Hoàn thiện phân cấp quản lý NSNN của thành phố hà nội tt tiếng anh

Since the 1996 Act of Government Budgeting amended and came into force in 2002 and 2015, the decentralization of budget management has been complying with thefundamental rules and remain

INTRODUCTION 1.The urgency of the topic:

The decentralization of Government Budget is an imperative component of governmentbudget management, formulated based on the foundation of government apparatus, socio-economic issues and periodical targets of government budget management Therefore, eachcountry will come up with different decentralization budgeting methods taking the currentnational situation into account

In Vietnam, the decentralization of government budget management has beenimplemented long ago and the level of decentralization of government budget variedperiodically Since the 1996 Act of Government Budgeting amended and came into force in

2002 and 2015, the decentralization of budget management has been complying with thefundamental rules and remains relatively consistent, clear, transparent which ensures theproactiveness of different levels of local authorities as well as the central government

The decentralization of government budget management is a key section among thedecentralization of Authority Only with adequate resources and decision-making power onexpenditures, each level of authority decentralized would be able to fulfil their missionsindependently and effectively Theoretically, the decentralization of government budgetmanagement was affirmed as an important modality in improving the effectiveness ofgovernment budget management and ensuring that the managerial duties of all authority levels,from primary to central, can be timely tackled

One of the most noticeable challenges of the decentralization of government budgetmanagement is how to execute it in an urban context Over the last few years, after thedelegation from the Central Authority, the locally decentralized budget management(distributed to the Provincial, Town and Village Authority) in Hanoi city had stuck to not onlythe government budget law but also the local features resulting in remarkable outcomes Therules about income sources and spending task of different local authority levels were set outprecisely and specifically The local Authority has proactively formulated and distribute thelocal budget as well as proactively explore the urban advantages and potentials It wasevidenced that budget distribution had improved the effectiveness of spending task andavoided intensive intervention from higher Authority to the lower However, beside the success

in the decentralized budget management of Hanoi, there are some existing limitations such as:

It has not been aligned with the requirements of the decentralization of Local socio-economicmanagement within the area; The revenue distributed to District Authority is low still; Theregulations of decentralized budgeting in spending task have not been appropriate towardssocio-economic management decentralization; The role of socio-economic managementdecentralization in several missions and areas has not been assigned with enough details andspecifications On the other hand, increasing globalisation together with international andregional economic integration have been adjusting the economic situation of the whole countrygenerally and of Hanoi city particularly With the expansion of border of administration andthe strengthening of urban administrative innovation, the decentralization of governmentbudget management should undoubtedly be renovated to encourage the capital’s economy

In order to promote the current positivity and to tackle the existing issues of thedecentralized budget management of Hanoi, especially under the condition of the citycouncil's policy to expand the border of administration and to accelerate the decentralization

of the administrative and socio-economic management, PhD student is going to discuss “the

possible improvement to the decentralized budget management of Hanoi city" in this

thesis

2 Purpose and significance of the study

a Purposes

The thesis of the decentralization of the Government Budget management in Hanoi aims

to establish a theoretical framework and practical grounds so as to propose a system ofpragmatic solutions, hence, to complete decentralization of the Government Budgetmanagement of the capital city within the period of 2018-2025 onwards to 2030 Therefore, thethesis will answer these following key research questions:

(1) What are the principles for dividing expenditure responsibility and revenues among levels

of authorities?

(2) How is the practical situation of the decentralization of Government Budget management

of Hanoi at the moment? Are there any limitations and why?

(3) What are those improving solutions to the performance of the decentralization ofGovernment Budget management in Hanoi, which could promote efficient allocation ofresources, equality assurance and improvement in the government management quality at localauthority?

