The Public Financial Management Reform Project (PFMRP)

The Socialist Republic of Vietnam The Public Financial Management Reform Project (PFMRP) Presented by Vice-Minister of Finance: Dr Tran Van Ta Content • • • • • • Reform background Project goal Project description summary Sustainability and risk considerations Project progress Lessons learnt so far Reform background • The Public Administrative Reform Master Plan over 2001-2010 sets platform • The revised State Budget Law promotes decentralization, transparency, accountability, and administrative rationalization & streamlining • The reform areas are recommended from analysis supported by the World Bank and other donors i.e PER 2000, PER 2004, CFAA 2001, Vietnam Development Report 2003,… Some weaknesses • Fiscal sustainability concerns: declines in crude oil revenues, mismatch between capital and recurrent expenditures, salary reform pressure, extra-budgetary accounts, non-performing loans to SOEs, and weak prioritization processes • Poor budgetary information: lack of fully consolidated budget, lack of a common accounting structure, lack of integrated, electronic data recording Identified five areas of reform The PFMRP addresses the first 04 areas of reform: • Budget management • Debt management • SOE fiscal risk management • Public asset management To be addressed by the other important projects: • Revenue management: The PFMRP’s project goal • Aiming at good governance, contributing to poverty reduction • Objectives: – to strengthen budget planning, execution, reporting and accountability, – to strengthen the links between budget management and the developmental goals within a medium-term expenditure framework; and – to improve the management of public debt Project performance indicators • Improved accuracy, timeliness, relevance, transparency and compliance with international best practices; • Better planning of the State Budget and the Public Investment Program; and • Greater fiscal sustainability Project description overview • Component 1: Strengthening Treasury and Budget Management • Component 2: Strengthening State Budget and Investment Planning • Component 3: Strengthening Management of Public Debt and Monitoring of SOE Fiscal Risks Component 1: Strengthening Treasury and Budget Management • The Treasury and Budget Management Information System (TABMIS) will be operational in all central, provincial and district treasury offices, finance & planning agencies, based on a new, integrated account code structure • Review of policies and business processes in the development of Unified Chart of Accounts/State Accounting regime • Treasury Single Account Component 2: Strengthening State Budget and Investment Planning • Technical assistance for the piloting of the Mediumterm Fiscal Framework (MTFF) and the Medium-term Expenditure Frameworks (MTEF) • Change management and communication of the new practice • Design and implementation of a budget preparation system Component 3: Strengthening Management of Public Debt and Monitoring of SOE Fiscal Risks • Technical assistance and capacity building to support strengthening of recording and management of domestic debt • Procurement of systems for recording, consolidation and management of public debt • Inventory of SOE Fiscal Risks Sustainability & risk considerations • Sustainability: an emphasis on training and ‘learning by doing’, a strong legal framework, making a platform for further development as committed • Risks: – System risks: costs of supporting and upgrading; Difficulties in the integration of different accounting structures; Network infrastructure preparedness – Organizational risks: Procurement and implementation capacities; Substantial organizational changes; Acceptance of new technologies, practices Project progress • Successfully completed the procurement of TABMIS • Reviewing of policies and business processes, organizational preparedness • Developing Unified Chart of Accounts • Studying TSA • Produced MTF&EF documents of good quality for the first time • Established Middle Office, developing Public Debt Management and Mobilization Plan, domestic markets • Training and building capacity Lessons so far • The flexible project design allows additional interventions and adjustments to be discussed and agreed if necessary • Independent Verification and Validation (IV&V) and other independent consulting services are needed • Leadership oversight is reinforced by regular reports and meetings and an empowered Project Management Unit (PMU) • Change management and well-targeted training activities are even more emphasized during the process • Early participation of project beneficiaries and all other stakeholders is a prerequisite Thank you! & The Ministry of Finance looks forward to your cooperation and assistance ... of reform The PFMRP addresses the first 04 areas of reform: • Budget management • Debt management • SOE fiscal risk management • Public asset management To be addressed by the other important projects:... • • Reform background Project goal Project description summary Sustainability and risk considerations Project progress Lessons learnt so far Reform background • The Public Administrative Reform. .. accountability, – to strengthen the links between budget management and the developmental goals within a medium-term expenditure framework; and – to improve the management of public debt Project performance