Actualexpenditures do not exceed estimates

- Budgetexpenditures meet the targets

- Not spreading out investments

- Autonomy decentralized and authorized in association with guidances, M&E

- Saving o f resources

T ran sp aren cy - Publicity o f

expenditure norms

- Forecast o f resources will be allocated in order o f priority

- Publicity o f targets

in expenditure estimates including recurrent

expenditures and Capital expenditures

- Results o f actual

estimatesPublicity o f

- State treasury to ensure funds for expenditure needs

- Having inspection

- Expenditure estim ates are in accordance vvith the actual revenues

and audit plans to reduce loss and waste

Participation - Stakeholders

participate in the annual budgeting process

- People knovv about priorities in Capital construction vvorks

- Commune People’s Council determines its socio- economic targets and conduct the

m onitoring o f implementation process

- District role in determining its socio-economic targets and

m onitoring tunction

o f socio-political organizations

- Opinions o f citizens and level

o f respect o f govemment authorities

- Settlement o f the govemment

authorities on the petitions o f citizens

(Source: Author)

Transparency is generally defined as the principle o f enabling the public to gain information about the operations and structures o f a given entity Transparency is often considered synonym ous vvith openness and disclosure, although one can fĩnd some subtle differences am ong these terms (Etzioni 2010)

It is essential not only that iníbrm ation be provided, but that it be relevant and in understandable form D um ping on the public immense amounts o f ravv íĩnancial íìgures does nothing to improve fiscal transparency (Schiavo - Campo and Tommasi 1999)

Kopits and C raig (1998) added: “It involves ready access to relỉable, comprehensive, ti me ly, understandable, and mternationally comparable

information on government activities so that the electorate and jìnancial markets can accurately assess the government 's financial position and the true costs and beneỹits o f government activities (including their present and/uture economic and social ỉmplications) ”

When considering the issue o f public íìnancial management, general comments vvere that the budget should be put in the accountability process Accountability has been variously deíìned, som e deíĩnitions are as follo\vs:

- D eíìnition #1 '.“Accountability” is the obligation to render an account for a

responsibility conferred.lt presum es the existence o f at least two parties: one vvho allocates responsibility andone who accepts it with the undertaking to report upon the m anner in which it hasbeen discharged(O ttawa: Intbrmation Canada, 1975);

- Deíìnition #2:“A ccountability is the liability assumed by all those who exercise authority toaccount for the m anner in vvhich they have tullìlled responsibilities entrusted tothem ” (M inister o f Supply and Services Canada, 1979);

In tcnns o f participation, Sherry A m stein (1969) described citizen participation as a ladder vvith eight levels:

Arnstein (1969) Ladder of citizen participation

C ftỉz e n c o n tr o l

D e l e g a te d p o w e r

P a r t n e r s h i p

Degrees of citizen povver

Degrees of tokenism

3 R E S E A R C H M E T H O D O L O G Y

3.1 Outỉine o f the research methodology

The thesis mainly used the comparative method The first part o f the thesis is the analysis o f modem public íìnancial management with the application o f modern public ílnancial principles to assess budgeting operation

The latter part o f the thesis, Thuy Nguyen district’s management o f budget expenditures vvas assessed from the perspective o f the new public management The overall assessment considered the level o f compliance with the aggregate íiscal discipline, by comparing the achievements vvith the initial goals to see the difference The study o f budget execution process was done in different stages: Budget estimation, budget execution, budget settlement and budget revenues

The collected data were synthesized by content based on the theoretical íramevvorkof:

They vvere also analyzed in combination with interviews vvith multiple stakeholders at different perspectives to clarify the level o f compliance with fiscal discipline, allocative efíìciency and operational eftìciency o f the district budget

3.2 Data coỉlection methods

Data were available from the annual report 2011 - 2013: Estimates o f revenue and expenditure, performance reports and budget settlement reports Based

on the key concemed issues o f the thesis, the author developed questionnaires to conduct interviews with the leaders o f the tìnancially autonomous units such as: Health; Education; District departments; Schools; district and commune People’s Committees to dravv conclusions about the effectiveness o f budget spending in each unit; allocative efficiency o f expenditure and participation in drafting the annual district budgct.

