The Government’s policy of financial decentralisation has successfully encouraged municipal governments to make the best use of their resources, says the Planning and Investment Ministry’s Financial and Monetary Department director Le Quoc Ly.

Local governments had become active and accountable, he told a three-day workshop to discuss financial control and local governance in Ha Noi earlier this week.

State Capital Investment Corporation Management Board deputy chairman Tran Van Ta echoed Ly’s view.

Local governments had raised 50 per cent of their own yearly budgets in 2006 compared with 26 per cent in 1992, he said.

The deputy chairman said: "The figures show the strong trend to financial decentralisation in Viet Nam.

"This decentralisation accords with the government’s policy of diversification and the narrowing of the divide between rural and urban and lowland and highland."

Nevertheless, difficulties remained, particularly with the management of mineral resources, he said.

Ly argued that although municipal governments collected more than VND20 trillion (US$1.2 billion) each year, the amount spent on urban infrastructure was very modest.

The mobilisation of resources for urban development, especially land, was also inadequate, he said.

He explained that Provincial People’s Councils decided budget allocations to districts and communes.

"An advantage of this system is that it suits the competency, development and organisation of local officials," he said.

But it could hinder the monitoring and evaluation necessary to ensure transparency.

"Provincial management of the programme had also delayed implementation of the Government’s policy," he said.

Ly conceded that some of the Government’s self-management financial policies did not match reality.

This was particularly true of environmental resources – a key factor in sustainable development.

Participants at the conference agreed the financial decentralisation programme must be completed and local authorities made accountable.