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2.2. The current budgeting process


The current budgeting process in Vietnam is implemented under legal framework regulated by the State Budget Law 2002. According to the Law, the state budget includes the central and local budget levels, which are central, provincial, district, and communal state budget levels. This budget system is designed as a vertical structure, in which a hierarchical relationship can be seen in accountability and reporting system of the local budget levels. Local budget levels are accountable to the upper level government as well as jurisdictional People Council. Description of the system is presented in the figure AA, and the budgeting process will be described as follows.

2.2.1. General budgeting procedure regulated in the state budget law 2002


The current budgeting process in Vietnam is followed the regulations of the State Budget Law 2002, which was enacted by Congress on December 16, 2002. Accordingly, the basic steps and procedure is inherent from the previous State Budget Law mentioned in the section 2.1.1. Only some changes in decision making power of budget authorities such as Congress and People's Councils and the milestones of budgetary plan have been made.

The introduction of the State Budget Law 2002 has strengthened the autonomy and discretionary responsibilities of provincial government in controlling local budgets such as budgetary plan, allocation, and execution. It is a further step to make the budgeting process more transparent and accountable. The introduction of the State budget Law 2002 also helps clarifying the revenue sources and budgetary expenditure responsibilities to lower budget management levels. The detailed revenue resources directly controlled by the central and local budget are presented in the annex 1.


2.2.2. Budgeting procedure regulated in State Budget Law 2006


According to the State Budget Law 2002, budget allocation and budgetary plan assignment is carried out as follows:

  • National Assembly decides total revenues and total expenditures, and level of budget deficit in each sector. It also decides allocation of central budget and additional budget from the central to the provinces and central cities.

  • Based on the allocation of central budget plan, and allocation of central to provincial, which was approved by National Assembly, Prime Minister to ministries, provinces and cities under central direct management.

  • Based on the budget plan assigned by the central government, ministries and central government agencies decide to assign budget estimates to the units under direct management of ministries, the central government agencies. At that time, People's Councils at various levels will allocate local budget. Based on the draft budget approved the People's Councils, People's Committees at all levels, budget is allocated to the units under their direct management.

The main activities and timeline can be summarized in the following table.

Table 2: Main activities and timeline of budgeting process stipulated in the state budget law 2002

Stages of budgeting process

Main activities

By the State budget Law 2002

Preparation of budgeting process

National Assembly’s Standing Committee have comments on budget allocation norms, which are basis for estimating budget plan of the first year stabilization period (the period of stable local budgets from 3 to 5 years)

by May 1st

Preparation of budget Plan

Prime Minister (MPI) issues instruction on building state budget plan

by May 31st

MOF, MPI issue instructional guidelines; then

ministries, central bodies and people committee instruct lower levels to build their budget plans



by June 10th

Provincial authorities submit budget plans to MOF

by July 20th

MOF works with the central and local agencies, consolidating and building national budget plan.

by the end of July

Review, approval and allocation of the state budget at National Assembly

Government submits national budget plan to National Assembly via the Committee of Finance and Budget Affairs for verification (MPI has explanations if needed)

before October 1st

National Assembly’s congress is held where discussion, hearings and decision on the state budget plan and central budget allocation scheme are made. In this congress, there are two important documents will be approved, including drafted budget plan and budget allocation plan.

before November 15th

Conducting distribution of the national state budget; National Assembly Standing Committee decides to allocate the central budget to lower budget levels.

before November 20th

Review, approval and allocation of the state budget at the localities, by the People councils

Provincial People Council decides provincial budget allocation

before December 10th

District and communal People Councils decide district and communal budget allocation, respectively

within ten days once the upper People committee decided budget allocation plan; and state budget has to be transferred to communal budget level by December 31st

Source: Consolidation from existing legal documents

In this process, when the drafted budget plan is submitted to National Assembly, the Committee of Finance and Budget Affairs has to review and comments on the budget plan. Then, all documents such as report on implementing budget plan of the current year, drafted budget plan for the coming year, and budget allocation plan for the coming year will be submitted to all members of National Assembly at least ten days before the congress begins. National Assembly has to decide drafted budget plan and budget allocation plan before November 15th.



According to the current State Budget Law, the MPI annually has instruction on how to make local social economic development plans and associated capital need to implement successfully the social economic development plans. It also coordinates with MOF in building central state bubget estimation and distributing the approved budget to assigned tasks (mostly development capital expenditures). MPI has a leading role on designing the NTPs and draft budget plan as well as allocation budget plans for NTPs.
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