3.3 Methods o f data Processing

Synthesis and comparison methods vvere used Data vvere synthesized by each stage o f budget operation, namely budget estimation, budget execution, budget settlement and budget revenues Comparison method was used to compare: norms estimated vs norms allocated; actual vs estimates to determine the degree o f compliance with the tlscal discipline o f the district; comparison o f the ratio o f subsidies in the total budget every year; comparisonbetween the actual períbrmances vs report to determine the transparency o f management Statistical method vvas used as well to check the C apital construction debts accumulated to

2013 The data Processing vvas also combined with a summary o f in-depth interview

results to assess the level o f participation o f citizens and civil society organizations

in the budgeting process

4 D A T A A N A L Y S IS

4 ỉ Overview o f budget m anagem ent o f Thuy Nguy en district

In the implementation o f the public íĩnance refonn program in accordance vvith the State budget law, Thuy Nguyen has increased decentralization o f budget management

to communes and delegation o f íìnancial povverto units using State budget It also set salary caps o f offìcials andcivil servants according to theallocated norms

In order to strengthen control o f public expenditures towards publicity and transparency, each unit using State budget issued intemal spending rules which were developed in an open discussion vvith the involvement o f its oữìcials

Management based on estimates approved by the district People's Council is one o f the regulations o f the State budget lavv However, the actual expenditures líom State budget

in 2011-2013 o f Thuy Nguyen districtmuch exceeded the estimates, see Table 1 belovv:

Table 4.A ctual budget expenditures vs estỉmates

In terms o f total expenditures, in 2011 and 2013 the actual expenditures exceeded the estimates by over 30%, vvhich vvas mainly due to the loose management o f Capital expenditures Though Capital expenditure increased to 113.80% in 2011 and 94.80% in 2013, there remained debts because o f spreading investments Chart 4.1 and 4.2 provide comparisons o f the actual vs estimate in recurrent expenditure and

in C apital expenditure to show a clearer picture o f the district hudget management

Chart l.A ctual vs estimate in recurrent expenditure in 2011-2013

(Source: District fììnancial settlement report)

Chart 2 Actual vs estimate in Capital expenditure in 2011-2013

So that the picture o f Thuy Nguyen district budget management can be seen more clearly, the next part o f the thesis vvill analyze in depth the four pillars o f "good govemance", namely: accountability, transparency, predictability and participation.

4.2 Assessment o f accountabiỉity in the management o f the district budget

4.2.1 Hai Phong city People's Committee developed the allocation norms o f

recurrent expenditures fo r State agencies at district and commune levels.Hoxvever, during the implementation process, the DPC adịusted to increase the norms fo r the district authorities and reduced the norms fo r the communes under its management.

In order to maintain íìscal discipline and avoid deficits, the norm for administrative expenditure vvas specitìed in the Decision No.2050 o f Hai Phong city People’s Committee vvith an amount o f VND 22 million / person / year It vvould not be changed during stable budget period 2011-2015 (uníess there is an adjustment íor inílation) Nevertheless, in 2013 the DPC adịusted to decrease the norms allocated for 37

communes by an average o f VND 21.64 million/ person / year, while administrative

expenses tbr the district level washigher than prescribeđ atVND 23.87 million / person / vear I’he main cause o f this adjustment was that they had to pay salary for contract staíì’

in addition to full-time statT vvho arc regulated by the City Department o f Home Atĩairs ITius, in terms o f accountability, the DPC "tightened" spending o f the lower - level

authorities but they werc "generous" to its level by allovvingthemselves to allocate

expenditure over the norms It is an unacceptable action

4.2.2 The situations o f spreading investment, debts and ineffìcient investments

have regularly happened

Characterized as a poor district, the objective reason vvhich caused large investment đebtsot' over 40% in all types o f constructions ovvned by the district and commune levels in 2011-2013 (illustrated in Table 4.2 ) vvas that the city govem m ent (higher authorities) provided Capital expenditures in drops and untimely Hovvever, the main cause o f this situation was due to the fact that the People's Committee determinedtoo manysocio - economic obịectives to be achievedwithout linking them

to tìnancial resources

Table 5 Investm ent in Capital construction in 2011-2013 and debts by

30/12/2013

ưnit: VND million

C ontents

Debt from previous year

W ork done by 2011- 2013

A ccum ulate

d funds

b y 3 0 /12/20 13

Debts in Capital construction

by 30/12/201

Totaldebts/vvorkdoneConstructions

(Source: District fm a n cia l settlement report)