• Provide a result-oriented and systematical perspective on feasible solutions to complete thedecentralization of Government Budget management in Hanoi from 2025 to 2030

3 Subjects and scope of the study

a Subjects of the study

The thesis studies theoretical issues on the decentralization of Government Budgetmanagement, especially the content of the decentralization of Budget management amonglocal authorities; a practical situation of the decentralization of Government Budgetmanagement in a local context (e.g city) and among different levels of local authorities withinthat city

b Scope of the study

Research overview: The thesis studies the decentralization of Government Budgetmanagement with 5 main contributions, which are: (1) Decentralize the authority and power ofenacting laws, policies, standards, and norms of State Budget (2) Decentralize revenues andspending tasks of the city budget (3) Decentralize management of Government Budget ondebts (4) Decentralize the implementation of the budget management process (5)Decentralize the supervision, inspection, and audit of the Government Budget

Research environment: The thesis studies the case of Hanoi and examines the experience

of some countries on the decentralization of their Government Budget management

Research timeline: The thesis studies the content of the decentralization of State Budget

management in the city in the period of 2013-2025 and onwards to 2030

(3) What are the solutions to improve decentralization of state budget management in Hanoi City

in order to promote the efficient allocation of public resources and ensure equity and improve the quality of state management of local authorities?

Historical method: This method is implemented so as to consider historical background

and context, explore sources related to the decentralization of Government Budgetmanagement

Case study method: The case study method is an empirical investigation of some

examples in different districts in order to increase the pragmatic level of knowledge

Quantitative research method: The author has created a research model with various

variables, which are: the qualification of Government Budget management officer; positiveimpacts on local economic growth and social development; support from Government Budgetmanagement superior authorities and financial autonomy of local authorities The analysis isperformed to accredit the relationship between the decentralization of Government Budgetmanagement and influencing factors

Comparative method: This method clarifies the differences and similarities, strengths,

limitations of research issues, hence, suitable proposals are provided to achieve researchpurposes

Scientific method: The author uses related research paper results which were published in

national and international journals to improve the theoretical framework and propose varioussolutions

6 New contributions to the thesis

Theoretically, the thesis has established a theoretical framework of the content of the

decentralization of Government Budget management at a local level followed economicalmanagement approaches The thesis has specified evaluation criteria and elements that haveimpacts on the decentralization of Government Budget management at the city level

Practically, from quantitative and qualitative research results, the thesis has come up

with several conclusions on the success, limitations, and the reasons behind them in thedecentralization of Government Budget management in Hanoi The thesis also evaluates thelevel of influence of elements to research subjects, including, the element of “financialautonomy of local authorities” and the element of “positive impacts on locality” have thestrongest impact on the level of hierarchy in Government Budget management in Hanoi

In terms of proposal solutions, the thesis has stated a few perspectives and solutions so as

to complete the decentralization of Government Budget management in Hanoi in thecorresponding time

7 Research design

Apart from the introduction, conclusion, the list of the author’s published research paperrelated to the thesis, reference list, and appendices, the structure of the thesis includes 3chapters:

Chapter 1: The theoretical framework of Government Budget and the decentralization ofGovernment Budget management

Chapter 2: The practical situation of the decentralization of Government Budgetmanagement in Hanoi

Chapter 3: Perspectives and solutions to complete the decentralization of GovernmentBudget management in Hanoi

CHAPTER 1:

THE THEORETICAL FRAMEWORK OF GOVERNMENT BUDGET AND THE DECENTRALIZATION OF GOVERNMENT BUDGET MANAGEMENT

1.1 GENERAL THEORIES ABOUT GOVERNMENT BUDGET

1.1.1 Definitions and characteristics of a government budget

1.1.1.1 Definitions of a government budget

The first definition of the government budget is that it is a document, in which thegovernment presents revenues and expenses drafted for the following year and requirelegislative approval prior to implementation The second concept is that a government budget

is a tool for the government to operate policies; the scope of the government budget depends

on the scope of government activities, including revenues and expenses

Upon the above analysis, some notions of the government budget could be understood assuch:

A government budget is a document of estimated revenues and expenses of the government, which was approved by the legislature, reflecting the economical relations incurred during the establishment process, distribution of the centralized monetary fund and is performed during a defined period to ensure government functions are operated according to

a statutory basis

1.1.1.2 Characteristics of a government budget

First, the establishment and usage of the government budget always go with the

economical and the government based on certain rules executes political power of thegovernment

Second, a government budget always closely linked to government ownership and

always contains common interests, public interests

Third, a government budget is an estimated revenues and expenses document Agencies and

units are responsible for making the government budget and setting important parameters related

to the policies that the government must implement in the next fiscal year

Fourth, a government budget is a crucial part of the national budget system The national

budget system consists of: government finance, business finance, financial intermediaries, andpersonal or household finances

Fifth, the characteristic of a government budget always linked to hierarchical aspect.

