PEMNA: Vietnam needs to continuously reform its tax system to facilitate investment and growth
admin 21-06-2020, 21:51

VCN - PEMNA will also be an essential framework to ensure that all its country members including Vietnam can share experience and learn from each other about budget structure and public debt management.

Mr. Ousmane Dione, Country Director for the World Bank in Vietnam

Mr. Ousmane Dione - Country Director for the World Bank (WB) in Vietnam shared his thoughts on the sidelines of the opening session of the plenary conference of Public Expenditure Management Network in Asia (PEMNA) 2019 on May 22nd.

From 22 to 24/5, the plenary conference of Public Expenditure Management Network in Asia (PEMNA) 2019 took place in Quang Ninh. This is the 8th plenary conference of the network and the first conference hosted by Vietnam’s Ministry of Finance, with the theme "The restructuring of state budget and management of public debt to ensure safe and sustainable national finance.” How do you evaluate this theme?

I think that this theme is very important and appropriate because the support of PEMNA will also help its member countries to further promote the regional development process.

Issues such as: economic management, sustainable and safe debt management are important ones that the PEMNA members will discuss during the next 2 days.

PEMNA will also be an essential framework to ensure that its member countries can share experiences and learn from each other.

The framework of the PEMNA conference not only helps its members ensure debt sustainability, but also promotes activities related to economic governance and other issues. It will also address the issue of how the member countries can benchmark and compare the level of development in this field with each other, and learn from international experience as well as from countries in PEMNA.

The WB is very interested in this content because we find that this is the right direction to ensure the sustainable use of economic resources. That is because we will only have effective investment options when this content is guaranteed and that will be the way for countries to develop in a sustainable and inclusive way.

What role does the WB play for PEMNA to support its countries?

The WB is implementing its role to support countries to handle these challenges. In many countries, the WB provides financing support for development goals and strengthening institutional capacity of nations. Moreover, many people may not realize that the WB also carries out many activities to provide technical advice to Governments.

We have macroeconomic experts, public management and governance experts who are working with government officials to share effective international practices to respond to the proposed policy options. We have experts in accrual accounting, collection policy, debt policy, budget management, job performance management - these are all topics that will be discussed in the next two days.

So WB is not only a bank supporting financial development policies but also an intellectual bank. We have supported PEMNA for the past 10 years. There are different activities at PEMNA and they will help the member countries to develop their own public spending management and gain experience from other countries.

The WB and Korean Ministry of Economy and Finance have worked closely together. In the changing global context, we think issues such as ensuring sustainable safety finance and managing public spending are increasingly important.

What are your recommendations for the PEMNA countries in general and Vietnam in particular on budget restructuring and debt management to ensure fiscal sustainability?

Of course, no general advice is suitable to all PEMNA countries.

The PEMNA countries are diverse, which is reflected in their current fiscal status. We have 10 member countries and each country has a different context and there is no model that fits all. Each country has its differences.

For example, Indonesia's GDP mobilization rate is only about 13% compared to 25% for China. Similarly, their debt levels are also very different. Therefore, each country is different and must face its own fiscal challenges.

I think the common factor among countries are some basic principles that guide management and healthy fiscal policy. They are: the reliability of budget, transparency, performance allocation and implementation, and overall fiscal discipline.

For Vietnam, the Government has embarked on a roadmap to consolidate the fiscal situation with the goal of reducing overspending and stabilizing public debt. To ensure long-term sustainability, Vietnam needs to continuously reform its tax system to both stabilize revenue collection and create a favorable tax environment for investment and growth.

PEMNA: Vietnam needs to continuously reform its tax system to facilitate investment and growth
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In terms of spending, recurrent expenditure has been increasing rapidly and needs to slow down, including improving spending efficiency. Public investment efficiency needs to be simultaneously strengthened. Most importantly, it is necessary to continuously strengthen the fiscal situation, which will help to improve the confidence of investors, especially in the period of global integration.

Thank you, sir!

By Thuy Linh/ Ha Thanh