In-depth analysis on the investm ent in Capital construction, we can see that the investments have been sprcading Even in the Resolution o f the People's Council there vvere too many goals determ ined, so it was difficult to identify key objectivesand key constructions

Table 5 illustratesm ore about the spreading o f investment and the DPC started to find theirresponsibility for settling these debts In the 2013 estimates, spending for school construction accounted for 62.2% o f the total Capital expenditures o f the district, but thcy m ainly used Capital expenditures for payments o f construction

debts arising from many years ago Expcnditure for rural roads vvas high, which accounted for 16.3% With regards to construction items to be constructed and repaired such as otĩices o f the Party, Goverment and mass organizations, though Hai Phong city People’s Committe directcd Thuy Nguyen district to "stop the construction and repaỉr o f thehead offices ” since 2010, it still deployed some o f the

(Source: District/ ìnancial settlement report)

Spreading investment led to inefíìcient investment Land has been lefỉ idle for many years despite hugc o f money was spent by the DPC for land clearance

Table 7 Total expenditure for land clearance in 201 ỉ

Uoit: VND million

(Source: District /m a n cia l settỉemení report)

Thuy Nguyen district notiíìed its communes and the thousands o f households on land acquisition policy, mainly agricultural land to serve the industrial prọịects It drew up an inventory, developed land, crops and architectonic model compensation plans It requested people to stop production for many years Hovvever, by the end

o f 2013, hundreds o f hectares o f land has been left idle and thousands o f households

w ere sutĩered ÍTom “exceedỉng o f fallow land but lacking o f cultívatìon la n d ” The

district did not allocate funds for land clearance as announced to households but vvaited for the advancem ent from the enterprises havinginvestment prọịects Some enterprises are really facing diftìculties but some intended not to carry out their prọịect, which led to delayed prọịects causing loss to many people

The delay o f many prọịects o f Vinashin in Thuy Nguyen Hai Phong has made thousand

of local households lose their families' livelihoods

A project o f Nam Trieu Shipbuilding Corporation left idle.

Hundreds of hectares of land has been left idlc

Thuy Nguyen notified Lam Dong CPC about acquisition of more than 75ha of land, mainly rice cultivation and aquaculture ponds to build Lam Dong Shipyard of Thanh Long shipbuilding industry limited company Then, the commune receiveđ a recall of more than 50 ha o f land of more than 50 households for building South Kien Bridge industrial zone o f Shinec shipbuilding industry joint slock company (a shareholder of Vinashin) and 12 ha o f agricultural land for building factory of the Cam River shipbuilding company

As much as 140ha out o f 200ha of Lam Dong commune were revoked for three Vinashin projects, affecting at least 400 households

Tam Hung Commune is now home to two delayed projects of the Vinashin’s affiliate Nam Trieu Shipbuilding Corporation The projects, covering a total 67.5ha of land, were started in 2008 but remain idle to this day

People o f Hoang Dong Commune also had to give up 69ha o f land to Vinashin An Duong shipbuilding project, which is still a fallow land plot

A project to upgrade and expand the shipyard tầctory o f Pha Rung one member limited company, with a total investment ot'more than VND 4,876 billion, on 93ha of land in Minh Duc town, completed the clearance but after started the construction of somc items,

it was delayed

Local authorities vvant to re-lease the planned land plots to households for a short time,but few want to take the land because it would take them at least 3-5 years to recovertheir investment

Meanvvhile, an entertainment and tourism complex planned by Quang Minh-Vinashin Tourism and Investment Company also occupies 151 ha of land at Thuy Son Commune The project has not progressed because of a lack of C ap ital

People are in excess of fallow land but lack of cultivation land

Lai Van Duc, o f Tam Hung Commune, said, he and his brothers leased 2,880 square metres íor aquaculture They invested much of their savings in the area, but because of the Vinashin projects that area is not in use

