Openness and transparency of state budget in Vietnam today

In o de to efo m fiscal policy and the behaviou of gove nment agencies, Vietnam has enacted the State Budget La (20 5), moving close to inte national p actices on t anspa ency and fiscal[r]

N VETNAM TODAY

Dr o uo 1-LLA f uye Qua T uo 2

I troduct o

Like othe count ies, Vietnam needs gove nance that is t anspa ent and that enables pa ticipation by citizens To achieve those goals, the state needs to st engthen its institutions and change la s to ensu e fiscal t anspa ency hilst o king out mechanisms that enable citizens to kno about and pa ticipate in budgeting p ocesses

In Vietnam, su veys on open Budget Index (OBI) (2008)> P ovincial Open Budget Index (POBĨ) (20 7) and the Minist y open Budget Index (MOBI) (20 8) have sho n that assessment tools a e needed to p omote budget t anspa ency as a ay to c eate competition fo funding and to mo e effectively manage public esou ces Any agency using esou ces f om the state budget must ensu e t anspa ency and accountability

in expenditu es In addition, a mechanism that allo s citizens to kno about and

pa ticipate in the budgeting p ocess is essential to ensu e the best use of gove nment funds

This pape int oduces some concepts and p inciples of budget t anspa ency

in elation to gove nance The pape then summa ises the esults of applying tools designed to p omote and measu e budget t anspa ency in Vietnam, including OBI, POBI and MOBI Related changes in institutions, la s and the oles of functional agencies in ensu ing budget t anspa ency a e documented It sho s the changes

to a ds good gove nance goals in Vietnam

J Faculty o fLaw, Vietnam National University, Hanoi

2Centrefor Development andInvestment - CD/

Ope ess, Tra spare cy a d Accou tab l ty State Gover a ce

Budget tra spare cy a d gover a ce

ransparency is a fundamental cha acte istic of good gove nance It can be defined as a ay of making and implementing decisions in compliance ith la s and egulations It also means that info mation about the p ocesses of p omulgating and implementing decisions must be made public, pa ticula ly to the beneficia ies of (o affected people f om) decisions T anspa ency also equi es that info mation be fully disclosed and be delive ed in easy-to-unde stand fo mats, including in the media so that people can di ectly access it

T anspa ency has a close elationship ith the ule of la and accountability State- un agencies a e accountable to those ho a e affected by thei decisions o actions Accountability cannot be ensu ed ithout espect fo and implementation of the ule of la and t anspa ency

The focal point ofthe elationship bet een citizens and state is seen in decisions on

ho public esou ces a e mobilised and spent The budget is he e the most impo tant questions about the ole of the state a e implicitly aised and ans e ed Inc easing o dec easingbudget spenđingmaydi ectlyo indi ectìyaffectthelivesofpeople,pa ticula ly disadvantaged g oups such as omen, the poo , child en and ethnic mino ities

tate budgets eflect the state's p io ities in its policies and p og ams The state budget is the most po e ful economic tool fo the state to meet the needs of the people, pa ticula ly the poo and the disadvantaged T anspa ency in the budget cycle ill p ovide oppo tunities fo people to pa ticipate in the policy-making p ocess and esou ce allocation

Budget transparency is defined as the full disclosu e of all elevant fiscal info mation in a timely and systematic manne 2 If the state budget is not made public and t anspa ent, budget info mation is difficult to access, available data may not be eliable and cannot be used to monito and assess the ta geting and effectiveness of expenditu es When people have access to info mation on the state budget and a e

p ovided ith skills and the oppo tunity to pa ticipate in the budgeting p ocess by the state, they ill heip to imp ove the quality ofpublic se vices and gove nance efficiency Budget t anspa ency is a tool that empo e s people to influence policies, p og ams and esou ce allocation Budget t anspa ency equi es the state to be p oactive in its

1Vu Cong Giao and pa tne s, Mode n gove nance: Theo etical and p actical issues, 20 7, pp 43

