BUDGETARY ADMlNESTRATION iN VIET NAM

Thesis for the Dayton of M. A.
MICHIGAN STATE UNEVERSITY
Buu-Dich
1960

 

11%5515

LIBRARY

Michigan State
University

 

BUDGETARY ADMINISTRATION IN VIET NAM

By

Buu-Dich

A THESIS

Submitted to the College of Business and Public Service

.Midhigan State University of Agriculture and
Applied Science in partial fulfillment of

the requirements to: the degree of

MASTER OF ARTS
Department of Political Science

1960

 

 

ACKNOWLEDGEMENT

This thesis has been written with the help of
Dr. John T. Dorsey, Jr., my principal professor and advisor;
Mr. Do-Quang-Tri, Vietnamese participant, machine accounting
specialist; Mr. Le-Quang-Huynh, Vietnamese participant, tax-
ation specialist; and Mr. Nguyen-Van-Tinh, Vietnamese
participant, budget specialist.

Material was supplied by Dr. Dorsey; Mrs. Nona
Pettigrew, librarian of the Viet-Nam Project; Miss Elsie
Cunningham, participant director; the Vietnamese Embassy,
flashington; the General Directorate of Budget and Foreign
Aid, Saigon; the National Institute of Administration,
Saigon; the General Directorate of Internal Revenue, Saigon;
and the Department of Finance, Saigon.

Material assistance was given by the Vietnamese
Government, the International Cooperation Administration
and the Viet-Nam Project.

To all these persons and organizations I grate-
fully dedicate this thesis as an expression of my sincere

devotion.

Buu-Dich

East Lansing, 1960

BUDGETARY ADMINISTRATION IN VIET NAM

By

Buu-Dich

AN ABSTRACT

Submitted to the College of Business and Public Service
Michigan State University of Agriculture and
Applied Science in partial fulfillment of

the requirements for the degree of

MASTER OF ARTS

Department of Political Science

1960

Approved by:

 

 

A T R A T

Three major periods can be distinguished in the
historical evolution of Vietnamese budgetary administration.
In the pre-colonial period, prior to 1862, fiscal management
in Viet-Ham was not considered as very different from the
management of the king's household. In the colonial period
Viet-Nam was divided into three regions, each one of which
had its own budget which was more or less dependent upon
the French Indo-China general budget. French fiscal rules
and regulations were applied in Viet-Nam almost without
change. The people were represented in four different
Assemblies with consultative functions on budgetary matters.
In the present period the need to develop the nation
economically obliges the government to give more importance
to budgetary administration.

Budget preparation begins with a presidential
message to different departments defining the budget policy
of the year. The departments prepare their estimates ac-
cording to the spirit of the presidential message. These
estimates are reviewed bythe General Directorate of Budget
and Foreign Aid which is responsible for the preparation of
the national Budget proposal. Accurate information about
Past and present budgets is necessary to prepare a new
budget; the classification of budget expenditures and
receipts, together with machine accounting, permit the

Bun-Dich
ii

111

central budget agency to obtain the needed information in a
short lapse of time.

The budget proposal is submitted to the National
Assembly for authorization, but many government receipts
and expenditures are not included in it and a great amount
of revenue from the American aid is earmarked by the
executive in agreement with the United States Overseas
Mission. The Constitution permits the President to expend
in each quarter one-fourth of the credit entered in the
budget proposal pending the final vote of the National
Assembly on it. The President can also veto specific items
and transfer money from one chapter to another in the budget
authorized by the National Assembly. The majority of three-
fourths of the total number of assemblymen required to
override a presidential veto is the same as that required
to amend the Constitution.

The General Directorate of Budget and Foreign
Aid supervises the implementation of programs and controls
the expenditures of the agencies through its Directorate of
Programs and Planning and its Directorate of Obligation
Control. To make an expenditure five steps are necessary:
allotment, obligation, liquidation, authorization, payment.
Money is allotted to different departments at the beginning
of eadh quarter. Money is obligated when the supplier has
been chosen, and liquidated when goods or services have

been delivered. In order to secure flexibility in budget

Emu-Dion

 

iv

execution, the expenditure procedure is greatly simplified
by the use of special funds, petty cash funds, imprest
cadh funds and revolving funds.

Local budgets depend heavily upon subsidies from
the national budget. About twenty agencies have autonomous
budgets and many government expenditures and receipts come
from extra budgetary accounts. A great part of budget re-
ceipts come from the counterpart fund of American aid. The
aid programs and procedures are subject to agreement between

the Vietnamese and U.S. governments.

