## VIETNAM — TECHNICAL ASSISTANCE REPORT ON GOVERNMENT FINANCE STATISTICS MISSION (FEBRUARY 2022–APRIL 2022)

## Source details

**Canonical URL:** [VIETNAM — TECHNICAL ASSISTANCE REPORT ON GOVERNMENT FINANCE STATISTICS MISSION (FEBRUARY 2022–APRIL 2022)](https://www.imf.org/-/media/files/publications/cr/2022/english/1vnmea2022004.pdf)

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### Mission scope and objectives
- Mission expert: Anthony Olliffe. Conducted remotely during February 2022–April 2022.
- Main purpose: assist upgrading compilation and dissemination of fiscal data and GFS in line with GFSM 2014.
- Main objectives achieved:
  - Reviewed GFS data for 2003 to 2016 compiled by MOF from State Budget Balances (SBBs) under 2015 State Budget Law coverage.
  - Assisted mapping from SBBs for 2017–2019 to GFS (2003–2019).
  - Examined five types of land-related collections and reviewed GFS classification.
  - Reviewed TABMIS Chart of Accounts to GFS mapping.
  - Clarified differences between GFS expense, revenue, and deficit numbers and those published in SBBs.
- Additional activities:
  - Reviewed differences between IMF Article IV general government data and MOF-converted GFS data.
  - Reviewed TABMIS 2018 State budget data used for GFS mapping.

### Priority recommendations and timetable
- Table of priority recommendations (as provided)
  - June Quarter 2022
    - Resolve differences between Article IV general government and GFS data.
    - Responsible: SBD and IMF
  - September Quarter 2022
    - Load to the IMF’s annual GFS database updated GFS data for 2003-2016, finalized during the 2019 GFS mission, and 2017 to 2019 reviewed during this mission.
    - Responsible: SBD
  - December Quarter 2022
    - Determine an appropriate GFS classification of Land Use Rights that is consistent with the treatment in Laos and China.
    - Responsible: SBD and IMF

### Institutional and data coverage observations
- General government sector (GGS) levels: central, provincial, district, and commune.
  - Central government includes budgetary central government, extra-budgetary funds including public service delivery units under self-financing regime, and Vietnam Social Security (VSS) fund.
  - Sub-national governments: 63 provinces, approximately 700 districts, and nearly 11,000 communes, wards, and district towns; nearly 30 extrabudgetary funds managed by sub-national governments.
- State Budget: decentralized within a unitary system; about half of public services expenditure is the responsibility of sub-national governments; sub-national governments have own revenue sources with equalization transfers for shortfalls.
- TABMIS (launched early 2013 with World Bank assistance) is primary source for SBBs but does not reflect all final annual audit adjustments; published SBB data are compiled manually by VST and present consolidated operations of budget GGS only, excluding VSS fund, own-source revenues/expenditures of public service delivery agencies and other EBFs.

### Data compilation and TABMIS mapping
- Bridge tables map TABMIS COA economic classifications to GFSM 2014 classifications to enable automated GFS table generation from TABMIS once differences to final annual data are resolved.
- Historical GFS timeseries: previously contained data for 2003–2013. The 2019 GFS mission reviewed revised data for 2003–2016 (including previously extra-budgetary revenue/expenditure such as national construction lottery income, G-bond finance for public investment).
- This mission continued review of 2003–2016 and updated 2017–2019 to ensure budget coverage consistent with 2015 State Budget Law.
- MOF will provide GFS-mapped State budget data for 2003–2019 to IMF for publication upon internal approval.
- TABMIS differences to final accounts: audit-driven adjustments impeded direct use of TABMIS for GFS. MOF adopted methodology to adjust TABMIS to final annual accounts during 2020/21 mission. Adjusted 2018 TABMIS provided more accurate tax/non-tax splits and detailed expense categories.
- MOF will not authorize use of TABMIS to compile GFS until MOF separately publishes more detailed expense categories, e.g., via State Financial Statements (SFS) for 2019 and 2020.
- Compiled GFS data using TABMIS not attached due to restrictions on TABMIS database release.