2OECD> Best p actices fo Budget t anspa ency, 2002

budgeting p ocess and to p ovide budget documents The info mation mentioned in budget documents should be p esented in a simple, easy to unde stand manne fo the people Budget info mation also needs to be p ovided in a timely manne so that people can effectively pa ticipate in the budget cycle

eople participation in the budget p ocess b ings about many benefits and is impo tant fo the efficiency of state gove nance Resea ches have sho n that hen people have access to info mation on the state budget and a e p ovided ith skills and the oppo tunity to pa ticipate in budgeting ith the state and local autho ities, this has esulted in significant imp ovements on the p ovision of public se vices and gove nment efficiency2 Citizen pa ticipation is closely linked to budget t anspa ency and accountability

The influence of budget t anspa ency on state gove nance is evident in fou espects

First, budget t anspa ency helps to educe co uption and esults in mo e efficient use of public esou ces3 If the state budget is fully and p omptly disclosed

to the people, they ill be bette able to monito budgeting and spending p ocesses National, p ovincial and local gove nments in Vietnam ill be less likely to manipulate budgets fo political and c iminal ends and ill give employees fe e oppo tunities

to commit co upt acts A budget lays out a gove nments p io ities in te ms of policies and p og ams Ho eve , even hen a budget is allocated to specific p og ams, including those ta geting disadvantaged and vulne able g oups, poo management, misallocation and co uption can esult in beneficia ies not being eached as expected econd, budget t anspa ency is a tool to inc ease citizen t ust in gove nment

In many places in the o ld, people's pe ceptions and attitudes to a ds gove nment

a e often negative In the eyes of the people, the gove nment is often associated ith

co uption, poo public se vice quality, inadequate inf ast uctu e and asteful use of public esou ces Ifbudget allocations fo policies and p og ams a e made public, policy implementation ill be imp oved, the eby inc easing people’s t ust in gove nment

Inte national Budget Pa tne ship (20 2), The Po e of Making Simple: A Good Gove nment Guild to Developing citizen budget See mo e: https:// inte nationalbudget o g/publications/the-po e -of-making-it-simple-a-gove nment-guild-to-deveỉoping-citizens-budgets/

2Bellantoni, A , 20 4 Citizens’ Pa ticipation in Public Policy-Making Pa is: OECD Tại https://site esou ces

o idbank o g/EXTSOCIALDEVELOPMENT/Resou ces/244362- 3 4 504055/4348035- 3527366 8664/ BT_What_ Why_Ho pdf

3 Wo ldbank, Budget t anspa ency: What, Why and Ho ? See mo e: https://site esou ces o ldbank o g/ EXTSOQALDEVELOPMENT/Resoii ces/244362- 3 4 504055/4348035- 3527366 8664/BT_What_Why_Ho pdf

Openness, ransparency and Accountability in tate overnance

Openness> ransparency and Accountability in tate overnance

hird, budget t anspa ency is a tool to gene ate highe evenue fo state budgets When budgets a e t anspa ent, pa ticula ly in the allocation of funds, citizens ill be enabled to monito ho thei taxes a e being used The efo e, they ill be mo e likely

to pay mo e taxes so that the gove nment can pe fo m its functions if they t ust that thei money ill be ell spent

Fourth, openness and t anspa ency in state budget also cont ibute to the sustainable development goal (SDG) No 6: Access to Info mation, T anspa ency,

Pa ticipation and Accountability

2 Regulations on budget t anspa ency in Vietnam

The Gove nment of Vietnam has set a goal to p omote t anspa ency and accountability, namely: (i) By 2020, complete basically the task of building the Vietnamese legal system in a synch onized, unifo m, and feasible manne ; embodying openness, t anspa ency, stability, accessibility, ith lo compliance costs; and based

on a set ofpolicy systems that have been planned in each secto that a e consistent ith socio-economic development goals, (ii) Institutionalize the p inciples of assignment, coo dination and cont ol of state po e ; p event and combat co uption; st engthen the effectiveness of gove nance; enhance openness, t anspa ency, accountability in the

o ganization and ope ation of state agencies, institutions in the political system, Vietnam has oined the United Nations Convention Against Co uption (ƯNCAC) This sho s that Vietnam has a st ong commitment in this a ea That commitment is clea ly eflected in evisions ofthe Anti-co uption La 2005 (amended and supplemented in 2007,20 2) and 20 8 La on Anti-Co uption

