Most funds comply with financial regulations
According to Report No. 609/BC-CP of the Government on the implementation of the financial plan 2024 and the proposed financial plan 2025 for centrally managed extra-budgetary financial funds. There are currently 22 funds under the management of ministries and central agencies.
By the end of 2024, the total balance of these funds was quite large, increasing by 3.97% compared to 2023. Of these, the three public funds managed by the Viet Nam Social Security account for 91.4% of the total balance. Four funds have balances below 100 billion VND, eight have balances ranging from 100 billion VND to 1 trillion VND, and another eight exceed 1 trillion VND.
In general, these funds have adhered to state financial regulations and their internal spending regulations, aligning with their assigned objectives and tasks.
Clause 19, Article 4 of the Law on State Budget 2015 stipulates “Extra-budgetary state financial fund is a fund established by competent authorities, operating independently from the state budget, with revenues and expenditures to carry out tasks as prescribed by law”.
The operation of central-level extra-budgetary financial funds has contributed to improving the efficiency of assigned tasks such as insurance management, public debt repayment accumulation, lending capital at preferential interest rates, supporting environmental protection projects, science and technology projects, innovation activities, enterprises, cooperatives, sponsoring, supporting activities and projects on telecommunications, preventing and combating the harmful effects of tobacco, supporting overseas employment, supporting job creation, supporting people with meritorious services to the revolution or relatives in difficulty, compensating for losses, sacrifices, hardships in crime prevention and combat and being a source of encouragement for collectives and individuals to continue to fight fiercely against all types of crime and drugs, improving the effectiveness of ensuring security and order, and developing the country's socio-economy.
Uncoordinated organisational models, overlapping spending tasks, and financial resources mainly rely on the budget
Despite these contributions, the audit results of the management and use of centrally managed extra-budgetary state financial funds from 2020 to 2023 have highlighted several shortcomings and limitations.
Currently, legal regulations relating to the organisation and operation of funds are divided into three groups: those specified in laws and decrees, those under the Prime Minister’s decisions, and those under decisions by central agencies.
In practice, the funds follow four main organisational models: public service unit models, single-member limited liability company models, and others without clear definitions. Furthermore, the management apparatus between funds also lacks synchronisation. Some funds are managed by concurrently appointed officials of ministries and branches, so there are no costs incurred, while many other funds have established their organisations, including: fund management councils, control boards and management boards, leading to increased staffing and expenditure.
Moreover, while most funds operate under similar models and management mechanisms, they apply different salary and bonus policies, sometimes violating current regulations. For example, the Viet Nam Environmental Protection Fund applies salary payment based on work results, which does not accurately reflect the labour efficiency of each individual when all workers are applied the same unit price, ignoring the work completion assessment.
One major issue with extra-budgetary financial funds is the duplication of spending tasks with the state budget and the Viet Nam Bank for Social Policies.
For instance, the Science and Technology Development Fund, the National Technology Innovation Fund, the National Employment Fund, and the Gratitude Fund have expenditure contents similar to the state budget.
Some funds even directly provide financial services that duplicate those of the Bank for Social Policies. Some funds also have unspecified expenditure contents, such as the Public Telecommunications Service Fund.
Although these funds have been established to mobilise resources from society, foreign organisations, or the private sector, many still depend heavily on state budget financing. Some are granted initial capital from the state budget, others receive regular funding support, and some continue to receive additional capital during their operations, no longer in line with the State Budget Law 2015.
Several funds, such as the Viet Nam Cooperative Development Support Fund, have yet to generate revenue from their operations or other sources. Notably, many rely mainly on interest from bank deposits, such as the Viet Nam Environmental Protection Fund, the Small- and Medium- sized Enterprise Development Fund, and the Overseas Employment Support Fund.
Completing the fund management mechanism and policies based on its assessments of centrally managed extra-budgetary financial funds, the SAV has made following recommendations: Study the management mechanism for centrally managed extra-budgetary financial funds by distinguishing between public funds that operate under their charters and specialised laws (including Social Insurance Fund, Health Insurance Fund, Unemployment Insurance Fund, and Debt Repayment Accumulation Fund) and the remaining extra-budgetary financial funds with appropriate management mechanisms.
Regarding organisational models, reorganising centrally managed extra - budgetary financial funds must improve the efficient use of state resources. It recommends streamlining fund management structures; in some cases, separate fund organisations may be unnecessary. Instead, ministries and sectors could define standards and criteria for enjoying incentives from the fund and entrust commercial banks and policy banks to lend to enterprises and enjoy incentives according to the fund's mission.
Regarding the salary regime, research and review the regulations on salary payments for centrally managed extra-budgetary financial funds to ensure consistency and fairness compared to other agencies of the state apparatus. Salaries should match the assigned duties and responsibilities. Fund activities should be evaluated to avoid scenarios where funds primarily earn interest from bank deposits while employees receive high incomes comparable to those at one-member limited liability companies with 100% of charter capital held by the State.
Regarding the implementation of the tasks of the funds, research and review the missions and operational objectives of the funds. Based on this, suitable mechanisms and measures should be introduced to ensure the funds fulfil their intended roles and missions. Additionally, a thorough review of the funds’ tasks should be conducted to prevent duplication with the state budget’s functions.
The SAV also recommends that the Ministry of Finance coordinate with relevant ministries to thoroughly review the use of capital resources of all funds, making this a key criterion for assessing fund performance.