Buu-Dich

TABLE OF CONTENTS

Page

Chaptep I: Introduction . . . . . . . . . . . . . . . 1
1. General Considerations . . . . . . . . . . . . 1

6

2. Historical Background . . . . . . . . . . . .

Chapter II: The Budget Cycle . . . . . . . . . . . . 22
1. Budget Preparation . . . . . . . . . . . . . . 23
2. Budget Authorization . . . . . . . . . . . . . 43
3. Budget Execution . . . . . . . . . . . . . . . 53
4. Budget Accounting and Auditing . . . . . . . . 82

Chapter III: Local and Autonomous Budgets . . . . . . 95
1. Prefectural and Municipal Budgets . . . . . . 95

2. Provincial and Village Budgets . . . . . . . . 98
3. Autonomous Budgets . . . . . . . . . . . . . . 107
4. Extra Budgetary Accounts . . . . . . . . . . . 119

Chapter IV: Specialized Budget Problems . . . . . . . 127
1. The General Directorate of Budget and

Foreisnfldeeeeeeeeeeeeeeee127
2. The Introduction of Machine Accounting . . . . 131

3. The Foreign Aid Administration . . . . . . . . 134
A. The MSUG Recommendations . . . . . . . . . . . 143
5. Budget Policy and National Recovery . . . . . 147

W e e e e e e e a e e e e e e e e e e e e e 156
£22de! I e e e e e e e e e e e a e a e e e e a e e a 161
Ampflandix I; e e e e e e a e e e e e e e e e e e e e e 167

C H As? I E B O N E

INTRODUCTION

The concept of modern budgetary administration
in Viet-Nam takes shape as a result of new demands on the
government in the direction of national development and
democracy. Vast programs of reconstruction and re-equipment
are necessary to national development and must be coordi-
nated and synchronized by means of an elaborate system of
planning and budgeting. The role of the legislature in
authorizing government expenditures is essential to demo-
cracy and must be institutionalized in the process of budget
authorization prior to its execution. But before examining
the evolution of the Vietnamese budgetary system from a
rudimentary to a modern technique, from an authoritarian to
a more democratic orientation, the following general con-

siderations will provide a useful introduction.

1, Gpnera; Considerations:

a- 2pc Vietnamese ziscal Year: The time used
for the execution of the Vietnamese budget is theoretically

one year. Many reasons can be invoked to explain this
practice: (1) things in the world often evolve in cycles and
the cycle is generally one year; (2) the succession of sea-
sons has an obvious influence upon most economic activities;

(3) private enterprises generally choose the year as the

- 2 -

standard time for their business, and since national budget
receipts derive in large part from the taxation of private
business, it is convenient that the period of one year be
adopted for the national budget.

Compared with other people in the world, the
Vietnamese people are very conscious of the year. They
celebrate the new year with conviction and enthusiasm; any
other unit of time chosen for the execution of the budget
would not be in accord with that national consciousness.
Faithful to their old traditions, the Vietnamese people do
not celebrate the new solar year‘but the new lunar year.
The adoption of the lunar year as the budget period would
be more in keeping with the popular tradition, but it would
involve too many inconveniences to be retained 1/. There-
fore, the Vietnamese budget period is one solar year begin-
ning on the first of January each year.

It is desirable that the transition from one
fiscal year to another be conducted smoothly. That is the
reason why, although the budget period is one year, an
extra overlapping period is added to help the government
realize the budget program without causing undue disturbance
in fiscal affairs. In the second place, certain work pro-
Jects cannot be completed in one year. In order to fit

these works into the budget it is necessary to divide them

 

£1) The lunar year sometimes has thirteen months instead of
welve.

-3...

into several parts. For example, if the construction of a
bridge takes three years, 1960, 1961, and 1962, only what
is going to be spent in 1960 is entered into the 1960 budget.
In the third place, the relatively new concept of positive
government has resulted in the undertaking of vast pregrams
of national reconstruction, armament, expansion, etc. The
traditional period of one year used for the execution of the
budget seems too short, and the budget is more and more con-
sidered as a part of a larger plan of five or seven years.
For example, Viet—Nam has a Five Year Plan established by
the General Directorate of Planning. This plan started in
1958, with emphasis upon consolidating the infrastructure
of the national economy.

