Intergovernmental Fiscal Arrangements in a Transitional Economy: A Look at Vietnam

Transition from a centrally planned to a market economy calls for accomodationg changes in politics and institutions in the provision of public services to meet the needs and requirements of different regions in vietnam. The analysis here is on the latest developments in fiscal decentralisation in Vietnam and whether and to what extent the implementation of the New Budget Law has improved efficienty in the delivery of public services. The analysis of the recent developments shows that there are significant improvements in fiscal arrangements. The implementation of the new Budget Law provides a legal framework for the fiscal arrangements. It als clarifies the roles of diffferent agencies and levels of government in the provision of public services. The stable system of arrangements is expected to bring a measure of certainity. On the flip side, howerver, the local governments do not have powers to e revenus and therefore, cannot take decisions on level and composition of expendiutures. It is also necessary to introduce a simple and transparent formula based system of transfers to offset revenue and cost disabilities while preserving the incentives. Thus, Much needs to be done to address satisfactorily the issues of incentives and accountability as well as those of autonomy and flexibility in the provision of public services at local levels.