The EU and Germany have pledged to fund a project worth EUR14 million (US$15.1 million) for Vietnam titled “Strengthening Public Financial Management in Vietnam”, which is part of the ongoing EU-supported Enhancing Economic Governance Program.

The additional fund to be disbursed in a four-year project aims at strengthening Vietnam's public financial management, which is crucial for fulfilling the United Nations 2030 Agenda for Sustainable Development in Vietnam.

“I hope it will contribute to Vietnam’s macroeconomic stability and strengthen the government’s ability to implement its fiscal and economic policies,” EU Ambassador Giorgio Aliberti said at the first meeting of the Standing Committee of the project held in Hanoi on January 17.

He affirmed that the EU remains strongly committed to supporting sustainable development and inclusive growth in Vietnam.

Delegates from Vietnam's Ministry of Finance, the European Union, and the Government of Germany at the meeting in Hanoi on Jan 7. Photo: Embassy of Germany in Hanoi

Co-financed by the EU and the German Federal Ministry for Economic Cooperation and Development, the project's ultimate objective is to contribute to poverty alleviation and sustainable growth in Vietnam.

The project is an important part of the roll-out of Vietnam’s National Financial Strategy 2021-2030 as three focus areas of the project are priorities of the Ministry of Finance in the coming time, according to Vietnam’s Vice Minister of Finance, Nguyen Duc Chi. 

Sharing the same point, Mr. Jens Schmid-Kreye, Deputy Head of the Department for Economic Cooperation and Development at the German Embassy in Vietnam, remarked: “A robust public finance management system will make substantial contributions to Vietnam’s long-term socioeconomic growth.”

He stressed the importance of joining hands in building Vietnam into a sustainable future. “This four-year project reaffirms Germany’s long-standing commitment to supporting Vietnam in achieving its sustainable development goals. With extensive experience gained from our partnerships and joint initiatives, including with the Ministry of Finance, Germany remains committed to collaborating with our Vietnamese partners to strengthen public finances.”

Implemented by the German Development Cooperation Agency (GIZ) in cooperation with the Ministry of Finance of Vietnam, the project aims to (i) improve state budget management and revenue forecasting; (ii) enhance management of public debt; and (iii) enhance tax environment and revenue mobilization.

Role of fiscal discipline

Over the past decades, Vietnam has developed rapidly and achieved impressive economic and social progress. Despite remarkable achievements, challenges to Vietnam’s sustainable economic growth remain numerous. One of these challenges is to maintain fiscal discipline in the face of increasing demands for public spending, deal with population aging, and address climate change issues.

Sound planning and execution of the state budget, efficient public debt management, and a favorable tax environment to ensure efficient revenue mobilization will be crucial to address these challenges while maintaining fiscal sustainability.

The project will focus on providing technical assistance in these areas.

In this regard, the EU and the Government of Vietnam signed a Financing Agreement in 2021 on Enhancing Economic Governance with an EU contribution of EUR18 million. This Enhancing Economic Governance Program (EEG) was designed to provide Vietnam with technical assistance to strengthen the doing business environment, planning management, public investment and procurement, and public financial management, including budget management, public debt management, tax policy, and administration.

GIZ will implement technical assistance for the Ministry of Finance related to the specific objectives on budget, debt, and tax.