Dear Vice Minister of Finance Mr. Đỗ Hoàng Anh Tuấn,
Dear Vice Chairman of the Finance and Budget Committee of the National Assembly Mr. Nguyễn Hữu Quang,
Dear colleagues from the Ministries of Finance, Planning and Investment, Education, Health, Science & Technology, Agricultural and Rural Development, and Transport, and from the various cities and provinces,
Dear my fellow development partners,
It is my great pleasure to be here today, and welcome you to the dissemination workshop for the Public Expenditure Review. Before we delve into the discussion, allow me to make a few brief remarks.
First of all, let me express my sincere gratitude on behalf of the World Bank team for the excellent collaboration during the preparation of the PER. This is a truly joint report and we greatly appreciate the trust and partnership that we have developed not only with the MOF but also with all others involved government agencies, including directorial and technical staff from eight ministries and five provinces. Let me also take this opportunity to thank our development partners, including the Australia DFAT, the Canadian GAC, the Swiss SECO, the United Kingdom UKaid, and UN Agencies, who have been providing valuable technical and financial support throughout the process.
Second, I would like to stress the importance of this PER. It comes at a critical juncture when Vietnam faces important fiscal choices, in part as a result of Vietnam’s development transformation. Public spending needs continue to grow given the increasing demand for quality public services and social protection in the context of rapid aging, and for investment in infrastructure to promote growth and poverty reduction. Greater openness and deeper integration into the world economy has resulted in a weakening of trade revenues due to tariff reductions and a greater vulnerability to external shocks. Reduced revenue from natural resources and land sales, coupled with the widespread use of tax holidays to promote investment have also resulted in slowing revenue growth in recent years. Consequently, fiscal space has narrowed. Persistent fiscal deficits have driven rising public debt and raise concerns about the medium-term sustainability of the current fiscal position and the corresponding public debt path.
The Government’s plan to rein in fiscal imbalances and to achieve a deficit target of 3.9 percent of GDP during 2016-2020 is extremely important in this regard. But achieving this target will require concerted efforts to boost revenue mobilization, restructure and enhance efficiency in spending, and strengthen the management of public assets and liabilities, and of fiscal risks – at both central and local levels.
In that context, we are pleased to, together with our government counterparts, present today a review that makes concrete, concerted recommendations on policy options, aiming to (a) achieve a gradual, growth-friendly fiscal consolidation as a crucial element to entrench fiscal sustainability while ensuring adequate fiscal space for investment and social spending; and to (b) restructure budget allocations, including between central and local government, between capital and recurrent spending, and reallocation within sectors.
We hope that this PER, being the first in more than a decade, has been providing a useful analytical foundation for the Government and relevant stakeholders including the National Assembly, in further developing its medium-term development, fiscal and budget plans and priorities. Beyond their fiscal importance, these reforms have the potential to further enhance public service delivery and investments in the social and economic infrastructure.
This process of interaction is in many ways as important as the report itself. Because it is only through our dialogue that analysis and ideas can be transformed into action, policies and real results and we are grateful for the opportunity to work so closely with decision makers here in Vietnam.
Going forward, it will be important to ensure that, starting with today’s launch: (a) the knowledge gained is spread to wider audience, through effective, follow-up dissemination activities, (b) the recommendations are followed through, as per the Prime Minister’s endorsement. In that context, we are pleased that the Prime Minister has instructed relevant agencies to take stock of implementation progress of the recommendations on a six-monthly basis. We stand ready to provide support as needed throughout the implementation of this PER.
Today’s event really just marks the next milestone in our evolving partnership on these important issues. We stand ready to continuing our collaboration and to assist Vietnam in tackling the difficult challenges but also seizing the great opportunities that lie ahead. I look forward to today’s discussion and invite all of you to participate actively, to pose your questions and to share your ideas.