ACKNOWLEDGEMENT I would like to sincerely thank District party committee of Thuy Nguyen District People’s Committee for granting me a great opportunity to participate in Master Program of Public Management which jointly trained by Uppsala University of Sweden and University of Economics and Business - Vietnam National University; I am also deeply indebted to Dr. Hans Blomkvist from Uppsala University (Sweden) and Dr. Nguyen Phu Ha from University of Economics and Business - Vietnam National University for their enthusiastic supports and valuable suggestions during the study and completion of this thesis. I gratefully acknowledge the experts and leaders of Thuy Nguyen district, district and commune departments, leaders of enterprises who supported me in the process of conducting research, survey and verification of information, as well as readily gave their time for joining the interview and provided me with necessary information to ful li ll all the steps of the thesis.
My deep gratitude to Uppsala University (Sweden) and University of liconomics and business - Vietnam National University and profi:ssors of the Master Prtigram of’ Public Management Council li›r giving me a chance to present this thesis and I would appreciate your comments that will help tiirther improve my thesis. Respectliilly, Biii Anlt l"iién ABSTRACT Title:ANALYSIS OF THE CHARACTERISTICS OF PUBLIC FINANCIAL MANAGEMENT, COMP7\ RISON AND APPLICATION €1F PUBLIC FINANCIAL MANAGEMENT IN THE STATE MANAGEMENT OF THUY NGUYEN DISTRICT, HAI PHONG CITY Level: F inalassignment tor Master PrograminPublic Management. Authors: Birt Anh Tuan Sweden Supervisor: PhD.Hans Blomkvist Loca lSupervisor: PhD.Nguyen Phfi H:i Time of completion: December 20 14 Objective:This research aims to improve the aggregate fiscal discipline, allocative efficiency and operational efficiency on the basis of enhanced transparency, accountabil ity, predictability and participation in public financial management of Fhuy Nguyen district, Hat Phong City. Methodology: Based on the theoretical framework for good governance associated with the ohjectives o1’ public financial management, the thesis mainly used secondary data obtained from the documents reflecting the results ot" the state budget expenditure in Thuy Nguyen district in 3 years from 20 I I to 20 13, compared with plan assigned to see the strengths and weaknesses in the state budget expenditure management in ’l huy Nguyen district.
The thesis also applied the the concept of’the “ladder of citizen participation” with eight levels developed by Sherry Arnstein ( 1969) to evaluate the levels of participation. This model is considered a tool to identify levels of’ participation of organizations as well as citizens in three main categories: Non-participation, Degrees of tokcnism and Degrees of citizen power. In addition, so that the causes of the weaknesses in the state budget expenditure management could be deeply analyzed. the author conducted in-depth interviews with a number of leaders of district People’s Committee, and ofticials of division of planning and I mance, division ot’education, division of health at district level as well as some chairmen and accountants at commune level.
district construction debts increased by nearly 2 times in comparison with the at located budget after three years. District State Treasury has done well both in revenue control and cash — on hand forecast to timely serve spending needs. Only at the end of the year, when demands for spending are too large, it suffers from shortage of money. - Fhe participation of commune authorities in the district activities; of socio - political organizations in the Party and government activities; of people in district government activities was at the same level of No power (compared with eight- level ladder developed by Sherry Arnstein ( 1969) to describe the process of citizen participation).
This shows that the "abolishmen t of district People's Council" has many shortcomings. Some activities such as determination of socio-economic objectives and determination of budget allocation, etc., were not conducted in accordance with international good practices. In terms of respect for people’s opinions, there was difference in situation between the district level and commune level. Comparison between the two levels showed that the degree of citizen participation in the activities of commune level was between the “Df?bº CeS €tf toki:nism” and Degrees of power” in the 8 - level ladder described by Sherry A rnstein ( 1969) while district level only reached “No power”.
It proved that commune People's Council has efficiently implemented its ftinct ion and power. representing the will and aspirations ot’ local people. Thereby, the level of responsibility of authorities for the settlement of citizens’ claims was higher at commune level than district level. Some recommendations were made for the effective management of publ ic expenditure management.
namely: - Strengthening the monitoring and supervision of the implementation of financially transparent processes at all levels, especially commune level. Public disclosure of tinancial performance should be clear, simple, understandable and timely. - Strengthening the coordination and participation of stakeholders and citizens to identify key tasks and key investment projects in order to avoid spreading — out budget and limit power abuse, corruption and waste. - €l ut put — based allocation will improve budget performance and accountability of budget users.
The output here is understood as the result of the activities performed by the organization as assigned. - Improving self-responsibility of civil servants, contributing to saving state budget spending. Specifying the responsibilities of each individual in the organization and enhance their self-responsibility will contribute to improving the efficiency of state budget spending. Suggestions for future research: Expanding the research scope to other districts of Hat Phong City will provide a more objective perspective for assessment.
Contribution of the thesis: Strengthening public financial management towards openness, transparency, accountability and participation will help Thuy Nguyen effectively use its resources and to be a reliable place to receive investments from the higher levels and private sectors. Key words: Abolishment ot’ People's Councils, public finance, publicity and transparency, accountability, participation, prcdictabil ity. TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF CHARTS ABBREVIATIONS l. Four pillars of good governance.
Main Objectives of’Public Finance Management. Public expenditure management and good governance. Outline of the research iiicthodology. flata collection methods.