Vietnam has committed to the implementation of sustainable development goals (VSDG 6) focusing on peace, fai ness and equality, including combating co uption and ensu ing t anspa ency and efficiency

Vietnam has amended, enacted many la s elated to disclosu e, t anspa ency and people’s ight to info mation in the budget p ocess, including Law on ublicInvestment>

2019 (A ticle 4 - Public t anspa ency of public investment); tate Audit Law, 2015 (A ticle 50 - Publicity of audit epo ts - and A ticle 5 - Publicity of summa ization epo ts on annual audit esults and epo ts on esults of the implementation of audit conclusions and p oposals); Law on Access to Information 2015 and Law on tate 1P ime Ministe , Decision No 225/QD-TTg dated Feb ua y 4,20 6 on the Plan fo state administ ative efo m

in the pe iod 20 6-2020

Ope ess, Tra spare cy a d Accou tab l ty State Gover a ce

Budget 2015 p omoted mo e t anspa ent mechanisms in national and local finance In addition, Vietnam has also enhanced the efficiency of public debt management ith the adoption of Law on ublic Debt Management, 2017

In o de to efo m fiscal policy and the behaviou of gove nment agencies, Vietnam has enacted the State Budget La (20 5), moving close to inte national

p actices on t anspa ency and fiscal quality, including disclosu e equi ements on state budget documents in budgeting p ocesses and medium-te m fiscal f ame o k plans2 Hie ove -a ching legal f ame o k fo the disclosu e of state budget info mation

is the La on State Budget (20 5) Clause , A ticle 5, La on State Budget (20 5) details info mation that must be disclosed, and the content, fo m and timing ofbudget publication Documents that must be made public include: (i) Executive budget

p oposal submitted to the National Assembly and People’s Councils; (ii) Enacted budget decided by the competent autho ities; (lii) Repo t on the implementation of the state budget; (iv) Final statement of the state budget app oved by the National Assembly and People's Councils

Content ofopenness: (i) Figu es and notes ofExecutive Budget P oposal submitted

to National Assembly and People’s Councils, (ii) Enacted budget decided by competent autho ities, (lii) situation of implementation of state budget and settlement of state budget; (iv) esults of implementing State Audit p oposals; except fo detailed figu es and notes in the fields of defence, secu ity and national ese ve Clause 3, A ticle 5 also states that the content of openness must meet the c ite ia and fo ms p esc ibed by the Minist y of Finance

Form of openness: Hie disclosu e of the state budget must take seve al fo ms: announcement at a public meeting; posting in offices of agencies, o ganizations and units; p inted mate ial; notifications to elevant agencies, o ganizations, units and individuals; posting on ebsites; notices in the mass media

ime ofpublication: The Enacted Budget epo t must be publicized ithin five (5) o king days f om the date the Gove nment submits to the National Assembly deputies and People’s Committees and People’s Council deputies The Budget estimation epo t al eady decided by competent autho ities, state budget statement

State Budget La 20 5 (A ticle 5) and Ci cula No 343/20 6/TT-BTC

2Resolution No 25/20 6/QH 4 of the National Assembly, p omulgates medium-te m fiscal policies Based on the Socio-Economic Development Plan (Socio-Economic) fo the pe iod 20 6 - 2020

Ope ess, Tra spare cy a d Accou tab l ty State Gover a ce

epo ts al eady app oved by competent autho ities, esults of state budget audit, esults

of the implementation of ecommendations ofthe State Audit Office of Vietnam must

be made public no late than 30 days afte the date it is issued In-yea epo ts, including qua te ly, and mid-yea epo ts, must be made public ithin 5 days of the end of qua te s and mid-yea The annual state budget implementation epo t is publicized hen the Gove nment submits to the National Assembly at the next mid-yea meeting