During the feudal period, the budget model was primitive and arbitrary, confusing the King’streasury with the feudal government budget

1.1.2 Government budget system

The budget level is formed on the basis of the government authority level, consistent with thecurrent organizational structure of our government system, the government budget system includescentral and local authority budgets, in which the local authority budget consists of:

The budget of provinces and cities operating directly under the central authority(generally referred to as provincial budgets)

The budget of districts, towns, provincial cities (generally referred to as district budgets).The budget of communes, wards, and townships (generally referred to as commune budgets).The central budget reflects the collecting and spending tasks by branch and plays aprominent role in the government budget system, it originates from the position and role of thecentral authority, which is the lifeline of the country

The provincial budget reflects the collecting and spending tasks by territory, ensuring theimplementation of the tasks of comprehensive organizing socio-economic management of theprovincial authorities and centrally-run cities

The budgets of communes, wards, and towns are special administrative units with specialimportance and specific characteristics: the revenue stream is directly exploited in the area andthe spending task is also allocated to serve the immediate purpose of the community in thecommune without any intermediaries.

1.1.3 Revenue stream and spending tasks of government budget

1.1.3.1 Collect government budget

Government budget collection is a financial activity of the government established by asystem of policies and laws promulgated by the government based on the political power of thegovernment over other entities in society to mobilize a part of the social wealth value to form agovernment budget to meet the government's spending needs

Government budget collection includes taxes, charges, and fees paid by organizations andindividuals according to the provisions of law; revenues from economic activities of thegovernment; donations from organizations and individuals; grants (non-refundable) and otherrevenues as prescribed by law

1.1.3.2 Spending on the government budget

Government budget expenditure is the process of allocating and using the governmentbudget to perform the government's tasks in each period With international practices,classified by economic content, government budget spending includes:

(1) Recurrent expenditures are those with a short-term impact, usually less than one year.(2) Development and investment expenditures are those with a long-term impact, usuallyover a year, forming material assets capable of generating revenue, directly contributing to theincrease in the infrastructure and facilities of a country

(3) Other expenditures include the remaining government budget expenditures, such as:Payment of principals and interests of monetary funds borrowed by the government, aid, loans,additional financial reserved funds, etc

1.1.4 Government budget management process

According to international practices, the process of government budget management is allactivities of three stages: (1) Preparing and deciding the government budget; (2) Execute thegovernment budget; (3) Auditing and evaluating the government budget

Regarding the content, the process of State budget management includes:

a Prepare and decide annual budget estimates (making government budget estimates)

In the preparation of estimates, law enforcement agencies forecast government budgetrevenues and expenditures from the central to local levels; to promulgate documents guidingthe estimation, implementation of estimation, and submission of budget estimates to superiorauthorities for consideration and decision

b Execute the government budget estimates

Compliance with the budget estimate is the process of implementing general economic,financial and administrative measures to turn the revenue and expenditure targets into reality.Compliance with the estimates must comply with the overall fiscal discipline; Ensureallocation efficiency and operational efficiency

The content of compliance with the budget estimation includes: Observing the budgetrevenue estimates, executing the budget expenditure estimates and the budget fundmanagement activities

c Auditing and evaluating budget (government budget finalization)

Based on the settlement reports and evaluation reports, the government authority willdiscuss to approve the settlement of the State Budget Regarding the relation with politicalpower, the procedure of State budget management is the process of concretizing thegovernment power in the financial and budgetary sector of the state authorities (NationalAssembly, Citizen's Council) and executive authorities (Government, People's Committee)

1.2 DECENTRALIZATION OF GOVRNMENT BUDGET MANAGEMENT

1.2.1 Concepts and forms of decentralization of state budget management

1.2.1.1 Concepts

Decentralization of State budget management is considered as one of the crucial parts inthe decentralization of government management, which indicates the transfer of power andresponsibilities from central government to subordinate government The purpose of thedecentralization of government budget management at provincial level is to divide themanagement rights between provincial and district authorities, so as to promote the dynamics,creativity, autonomy and self-responsibilities of local authorities based on defined allocation oftasks, powers and responsibilities of each authority in government administrative apparatus

