Vietnam’s Two-Tier Local Government Faces Budget Hurdles – Ministry of Finance Intervenes
Hanoi, Vietnam – A little over a month into the rollout of Vietnam’s new two-tier local government model (launched July 1, 2025), significant challenges are emerging, primarily centered around budget execution and staffing shortages. The Ministry of Finance (MoF) is actively collaborating with localities to stabilize the system and prevent disruptions to essential public services, marking this as breaking news for those following Vietnamese economic and administrative reforms. This is a critical moment for the country’s decentralization efforts, and the MoF’s response will be closely watched.
Ensuring a Seamless Budget Transition
The core principle guiding the MoF’s intervention is “not breaking the budget,” according to Nguyen Minh Tan, Deputy Director of the State Budget Department. This means maintaining existing revenue-sharing mechanisms between provincial and communal budgets while simultaneously navigating the complexities of the restructured administrative landscape. The MoF is urging localities to swiftly submit resolutions adjusting revenue and expenditure estimates for 2025, alongside detailed budget allocation plans. This proactive approach aims to guarantee the continuous flow of funds to municipalities and districts, ensuring the uninterrupted payment of salaries, social security benefits, and operational expenses.
This isn’t simply about maintaining the status quo; it’s about adapting to a new reality. Vietnam’s move to a two-tier system – streamlining administration – requires a delicate balance between central control and local autonomy. The MoF is providing guidance on preparing provisional budgets for 2026 and multi-year financial plans (2026-2028), adhering to Circular 56/2025/TT-BTC, emphasizing a methodical and realistic approach. For those unfamiliar, this restructuring is part of a broader effort to improve governance efficiency and responsiveness at the local level.
The Accountant Shortage: A Critical Bottleneck
However, the transition isn’t without its hurdles. A major obstacle reported by numerous localities is a severe shortage of qualified chief accountants, particularly in remote areas. The Director of the Finance Department of Thanh Hoa province, The Quang Hung, highlighted the difficulties in allocating budgetary estimates to 166 municipalities and districts due to this critical personnel gap. Lam Dong province’s finance department echoed this concern, requesting clear guidance from the State Treasury on account opening procedures in the absence of appointed chief accountants.
This shortage isn’t merely an administrative inconvenience; it’s a potential roadblock to effective financial management. Without qualified accountants, municipalities struggle to open transaction accounts, decentralize financial responsibilities, and maintain accurate records. This situation underscores the need for immediate investment in financial training and recruitment, especially in underserved regions. SEO optimization for searches related to “Vietnam finance jobs” and “accountant training Vietnam” will be crucial for attracting qualified candidates.
Ministry of Finance Steps Up Support & Addresses Administrative Delays
Recognizing the urgency, the MoF has proposed immediate solutions and is considering transitional arrangements. Crucially, the ministry is prepared to organize training programs to upskill financial staff and equip them with the necessary expertise for their new roles. The MoF is also directly appealing to provincial and municipal party committees and people’s committees to prioritize the implementation of new legal provisions and instructions.
Beyond the accounting shortage, the MoF is tackling broader administrative delays. This includes accelerating the registration of companies facing issues due to administrative boundary changes, ensuring uninterrupted business operations, and protecting the rights of individuals and businesses. The ministry is also streamlining document issuance and re-issuance processes, and providing direct tax advice to taxpayers, including leveraging QR codes for easy access to the electronic tax system. This focus on minimizing disruption is vital for maintaining investor confidence and economic stability.
Public Goods Management & Long-Term Sustainability
The MoF’s intervention extends to the management of public goods, ensuring compliance with regulations during the administrative reorganization. This includes reviewing the placement and management of assets, and making reasonable arrangements for housing and land used by government agencies. The emphasis on accountability and responsible resource management is a key component of the long-term sustainability of the two-tier government model.
Vice Minister Nguyen Duc Chi emphasized the MoF’s commitment to supporting localities, stating that the ministry will address any financial, budgetary, accounting, or public goods-related issues that could hinder the progress of the new system. This proactive stance signals a strong commitment to the success of Vietnam’s administrative reforms. For readers interested in following this story, searching Google News for “Vietnam government reform” will provide ongoing updates.
The Ministry of Finance’s swift and comprehensive response to the challenges facing Vietnam’s new two-tier local government model demonstrates a commitment to ensuring a smooth and effective transition. While hurdles remain, particularly regarding staffing and administrative processes, the MoF’s proactive measures and dedication to collaboration offer a promising outlook for the future of local governance in Vietnam. The coming months will be critical in solidifying these reforms and realizing the benefits of a more efficient and responsive administrative system.