Methods of data processing. Overview of budget management of Thuy Nguyen district. Assessment of accountability in the management of the district budget. Assessment of the budget transparency.
7tssessment of the budget predictability. Assessment of participation in budgeting process. Suggestion for future research:. CON 4 III BUTION OF THE THESIS.
45 LIST OF TABLES Fable l. Ob ject ives of Public Finance Management. Public expenditure management and good governance. Public expenditure management and good governance.
Actual budget expenditures vs. Investment in capital construction in 20 I I -2913 and debts by 30/ I 2/20 13. Aggregation of capital expenditure in 2013. Total expenditure for land clearance in 20 11.
Actual expenses vs estimates of the Division of Natural Resources and Environment. Assessment of performance of plans assigned of thc Division of Natural Resources and Environment. General transfers, targeted transfers for district and commune governments. lludget settlement in 20 11-20 13.
Actual revenues vs. List of construction works with funding withdrawal was not in accordance with the recommendations of’ thc auditors. 30 ABBREVIATIONS CPC Commune People’s Committee DPC District People’s Committee M& E Monitoring and Evaluation PEM Public Expenditure Management PFM Public Financial Management PPC Provincial People’s Committee VFF Vietnam Fatherland Front VND Vietnam dong VSIP Vietnam Singapore Industrial Park 1. Background Fhuy Nguyen is a northern district of Hat Phong city, located on important traffic routes connecting to Quang Ninh and Hat Duong.
In Hat Phong development strategy to 2020, Thuy Nguyen was identified as a dynamic economic region attracting foreign investment projects such as Vietnam Singapore Industrial Park(VSIP) of Singapore, key projects of the Government and of the city. In recent years, Thuy Nguyen has applied the regulations of financial management towards saving and efficiency. Especially the period 201 I -20 15 is considered as stable budget cycle, Thuy Nguyen is applying the regulations in accordance with the resolution of Haiphong city People’s Council, i .e the city provides balancing subsidy for district level; the district sets spending limit for commune level. "Fhuy Nguyen has nine departments in the political system of districts, 37 communes and towns are units of“ the state apparatus; There are 76 schools and one hospital which belong to public agencies.
Annual budget expenditure is from VNB 700 to 9110 billion. Thus, in order to ensure economically and effectively budget spending, it is necessary to ensure transparency in the budget execution. The unit which uses the state budget must improvc its accountabil ity. The level of participation of people under the motto "people know, people discuss, people do and people check" should also be promoted.
Predictability in budget planning should be improved to achieve scientitlcness and effectiveness. "Fhe government of Vietnam has four levels: national, provincial. district and commune levels. Each level of government has an elected body to approve the budget and monitor budget execution.
Since 201 I , at the request of the Ministry of home A1’t airs, Thuy Nguyen district piloted the "abolishment of People ’s Council” model. How it affects the objectives of aggregate fiscal discipline, allocative efficiency and operational efficiency in budget management needs to be studied with a view to identifying lessons learned. Research objectives - To review the implementation of following objectives: aggregate fiscal discipline, allocative efficiency and effective performance of public financial management of Thuy Nguyen in 20 l l -20 13. - To examine the degree of transparency, accountability and participation in the budget cycle in Thuy Nguyen district.
Research questions Does Thuy Nguyen district’s management of budget expenditure ensure the aggregate r scal discipline, allocative efficiency and operational efficiency? - What are the levels of transparency, accountability and predictability in the budgeting process of Thuy Nguyen district? - What types of participation in which citizens engage at the district and commune budgeting process? 2. THEORETICAL FRAMEWORK The assessment of public financial management, which was done using new concept of public management acquired from the Master program held by Uppsala University (Sweden), is summarized as follows: .4ccou ntebili !7 Predictabili 7 Govern mrnts should be Governments should be enswrreblr to citizens for predictable so citizens cen u hat t hry do plen their ow n lives Pa rtiripetion C” itizens should know whet Citizens shou Id have a direct thCir govrrnmCn t is doing so sey in what t hCir t hry can hold it eccounteblr govern mCnts do whrn it effects them Figure I.Four pillar of good governance 2. Main Objectives of Public Finance Management 1"eble I.Gbjcctivrs o£ Public Finance Management Requirements Contents I Aggregate fiscal To control and achieve a sustainable balance discipline between revenues, expenditure and debt To allocate resources to uses that reflect the 2. Allocative efficiency government’s policy priorities To deliver public services efficiently and 3.
Operational efficiency effectively 4 Table 2. Public expenditure management and good governance Operational Fiscal discipline Allocative efficiency efficiency Stay within overall Achieve required Appropriate balance Accountability budget authority results from of delegation and programs control Publish medium- Publish program Audit and term economic budgets, targets legislative review of Transparency ti›recasts and riscal and results efficiency and targets compliance Detailed plans and Identify and Maintain cost and Predictability budgets within manage fiscal risks cash discipline at targets to performance input level Consult stakeholders Consult on national Enable citizens to on tiscal targets strategies; enable complain and obtain Participation local decisions on redress local programs Applying the theoretical framework to analyze I huy Nguyen district budget management, the authors build specific content, as shown in the following table: 5 Table 3.Public expenditure management and good governance Fiscal discipline Allocative efTice ncy Operational efficiency Accountability -Budget estimates - Budget - Autonomy based on allocation expenditures meet decentralized and norms which have the targets authorized in been approved by - Not spreading out association with the Provincial investments guidances, M&E People's Council - Saving of (PPC).