In a local budget with an urban budget, the decentralization of urban budget management

is actually the delimitation of the scope, responsibilities, and powers at each level in theprocess of management and operation of urban budgets On the basis of perspectives andanalysis on the decentralization of government budget management as above, the thesis isdetermined to study the content of the decentralization of government budget management asfollows: “ The decentralization of government budget management is to delimitate scope,responsibilities, decision-making power and management right of the government budgetamong different levels of authorities

1.2.1.2 Forms of decentralization of government budget management

Based on the authority of all levels of government, decentralized state budgetmanagement can exist in the following forms:

Decentralization: is a form of decentralization of state budget management in which

superior authorities will transfer the right to perform budget tasks to its representative officeslocated locally

Authorization: is the task of subordinate government transferring the decision-making

power and responsibility to manage activities related to the State budget from the superiorgovernment When decentralizing the state budget management in the form of authorization,the subordinate authorities will make decisions on behalf of the superior authorities but theresponsibility for those decisions remains with the superior authorities

Empowerment: this is a form of decentralization of state budget management with the

highest independence for subordinate governments In this form, subordinate governments areallowed to decide on budget-related issues without being subject to the control oradministration of superior authorities

1.2.2 Requirements and principles of decentralization of government budget management

1.2.2.1 Requirements of decentralization of government budget management

Compliance requirements: Compliance requirement is the respect and execution of

spending and collecting tasks accordingly in budget of executive agencies and units Thecompliance expressed by complying with the budget law in collecting and spending activitiesfor the budget

Requirements for economic efficiency: Requirements for economic efficiency are

economic results as shown by growth index, average income, productivity of governmenteconomic sector and other impacts from state infrastructure investment activities

Social efficiency requirements: Socially effective requirements are understood as the

results achieved by the budget in ensuring social welfare, public service systems such ashealth, education, etc

Requirement on political efficiency: The political efficiency requirement of the

management of budget usage can be understood as the result of the coordination among statemanagement agencies in budget activities, in the construction of flexible and timely

information processing system to execute budget is of great significance in evaluating budgetefficiency.

1.2.2.2 Principles of the decentralization of state budget management

a The decentralized management of budget must be consistent with the decentralization of organizational structure in state administrative apparatus.

The process of decentralization of state budget management in general and local budgetmanagement in particular have to consider the relations between sector management andterritorial management Combining those two is one of the most essential principles in statemanagement of socio-economy in countries

b Each level of local authorities is allocated with specific revenue sources and spending tasks

The spending tasks of any levels of budget are guaranteed by that level of authority; theissue and implement of policies, new regimes that increase budget’s expenses have to possesssolutions The solutions should ensure financial resources are suitable to the balance ability ofeach budget

c Ensuring the leading role of the provincial budget of the city and the activeness of subordinate level budget

To promote local authorities’ activeness, budgetary powers should not be intensivelyfocused on provincial level of authority It is necessary to decentralize revenue sources toensure subordinates to actively perform their assigned spending tasks

d The decentralized management of budget must be consistent with the decentralization

of socio-economic management and management capacity of state authorities at all levels

Any level of authorities, which perform well at any government public goods andservices provision, should be assigned to perform that Hence, decentralization of budgetmanagement should be consistent with the management capacity of all levels of government,including management capacity, revenue sources development, and spending tasks execution

It will promote the benefits of decentralized budget management, improve allocative andbudget use efficiency

e Ensuring efficiency.

