Let elected bodies supervise the use of off-budget financial funds

Picture for illustration.

“Self-control” in spending

ver time, the off-budget financial funds have made important contributions to secure a number of social objectives, increasing private sector investment, and mobilizing more financial resources to support the state budget in promoting the economic growth and social development.

This is a financial institution of the State, which is operating independently from the state budget and decided by the competent State agency in order to mobilize more revenue from society to carry out the identified tasks. Localities, ministries, branches and state-owned enterprises will have the right to take charge in collecting and spending this type of fund in accordance with current provisions of law.

According to the Ministry of Finance statistics, so far, there are more than 70 active funds, in which the Central has 37 types of funds, while localities have more than 30 types with various purposes, scope, and activities.

During the operation, though the foreign off-budget financial fund has promoted the specific social goals, attracted more investment from the private sector, mobilized more resources to support the state budget in promoting the economic growth and social development, there are some shortcomings arising such as: the “self-control” funds have no sanctioning framework for unified management of funds; the management of revenue and expenditure is inadequate.

In order to manage and monitor these funds, the Law on Anti - Corruption stipulates that funds originating from the state budget must disclose their operation regulations and financial mechanism; the annual financial plan, in which the details of revenues and expenditures are related to the state budget according to the regulations of competent authorities; the performance of these funds and the annual settlement is approved by competent authorities.

The Prime Minister issued Decision No. 192/2004/QD-TTg on the issuance of regulations on financial disclosure, which stipulates that funds from the state budget and funds with income from people's contributions which are established in accordance with the law, must be publicized according to the provisions of this Regulation.

It is necessary to promulgate the Law on State Finance

As an expert who has spent more than 10 years dealing with the management of non-state budget funds, Assoc. Dr. Dang Van Thanh, Chairman of the Vietnam Association of Accountants and Auditors, said, “Off-budget financial funds, which are essentially state-run financial institutions, must be managed as state budget management. However, in Vietnam, each fund has its own regulations, there some funds in terms of size as large as the state budget, such as Reserve Fund, Science and Technology Development Fund, Fund for poverty reduction, Fund for the development and improvement’s capacity of the Vietnamese, or recently the Fund for Tobacco Control, etc. These funds are not currently regulated by the unified legal framework; not open to the public, the National Assembly as state budget. The issue is that, if it is identified as a part of state budget, it must be managed like the state budget and subject to the supervision of the elected body, and of the National Assembly and the local People's Council at the Central level. By such supervision, it must be transparent”, Mr. Thanh said.

He also recommends that the Law on State Finance should be promulgated in the coming time, and that these funds must be reported annually to the National Assembly as reports on the state budget. “Of course, it is not at the level of discussion, voting and approval, but the National Assembly has the right to question, ask for explanation if the spending of these funds is not correct, not effective. Of course, funds can be mobilized from other sources outside the State, but every source must be open to the National Assembly. It is important for the National Assembly to monitor its use for proper purposes, guidelines and effectiveness. For example, the Fund for poverty reduction must be used for poverty reduction, the Fund for environmental protection must be used for environmental protection,” Mr. Thanh emphasized.

Agreeing with this view, Dr. Vu Dinh Anh, an economist, said, “It is necessary to closely monitor the lending and use of off-budget financial funds for budget purposes. In order to strengthen the management of off-budget financial funds’ activities, it is necessary to improve the management framework in line with the system of financial and budgetary regulations; to attach reports on off-budget financial fund to the socio-economic development plan and financial-budgetary plans; to define the responsibilities and powers of various branches and levels in the establishment and use of funds and report on the revenue and expenditure of each type of fund. The Government should report to the National Assembly on the performance of state off-budget financial fund, together with the annual report on the state budget.”