### Classification of land-related collections — findings and guidance
- MOF-classified budget revenue types related to land (five types):
  1. tax on agricultural land
  2. tax on non-agricultural land
  3. land rent
  4. land-use right collection (charge for the issuance of Land-Use Rights (LURs))
  5. sales/rent of state-owned houses
- Legal context: land is collectively owned by the people and administered by government; property owners hold land use rights (LURs) rather than full ownership.
- Classification principle: revenue from issuance of LURs depends on economic benefits provided to payee. Capital receipt classification appropriate where effective economic ownership is transferred to LUR recipient, subject to land use laws.
- GFS guidance (Box A4.1 criteria) requires judgment; revenue classification justified where, for example:
  - contract is short-term or renegotiated at short intervals;
  - contract is non-transferable;
  - contract contains detailed use conditions;
  - contract can be terminated without compensation;
  - payment is on life of lease indicating lessor control.
- Mission review of Vietnam Land Law concluded receipts from issuance of LURs could be treated as a capital transaction because LURs:
  - are valid for long periods and not negotiable in a short period of time;
  - can be transferred;
  - when State reclaims land, compensation/support will be provided to LUR holders if eligibility conditions are satisfied;
  - charge on LUR issuance is paid upfront and cannot be paid annually.
- MOF noted land rent can operate for long periods and be paid annually or one-off; because economic ownership is not transferred, land rent should retain revenue treatment.
- Current practice: GFS revenue classification of LURs is maintained as revenue in Vietnam’s presentation until further consultation with relevant agencies (e.g., Public Asset Management Department) and STA review of China and Laos treatments to ensure consistency.

### Key changes in GFS vs SBB presentation (implications for revenue, expenditure, deficit)
- Revenue
  - Receipts from sale of state-owned houses: reclassified from SBB revenue to GFS capital receipt transaction, reducing GFS revenue.
  - Withdrawal of State budget capital invested in enterprises: reclassified from SBB revenue to GFS financial asset transaction, reducing GFS revenue.
- Expenditure
  - Receipts from sale of state-owned houses: reclassified from SBB revenue to GFS capital receipt transaction, reducing reported expenditure in SBB-to-GFS reconciliation.
- Deficit
  - Withdrawal of State budget capital invested in enterprises: reclassified from SBB revenue to GFS financial asset transaction, increasing the GFS deficit relative to SBB presentation.

### Comparison with Article IV data
- Mission compared Article IV GGS data and GFS data for SBB for 2017–2019; concluded deficits were comparable though components differ due to assignment of final annual data to different GFS classifications.
- MOF determined Article IV data needs updating for changes to final annual data for years prior to 2017 to align with GFS compiled from SBB.

### Next steps and medium-term priorities
- MOF agreed to continue GFS TA activities in 2022 (details to be agreed post-mission).
- Focus areas:
  - Update annual GFS to 2019 after MOF internal clearance.
  - Update Article IV GGS data to be consistent with GFS data compiled from SBB.
  - Determine appropriate GFS classification of Land Use Rights consistent with China and Laos.
- V-GFSM (Vietnam GFS Manual) guidance: extend coverage to include own-source revenues/expenditures of material public sector delivery units and material extrabudgetary funds; produce quarterly GFS; improve quality of debt statistics.
- Medium to long-term shift: from above-the-line data to reconciliation of deficit with below-the-line financing data. Supplementary financing data sources:
  - Segment 2 of CoA that records cash and investments (also mapped to GFS).
  - External debt data from Debt Management Department.
- Regular production and publication of SFS will assist compilation of GFS assets and liabilities; balance sheet provides comprehensive picture of public wealth; SFS includes financial data of extrabudgetary funds, widening public sector coverage beyond current SBB.

### Quantitative and factual notes preserved from source
- Historical GFS coverage and updates: GFS data reviewed and updated for periods 2003–2016 and 2017–2019.
- TABMIS launched: early 2013.
- EBF 2017 estimates from July 2019 Article IV Consultation (country report 19/235): EBF 2017 revenue (net of government transfers) was 7 percent of GDP and expenditure (net of government transfers) was 5 percent of GDP.
- Bridge from TABMIS: reviewed adjusted 2018 TABMIS data for improved tax/non-tax splits and expense detail.
- Priority target dates: June Quarter 2022; September Quarter 2022; December Quarter 2022.

### Officials met during the remote mission
- Nguyen Minh Tan — Deputy Director, State Budget Department
- Dinh Thi Mai Anh — Deputy Head of Division, State Budget Department
- Nguyen Thi Minh Tam — Senior Expert, State Budget Department
- Pham Ngoc Thang — Expert, State Budget Department
- Nguyen Thi Thu Hien — Expert, State Budget Department
- To Huynh Thao — Deputy Head of Division, Public Asset Management Department
- Tran Thuy Linh — Expert, Public Asset Management Department
- Pham Thi Tuyet Lan — Director, Tax Planning Dept., General Department of Taxation
- Do Thi Thanh Huong — Expert, Tax Policy Department

*Source: IMF Technical Assistance Report — Vietnam: Report on Government Finance Statistics Mission (February 2022–April 2022).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1vnmea2022004.pdf_