The efficiency in the decentralization of state budget management is indicated in 2aspects, which are general efficiency created from legal provisions on decentralization of statebudget management and efficiency when considering expenses in the process of decentralizingstate budget management The first aspect is closely related to the scope of allocating revenuesources management and spending tasks of government budget Decentralized management ofstate budget collection must achieve the goal of accuration, complete and timely collection ofrevenues as prescribed with the lowest cost Regarding the second aspect, for every additionallevel of government budget, additional operation and management costs incurs, which includethe costs of that additional level of government budget and other related authority Forinstance, state budget inspection, supervision and approval activities Therefore, it is necessary

to build a government budget system with minimum amount of intermediaries

The effectiveness in decentralizing the state budget management shows the transparency

in allocation of spending responsibilities, associating resources with responsibilities andassociating responsibilities with powers of each level

f Ensuring fairness

There is a need for ensuring fairness in the decentralization of state budget managementdue to the following reasons:

(1) Different locality holds different natural and social characteristics, different level of economic

growth When applying the same basic principles of the decentralization of state budget

management to every locality, it could create unfairness and gradually cause bigger gap indevelopment conditions among locality

(2) The decentralization of revenues and the task of state budget spending between the central and

local governments is the main tool to implement the harmonization in the entire state budgetsystem The state plays a role of coordinator through the central government budget bysupplementing budget Supplementing budget is to balance a budget or to serve a certainpurpose This provision allows the efficient allocation of resources between localities tofacilitate mutual development

g Ensuring to increase the effectiveness of state budget management and control.

An important issue for any state budget system is to minimize possible losses afterimplementing the state budget management decentralization To ensure the increasedefficiency in the management and control of decentralization of government budgetmanagement, it is essential to build State budget control institutions, which have a higher level

of independence, as well as the authority to handle violations in budget management.Additionally, local authorities need to increase management capacity and accountability Whendeciding the level of decentralization of government budget management, tax collectingresponsibility and spending tasks for locality, we need to evaluate local management capacity,including: decision making capacity related to budget, capacity to organize collecting andspending tasks and budget monitoring capacity

1.2.3 Grounds of the decentralization of government budget management

a Based on the capability of local government to provide government public goods and services

Any level of authority that has the optimal capacity to provide government public goodsreceives the decentralized revenue sources and budgetary spending tasks

b Based on natural, economical, social characteristics of locality

When allocating revenue sources, spending responsibility, it is crucial to consider bothadvantages and difficulties to every locality to ensure balanced development among regions aswell as fairness in receiving government public goods and services for citizens

c Based on the form of government structure

Each level of government in the state apparatus performing the assigned functions andtasks in an administrative-territory area must have a contingent of officials, public employees,facilities and financial means Therefore, the structure of the state government apparatus, thelegal status as well as the functions and duties of state management of all levels of governmentare the basic basis for building a state budget system in a country

1.2.4 Contents of decentralization of state budget management

From the perspective of local state budget in the provinces and cities, decentralization of statebudget management has many contents, but mainly has the following 5 basic contents:

1.2.4.1 Decentralization of authority to issue policies, standards, and budget norms

Decentralization of authority to issue policies, standards, budget norms is understood asthe empowerment of local governments in issuing policy mechanisms under their authority,especially specific mechanisms, ensuring consistency with local socio-economic developmentobjectives and practical situation In all levels of government, the provincial People's Council

is allowed to decide the decentralization of revenue sources and spending tasks among thelocal government budgets at all levels; provincial Citizens’ Councils are allowed to decide on anumber of fees and charges in the list decentralized by the National Assembly StandingCommittee; provincial Citizens’ Committee are allowed to promulgate a number of regimes,budget spending norms, budget allocation norms to suit the conditions in the localgovernment The specific provisions on revenue sources, spending tasks and the authority to

promulgate revenue policies and regimes have contributed to eliminate the situation where thelocalities stipulate receivables that violates law provisions

1.2.4.2 Decentralize the management of revenue sources and State budget spending tasks

The decentralization of revenue sources needs to ensure a number of principles ofeconomic efficiency and management efficiency: corresponding to the decentralized spendingtask, we need to ensure the balance of benefits - costs of taxpayers Also, minimize the tax riskimpacts and administrative costs related to tax administration and collection

The decentralization of spending tasks should be developed in accordance with the localgovernment's responsibility to provide government public goods, clearly and transparentlywithout overlapping spending tasks among levels, ensuring economic efficiency, fiscal justice,accountability and administrative management effectiveness