3 Level of ope a d Tra spare t Budget V et am

In o de to measu e the level of openness and t anspa ency ofthe state budgets in Vietnam, some of tools have been deployed th ough su veys, such as: (i) open Budget Index (OBI); (ii) Minist y Open Budget Index (MOBĨ); and (iii) P ovincial open Budget Index (POBI) OBS, MOBS and POBS su veys aimed to assess the availability, completeness and timeliness of budget documents made available on ebsites of National and P ovincial Gove nments, Minist ies and othe gove nment agencies Minist ies and cent al autho ities can efe ence and measu e the level of openness and

t anspa ency in state budget management and the implementation of the 20 5 State Budget La Use of these tools can help in inc easing the confidence of the people and stakeholde g oups in budget management and implementation

In gene al, OBS, MOBS and POBS su veys sho that Vietnam has still little o

no full disclosu e of state budget info mation in acco dance ith the p ovisions of Vietnamese La and inte national p actices The OBI 20 7 index of Viet Nam as 5/ 00 points, the ave age POBI 20 8 index of 63 p ovinces and cities as 50 / 00 points and the ave age MOBI 20 8 index of 7 minist ies and cent al agencies as / 00 points Details of level disclosu e and t anspa ency of Vietnam’s budget ith each specific index belo :

3'L Ope Bud et I dex (OBI)

The Open Budget Su vey (OBS) is an initiative to p omote budget disclosu e, coo dinated by the Inte national Budget Pa tne ship (IBP) and ith independent civil society o ganizations in mo e than 00 count ies a ound the o ld In Vietnam, the

Inte national Budget Pa tne ship, Open Budget Su vey: http:// inte nationalbudget o

g/open-budget-su vey/methodology/

The Minist y open Budget Su vey (MOBS), P ovince Open Budget Su vey (FOBS) by BTAP, CDI, and VERP since 20 7, based on the inte national c ite ia of the Inte national Moneta y Fund (IMB), O ganizations

fo Economic, Coope ation, and Development (OECD), The Inte national O ganization of Sup eme Audit Institutions (INTOSAI) See mo e: ngansachvietnam net

Cente fo Development and Integ ation (CDI) has been an IBP pa tne fo OBS since

2006 This is the only study in the o ld to evaluate and compa e budget t anspa ency, public pa ticipation in budget management and monito ing at the count y level The 20 7 OBS su vey also sho ed that Vietnam has yet to fully, and in a timely manne , disclose budget documents in alignment ith inte national best p actices (IBP, 20 0) Of the eight (8) budget documents that must be disclosed acco ding to ORS2>Vietnam has published only fou (4) budget documents, including: p e-budget statement, enacted budget, in yea epo t and end yea epo t Othe budget documents

a e not public o fo inte nal use only

Vietnam has made significant effo ts to imp ove the level of openness and

t anspa ency of the state budget by enacting La on State Budget 2002 and 20 5 but these have been insufficient to imp ove Vietnam's OBI agg egate sco e Vietnam’s OBI inc eased ove the pe iod 2006-20 2, but slightly dec eased in 20 5-20 7

3 2 Ope ess a d tra spare cy of m stry a d ce tral a e cy bud ets

CDI and the Institute fo Economic Policy and Resea ch (VEPR) conducted the Minist y Open Budget Index su vey (MOBI)3 The su vey sho ed that 37 minist ies and cent al agencies disclosed less than equi ed budget info mation The e a e 7 out of 37 minist ies and cent al agencies had MOBI sco es in 20 8, accounting fo

45 5%, including 2 minist ies and cent al agencies disclosed at least one of the six (6) documents equi ed to be publicly available on thei ebsites The e a e 5 agencies only sco e on accessibility (ho eve , it is noted that these agencies c eated a folde fo documents on the ebsite but the folde is empty) The e a e 20 minist ies and cent al agencies disclosed no budget info mation4

