By Mai Thi Phuong Tran, Senior Financial Management Specialist and
Julia Dhimitri, Public Sector Specialist, World Bank
Context
Can Tho City is the capital of the southwest region of Vietnam, and the only provincial government among 13 provinces in the Mekong delta that is self-sufficient and a net contributor to the central government annually. Vietnam has developed very quickly and is still rising to be one of the fastest growing countries in the region and with this growth, there became a need to revise and adjust its PFM to suit new demands. At the national level, better fiscal discipline, improved national debt management, and strengthened public investment practices are the key objectives of the Government and donors. These reforms are being institutionalized in the legislature but need to materialize at sub-national levels. In addition, citizen participation in resource allocation, public service design, and public investment planning are areas of improvement where Vietnam remains lower in the international community ranking, representing an opportunity for real action from the grassroot level specifically from sub-national governments.
This Can Tho PEFA 2022 SNG Assessment is the first assessment of Can Tho City (CCT). The assessment will be used by CCT to plan improvements to the administration of its services. It will also facilitate discussions by both CCT and development partners with the central government on possible reforms in country-wide PFM system to enable better allocation of resources which would ultimately assist CCT – and other sub-national governments (SNG) – in the discharge of its functions.
Process
The PEFA assessment was undertaken with support from the World Bank under the framework of the SECO Trust Fund for Sub-National Public Financial Management Reform, effective April 2020. The first stage was a scoping mission in November - December 2019 to introduce the process, followed on by a self-assessment of CCT officials. The World Bank team reviewed and discussed the self-assessment with city officials, agreed on the evidence and its interpretation, and prepared this report in accordance with PEFA guidance.
The assessment covers the budget of Can Tho City composed of budgetary and extrabudgetary units as reflected in the PEFA Framework and Guidance. The assessment focuses on the sectors of health, education, and agriculture. Relations between city and public corporations are assessed through dimension PI-10.1. The assessment also takes into account information from a number of deconcentrated bodies of the central government such as the State Treasury, the Tax Department, the Customs Department, and the State Audit of Vietnam (SAV) Regional Office.
The assessment applies the methodology of the PEFA Framework issued in February 2016 and the 2021 PEFA Guidance for SNG Assessments. The assessment applies the full set of indicators of the Framework and Guidance, including annexes. The new indicators introduced in the PEFA 2021 SNG Guidance such as PI 9B - Public consultation and PI 14New - Medium term budget strategy are also applied in the assessment. The results of such indicators played a significant role in helping the City of Can Tho form future PFM reforms.
Results
The assessment has helped Can Tho City clearly identify its development needs to improve its PFM system with the final goal of achieving high quality public service delivery for its citizens. Can Tho City People’s Committee officially identified several areas of technical assistance for World Bank implementation 2023 – 2025 . The key proposed areas include: policy-based medium-term fiscal strategy; participatory medium-term financial and budget plan; performance-based budget framework applicable to public service delivery units; improved public debt management; improved public investment management; and, enhanced public participation in public service design and budget oversight. The World Bank and SECO will continue to provide technical assistance to Can Tho City to execute the PFM reform agenda.
Lessons Learned
The assessment was conducted predominantly from 2020 – 2021 but was recognized by the PEFA Secretariat as fully compliant to the PEFA 2021 SNG Guidance. This was achieved thanks to the team and Can Tho City’s decision to pilot the new SNG PEFA Guidance even when it was officially in “draft for consultation” status in 2020. The team and the City also decided to assess all Performance Indicators, including the new indicator 9B on Public Consultation, with the expectation of low scoring but yielding high value to hone in on actions for reform. To carry out this approach, the team involved experts from PEFA Secretariat into the assessment work and provided in depth training to counterparts and other assessment team members. This assessment team was independent from PEFA Secretariat peer reviewers. The early and in-depth involvement of the Secretariat team contributed significantly to the success of piloting the new guidance.
Official Launch
The report was officially launched during the dissemination workshop organized by the government on January 6, 2023 in Can Tho City. The event was announced by the local media.
In her opening speech Patricia Mc. Kenzie, Financial Management Manager, Governance Practice, World Bank, said: “The assessment received high recognition from not only the PEFA Secretariat but also seasoned international and local public financial management experts from SECO and the European Union (EU) on the quality of data and information, strong linkages to the proposed PFM reform actions, and relevance to country context. Those couldn’t be achieved without wide-scale efforts and excellent coordination of both the assessment team and local government agencies. I would like to emphasize the strategic importance of the role of sub-national government, Can Tho City, in sustaining the country’s financial management system’s health and citizens’ protection. While in Vietnam fiscal policy is set at the central level, implementation of these rules and regulations rest in the provincial level, with all provincial resources, people, both undertaking the risks and opportunities”.
Can Tho City People’s Committee Vice Chairperson, in his letter to the World Bank in March 2023, said: “We acknowledge the World Bank's recent assistance to Can Tho City in the diagnosis of our current public financial management (PFM) performance and related national legal framework by benchmarking with international good practices - the PEFA assessment. The Report does not only highlight the strengths, but also indicates several shortcomings for our improvement. The People's Committee of Can Tho City would like to propose, hereunder, the sub-national public financial management system reform priorities, aiming at efficiency, transparency, and sustainable development, for the World Bank to consider and support”.