1.2.4.3 Decentralize the operational management to implement the state budget cycle

Decentralized management of the state budget shows the relationship between differentlevels of state government in a state budget cycle including all stages: budgeting, approval,execution, settlement, inspection and budget examination The requirement of this content is todeal with the relationship of the level of participation, administration and control of theauthorities, state management agencies and specialized agencies in each stage of the budgetmanagement cycle

Citizens' Councils at all levels have powers and responsibilities in deciding local budgetestimates; local budget allocation; allocate estimated expenditure to departments, agencies andsectors according to specific fields, decide the additional amount from their budgets tosubordinate's budgets, and approve budget settlement

1.2.4.4 Decentralize borrowing to local governments

Decentralizing loans to local authorities, including decentralizing to local governments todecide on loans, establishing debt limit frameworks and controlling loan decisions, and methods ofloans allowed to be used Decentralization of decision-making authority: Local budgets arebalanced based on the principle that total expenditures do not exceed total revenue

1.2.4.5 Decentralize in supervision and inspection of state budget

The purpose of decentralization in the supervision and inspection of the State Budget is

to control the management and use of the budget, money and state assets; contribute to savingpractice, fight against corruption, prevent loss and waste, detect and prevent law violations;improve the efficiency of using state budget, money and assets

1.2.5 Indicators of decentralization of state budget management

1.2.5.1 Quantitative indicators

a The group of indicators reflects the decentralization of state budget revenues and expenditures

Revenue Decentralization Indicator (RDI): Is determined by the ratio between total local

budget revenues and total state budget revenues

RDI = Total local budget revenues

Total state budget revenues

Expenditure Decentralization Indicator (EDI): Is determined by the ratio between total

local budget expenditure and total state budget expenditure The formula to determine theincome ratio of local authorities is as follows:

EDI = Total local budget expenditure

Total state budget expenditure

b The group of indicators reflects the financial autonomy capability

Revenue Autonomy I (RA I ): It is determined by the ratio of the total state budget revenues

within the local budget to the total local budget revenue

RAI =

State budget revenue of the local government aloneState budget revenue of the local government alone + Subsidies from

central budget

Revenue Autonomy II (RA II ): It is determined by the ratio of the total local revenues

RAII = Total of state budget revenues of locality alone

Total local budget expenditures

c The group of general indicators reflects the economic efficiency of the decentralization of state budget management

Production - Revenue Indicator (PRI): Is the average of the two indicators RDI and EDI

mentioned in part a

Mixed efficiency Indicator of decentralization of state budget management (CR), which is

an indicator that combines information between decentralized state budget revenuesmanagement and decentralized state budget expenditure management

c Assessment framework for transferring state budget sources mechanism between different levels of government

c Debt assessment framework of local authorities

1.3 INFLUENCING FACTORS TO THE DECENTRALIZATION OF GOVERNMENT BUDGET MANAGEMENT

1.3.1 Subjective factors

1.3.1.1 Management capacity of the leader and specific qualification of public employees in the government budget management system

1 Creative thinking group

This group shows the competitive ability to diagnose and identify the factors thatinfluence the operation of local state budget

2 Organising group

The group has the capacity to organize urban budget activities which is shown in theability to plan, design organizational structure, allocate resources, assign and delegate tasks toeach position in the management Also, the group has the ability to manage, use local budget,

supervise and evaluate the implementation of management, administration, use of local budget

in each part of local government

3 Motivating and encouraging management, administration, use of local budget activities group

This group represents the ability to influence, inspire; ability to understand the needs andaspirations to motivate all and each part of the apparatus to work in an effort to manage,operate and use local budget effectively

1.3.1.2 Organizational structure of the apparatus that decentralize the State Budget management

Organizational structure of the apparatus and management processes, powers andresponsibilities of each stage, each section, the relationship of each part in the process ofimplementation from the formulation, execution, settlement and audit of state budget revenuehave great impacts on decentralization of state budget management

1.3.1.3 The level of information technology application to the State Budget management decentralization

The application of information technology to the decentralization of state budgetmanagement will save processing time, ensure accuracy, speed and consistency in data,creating a base for future effective operation reform process

1.3.1.4 Specified functions of local authority

The basic function of the state is to provide public services such as education, health,transportation, public security, public utility services, environmental sanitation, urbaninfrastructure and other administrative functions, management at a higher level, more complex andmore urgent Therefore, when designing decentralization mechanisms for state budgetmanagement, it must be based on the particularities, functions and tasks of local authorities