Ope ess, Tra spare cy a d Accou tab l ty State Gover a ce

Inte national Budget Pa tne ship, op en Budget su vey (20 7) Read mo e at https:// inte nationalbudget

o g/open-budget-su vey/ esults-by-count y/count y-info/?count y=vn

2 Inte national Budget Pa ne ship, Guild to T anspa ency in Gove nment Budget Repo t: Why A e Budget Repo ts Impo tant, And What Should They Include? Read mo e: https:// inte nationalbudget o g/ publication/guiid-to-t anspa ency-in-gove nment-budget- epo t- hy-a e-budget- epo ts-impo tant-and-hat-should-they-include/

3CDI (20 ), Minist y Open Budget Index epo t 20 8 (MOBI20 8) Minist y Open Budget index Su vey 20 8 (MOBĨS 20 8) is the fi st independent su vey in Vietnam assessing the level ofbudget disclosu e of37 minist ies and cent al agencies, of hich 3 minist ies and cent al agencies a e estimate units and 6 cent al agencies and

o ganizations suppo ted by the state budget The 20 8 MOBI su vey assesses the level of budget disclosu e based on the availability, timeliness, completeness and accessibility of 6types of budget documents that must be disclosed unde the 20 5 State Budget La and Ci cula No 6 /20 7/TT-BTC

4CDĨ (20 ), Minist y Open Budget Index epo t 20 8 (MOBI20 8)

Openness, ransparency and Accountability in tate overnance

The MOBI20 8 su vey as based on the fou (4) c ite ia ofavailability, timeliness, completeness and accessibility The main esults a e p esented belo

Accessibility of budget documents The esult of MOBI 20 8 su vey found that: only 2 of agencies and o ganizations made public at least one of thei budget documents (accounting fo 32,43%); 25 minist ies and agencies had not published any budget documents at the time of the su vey (accounting fo 67,57%) Enacted Budget

20 as the most commonly published document - 0 of the 37 agencies evealed this (accounting fo 27%) Ranked second as the 20 7 End yea epo t on budget implementation ith six (6) of the 37 minist ies/agencies publishing (accounting fo 6,2%) Only the Minist y of Finance disclosed a -month implementation epo t as ell as End yea epo t 20 8

Table Numbe / pe centage of Minist ies and cent al agencies that publish thei budget documents

Type of document pe centageNumbe /

I Estimated evenue - expenditu e of the unit budget in 20 0 (27%)

II Repo t on implementation ofbudget fo the st qua te of 20 8 0 (0%) III Repo t on implementation ofbudget fo the fi st 6 months of 20 8 0 (0%)

IV Repo t on implementation ofbudget fo the fi st months of20 8 (2 7%)

V Repo t on implementation ofbudget fo the hole yea 20 8 (2 7%)

VI Final settlement of state budget evenues and expenditu es in 20 7 6 ( 6 2%)

imeliness o f budget documents MOBI 20 8 found that minist ies and cent al agencies had gene ally not disclosed budget documents on time as p esc ibed Out of the 0 units that published Budget Estimates 20 , only one ( ) published on time,

as p esc ibed, ithin 5 days of Decembe 3 , 20 8 Rega ding the 20 7 budget finalization document, 4 out of 6 units evealed info mation in due time as p esc ibed The emaining documents, including implementation epo ts at 3-months, 6-months, -months and yea -end e e eithe not published at all o e e published late than deadlines

CDI (20 ), Minist y Open Budget Index epo t 20 8 (MOBI20 8) See mo e: ngansachvietnam net

Openness> ransparency and Accountability in tate overnance

Compre e s ve ess o ft e bud et docume ts Othe public documents disclosed

by minist ies and cent al agencies su veyed a e often lack ofexplanato y epo ts hich

a e disclosed documents o incomplete tables to be disclosed, hile explanato y epo t

of budget documents is an impo tant document to explain to the people about the budget p ocess and implementation in each o ganization