Source (Labour Nevvspaper) - No 281 by HOANG HOAN - 9:38 AM, 04/12/2013

- Đ A I H Ọ C QUÒC Q tA IIÀ N ố i Ị

ĨRUNG TAM t h ô n g Ỉ1N THƯ VỊÈ-N

c r o 5 4 ơ r o i o í

Regarding the poor quality investment constructions using State budget, pcople complained and asked about estimates nonns, commune officials refused to answ er and rcquested them to ask district level When people brought the questions to the district, they only got general ansvver like "that construction was invested by the City, the district only managed the construction after being handed - over".

4.2.3 Financial autonomy: though recurrent expenditures were saved, the

per/ormance was with unsound results

In the implementation o f íìnancial autonomy, in 3 years ííom 2011 to 2013 the State agencies íbcused on developing intemal spending regulations for operating efficiently aỉlocated funds State regulations allo\v agencies to spend less than the allocated budget norms and "savings" from this practice can be used to increase the income o f civil servants

On the one hand, this regulation encourages departments/agencies to save expensessuch as electricity, water, paper, Petroleum, public relationship expense, etc Hovvever, on the other hand, it causes negative impact on the com pletion o f tasks assigned, especially vvhen district government has not conducted m onitoring and evaluation o f the perfonnance o f completed tasks and not considered it as criteria for budget allocation The story o f the Division o f Natural Resources and Environment about granting certiíìcate o f land use right is an illustration

One o f the important specializcd divisions o f the Division o f Natural Resources and Environment has the íunction o f granting land use rights for people When comparing the results o f this task with the allocated budget, there was a contradictory Since tunding for the Division o f Natural Resources and Environment vvas relatively stablc over the years, the actual expenses excecded the estimates by 13%, 1% and 3% respectively for 2011, 2012 and 2013 Hovvever, there was a big gap between the operational achievements o f this division and the plan assigned except for the year 2011 when its achievements exceeded targets

Table S.Actual expenses vs estim ates o f the Dỉvision o f Natural Resources and

Environm ent

Lỉnit: VI\D million

(Source: District ílnancial statement)

Table 9 A ssessm ent o f períbrnianee of plans assigned o f the Division o f

Natural Resources and Environment

Actual

% vs

plan assigned

Actual

% vs plan assignedGranting o f

C h art 3 A ssessm ent o f budget execution results o f the Division o f the Natural

R esources and Environm ent in 2011-2013

expenses, ií was even not enough fo r íravelling and accommodation costs o f stajỵ

xvhen going to communes to verijỳ the documents and conducỉ reaỉistic appraisal ” 4.3 Assessm ent o f the budget transparency

4.3.1 The contents and fo rm s o f publicity were incompỉete and noi transparent.

The C ircular No 03 o f the Ministry o f Finance and the G rassroots Democracy

O rdinance regulate the provision o f budget settlem ent transparency Agencies responsible for eníbrcem ent must understand clearly the contents to be publicized and conduct the intbrm ation publicity every year Hovvever the publicity in terms

o f form and time did not com ply vvith the regulations M ost o f com m unes did not publicize the settlem ent reports after being approved by the Com m une People’s

Councils Some other forms o f publicity such as notices to the com m unesocio- political organizations and leaders o f villages sand population groups, etc.; announcement on the radio system vvere conducted but vvith insutYìcient infonnation Intbrmation about the district budget was not transíerred to the commune level and the relevant units Normally, district budget settlem ent is developed by the Division o f Finance and sent to the District Commissioner, DPC and some other sector in a naưovv scope Information has been intemally publicized

in the key staff meeting o f District Commissioner or oíTicials meetings o f DPC or CPC

Chart 4.Assessm ent o f fìnancial publicity based on responses from 20 people who are district and commune <)ffieials in the in-depth interviews

(Source: District financial statement)

Chart 4 shovvs that the level o f publicity oíbudget estimates is the highest, 80% o f the respondents said that iníormation provided vvas adequate and timely T he level

o f publicity descends, for budget settlement is 35% and for other fínancial intbrmation is 10%