1.3.1.5 Capability of state budget resources and budget information

• Clearly delineate roles and responsibilities among ministries and levels of government,creating transparency in state budget expenditure reports and accountability of agencies;

• Public disclosure of compliance and reporting of state budget spending, this requires theapplication of standards, which is related to the extent, accessibility and credibility of budgetinformation in the annual budget process and accounting system of state budget spending;

• Publicize the entire process of Budget spending, from the stage of preparation,allocation, spending decisions, administration, inspection and supervision to reporting;

1.3.2 Objective factors

1.3.2.1 Macro economic stability

With a stable economic environment, the size of state budget will be provided fully and

on schedule In contrast, when the economy is unstable, the economic growth rate is slow, thegovernment will tighten credit to curb inflation, causing the size of state budget will bereduced Inflation also causes raw material prices to rise, leading to higher input costs.Therefore, it can be said that socio-economic factors have significant impacts ondecentralization of state budget management

1.3.2.2 Mechanisms, policies and regulations of the State on decentralization of state budget management

The delineation of responsibilities and powers of agencies and authorities at all levels indecentralizing the state budget management also significantly affects the quality of statebudget management Only on the basis of clear assignment of responsibilities and powers ofeach agency and locality will create conditions for decentralized management to effectivelyissue documents on state budget management without wasting effort and money

1.3.2.3 Decentralization of state management to local administrative agencies

Decentralization of state management to local authorities can only be implemented in

practice when and only when the local authority has sufficient financial resources, autonomyand self-determination in such revenue and expenditure activities.

1.3.2.4 Fairness among levels of authority

When a task transferred from the Central Government, the upper level authority to thelower level authorities in a hierarchical manner, the task may not be well performed Althoughtasks and responsibilities are transferred, it is not transferred in accordance with powers andresources

1.4 EXPERIENCES OF SOME COUNTRIES AND LOCALITIES ON THE DECENTRALIZATION OF GOVERNMENT BUDGET MANAGEMENT AND LESSONS FOR HANOI

1.4.1 Experiences of some countries on the decentralization of government budget management

1.4.1.1 Thailand’s experiences on decentralization of their budget management

A highlight from the success of decentralization in Thailand is the encouragement ofincreasing autonomy of local authorities, especially in the revenue and expenditure activities oflocal budget However, the percentage of spending increases of local authorities is due to anincrease in funding that is transferred at the same time as the tasks from the Central authority Themain task is related to the expenditures for small-scale public services such as rehabilitation ofinfrastructure (eg roads, bridges, irrigation canals, water supply and drainage)

1.4.1.2 Indonesia’s experiences on decentralization of their budget management

With stronger decentralization, local authorities receive greater autonomy and inparticular the expansion in the powers of local councils The Central authority has no longerinterfered with human resources allocation in local authorities

The fact that the local authorities are allowed to set up taxes and fees could increase theirimmediate revenue, but if these taxes and fees are not carefully calculated and reasonablyconsidered, local business activities will be impaired In the long run, it will lead to negativeconsequences

1.4.2 Experiences of some localities on the decentralization of government budget management

1.4.2.1 Experiences from Ho Chi Minh City

a Revenue sources of state budget

In addition to revenues arranged by the city, they are supplemented with additionalcapital construction investment The City People's Council allows the City People's Committee

to mobilize other capital sources such as calling for investment in the form of BT Transfer), BOT (Build- Operate- Transfer), BTO (Build- Transfer- Operate) projects to keyinfrastructure projects and public services, making the best use of ODA capital and fundingfrom the World Bank (WB), contributing to promote socio-economic development of Ho ChiMinh City

(Build-b About spending tasks

Management of recurrent expenditures of the State budget: The city has implemented themechanism of autonomy on payroll and administrative management costs for administrativeagencies, assigning financial autonomy to public service delivery units Management of budgetcapital-funded construction expenditure: With the principle of prioritizing capital for key andurgent projects capable of being completed and put into use; during the process ofadministration, the authorities regularly review and monitor the implementation progress of theproject