33 Prov c al ope Bud et I dex (POBI)

Simila ly to MOBI20 8, the P ovincial open Budget Index (POBI) as the fi st independent su vey in Vietnam to evaluate the level of budget t anspa ency ac oss

63 p ovinces and cities The POBI su vey as conducted by GDI and the Institute

fo Economic and Policy Resea ch (VEPR) The POBI Su vey 20 8 assessed the level of budget t anspa ency based on the availability, timeliness, completeness and accessibility of nine ( ) budget documents, including seven (7) “must be disclosed” budget documents unde the La on State Budget, 20 5, and t o (2) “need to be disclosed” budget documents unde good inte national p actice

The esults of POBI 20 8 sho ed an ave age index of p ovincial budget

t anspa ency of 50 / 00 points, significantly highe than the POBI 20 7 ave age of

30 5 points It sho s that the level of publicity in the 63 p ovinces / cities in 20 8 has imp oved compa ed to 20 7 In 20 8, six (6) p ovinces disclosed budget info mation SUFFICIENT manne and none of the p ovinces sco ed 0 In cont ast, in POBI

20 7, fou (4) p ovinces sco ed 0 and none of the p ovinces sufficiently announced info mation on thei budgets (Table 2)

Table 2 POBI ra k gs (per od 20 7-20 8)

ea SUFFICIENT

75" 00 sco es

RELATIVEL SUFFICIENT

50 - unde 75 sco es

INADEQUATE 25- unde 50 sco es

SCANT

0 - unde 24 sco es

20 8 6/63 p ovinces 27/63 p ovinces 2 /63 p ovinces /63 p ovinces

20 7 0/63 p ovinces 2/63 p ovinces 26/63 p ovinces 25/63 p ovinces

CDI and VEPR (20 8); P ovincial open budget index epo t 20 7

CDI and VEPR (20 ); P ovincial open budget index epo t 20 8

Openness, ransparency and Accountability in tate overnance

T mel ess of bud et docume ts

Vietnam’s p ovinces/cities have gene ally yet to publicized thei budget documents on time in acco dance ith p ovisions of the La of State Budget (20 5)

P ovincial Budget P oposal 20 , app oved by the People’s Council, and P ovincial Budget Final Settlement 20 7 e e the timeliest published documents, at 6 % and

4 2% (Table 3)

The equi ement fo the timeliness of budget documents published in 20 8 sa imp ovements f om 20 7 Ho eve , p ovinces did not disclose these documents in the time f ames mandated in the La on State Budget 20 5 (Table 3)

Table 3: Numbers a d perce tatges of prov ces d sclos g budget docume ts

due t me (F scal Year 20 7-20 8)

D aft of the P ovincial Budget P oposal submitted to the

P ovincial Budget P oposal app oved by People’s Council 35 (55 6%) 3 (6 %)

P ovincial Budget Implementation Repo t - Qua te N/A (30 2%)

P ovincial Budget Implementation Repo t - Qua te 2 N/A 27 (42 %)

P ovincial Budget Implementation Repo t - Qua te 3 ( 7 5%) 23 (36 5%)

ea End P ovincial Budget Implementation Repo t 2 (33 3%) 5 (23 8%)

P ovincial Budget Final Settlement 30 (47 6%) 3 (4 2%)

ource: OBI Report 2018 Complete ess of bud et docume ts

POBI 20 8 sho ed that disclosu e of budget documents had imp oved ove

20 7 but still fell sho t of statuto y equi ements 0/63 p ovinces fully disclosed 3 sub-fo ms attached to d afts of 20 P ovincial Budget Estimates submitted to the

P ovincial People’s Councils Only 6/63 P ovinces published all 3 sub-fo ms The

ea ly Repo t on Implementation of P ovincial Budget in 20 8 of25/63 p ovinces fully epo ted th ee (3) fo ms (Table 4)