In short, Viet-Nam accepts the calendar year as
a period of her budget with two qualifications: (1) an
extra period is provided for budget execution in addition
to the fiscal year, and (2) middle or long range planning

Provides guidance for the one year budget.

b- e econ on re 1 n o Bud i : Viet-Nam
is divided into administrative units such as provinces,
prefectures, municipalities, districts, and villages. Ex-
cept for the districts, all these units have their own'bud-
gets. This is dictated by the need for a certain amount of
deconeantration of power. Too much concentration of power
in.the hands of the central government makes for red tape

and inefficiency; in so far as each of the above mentioned

- 4 -

administrative units has its own particularity, a budget
system which allows for local differences is more efficient.
It is a well observed fact that the modern nation-state
reaches such large proportions that the individual seems to
be neglected. Intermediary units such as the province, the
municipality and the village may provide the citizen with a
smaller society fit to his needs and allegiance. These
conditions make for the division between central budget and
local budgets. Such a division may be called horizontal in
that the different budgets are on different levels. In
addition to the horizontal division there is a vertical
division of budgetary administration. Viet-Nam.has a host
of autonomous agencies with autonomous budgets, all of them
on the national level. The major reason for the creation of
these autonomous budgets is the need for more flexibility
in carrying out developmental programs and for more dis-
oration in the exercise of the executive power.
Furthermore, since certain receipts and expendi-
tures have a provisional or emergency character, it is con-
venient that they be put into extra-budgetary accounts
managed by the General Directorate of Treasury. In a word,
the deconcentration of budgetary ammunistration in Viet-Ram
can be analysed according to three different criteria: (1)
the horizontal division of budgetary function between the
national and the local budgets, (2) the vertical fragment-
ation of the budget structure into central and peripheral or

- 5 -

autonomous budgets, (3) the distinction between budgeted
and non-budgeted accounts.

c- The NOn-ngpensation of Expenditures: By
non-compensation of expenditures is meant that the expendi-
tures of a non-autonomous agency are not directly provided
by its own income. For example, (1) certain non-autonomous
agencies such as the General Directorate of Taxation, the
General Directorate of Post and Telecommunications, the
General Directorate of Customs, etc., receive a great deal
of money from the citizens, (2) certain other non-autonomous
agencies are in charge of goods that can be sold to the
public, and (3) almost every non-autonomous-agency has sur-
plus properties that could be sold for money. In all three
cases these non-autonomous agencies would act contrarily to
the rule of non-compensation of expenditures if they used
such incomes for their expenditures.

At the basis of the rule lies the desire of the
central government and the legislature to control the non-
autonomous agencies in all their activities. If only the
net cash of a non-autonomous agency, such as the General
Directorate of Post and Telecommunications, is entered into
the budget, the legislature loses the control of that non-
autonomous agency's expenditures in the process of budget
authorization.

The difference between an autonomous agency and

a non-autonomous agency in Viet-Nam stems primarily from

- 5 -

the fact that the rule of non-compensation of expenditures
is applied only to non-autonomous agencies. when an agency
would function better if supported by its own income or a
special tax, an autonomous status is generally conferred on
it.

In some instances, however, expenditures of a
non-autonomous agency can be partially compensated by its
receipts without causing much disturbance. (1) The non-
autonomous agency's use of its own product is sometimes so
insignificant that nobody would think of following the rule
of non-compensation of expenditures by selling the product
in the market, then entering the money as a receipt and
making an expenditure according to legal procedure in order
to buy back the product. (2) The process of building new
facilities in place of old ones implies two steps if the
rule of non-compensation of expenditures is to be tnllowed.
First, the old facilities must be sold to the public and
the money entered as a budget receipt; secondly, an expendi-
ture must be made to build the new facilities. In practice,
these two steps are generally combined into a single con-

tract of transformation.

2, Eigtgrica; Background:
a- e d at rio 186 : On June 5, 1862,

under the reign of Tu-Duc, after a succession of defeats in
the war against the French forces commanded by Admiral

Gharner, the Vietnamese government signed a treaty with

- 7 -

France by which Viet-Bam ceded to France three provinces in
East Cochinchina (Bien-Hoa, Gia-Dinh, Dinh-Tuong). In
addition, the treaty accorded French vessels the right to
use the Mekong River up to the frontier of Cambodia, gave
French Catholic missions freedom of operation, opened to
Frendh and Spanish vessels three ports (Do-Nang, Ba-Lat,
Quang-Ien), and promised not to cede any part of her terri-
tory to any other nations without the consent of France 1/.
1862 can thus be considered as the beginning of
French administration in Viet-Nam. It is difficult to say
whether or not Viet-Nam had a budget prior to 1862. If we
consider the budget as an authoritative allocation of funds
to government agencies and of charges to the citizens, we
can say without doubt that Viet-Nam.had a budget. If we
consider the budget as a document prepared by the executive
and approved by the legislative we can say that Viet-Nam
had no budget prior to 1862. The people of Viet-Nam had to
pay taxes to the kings in order to provide for the expendi-
tures of their administration, to make war against China
and against each other, and to carry out vast programs of
land reclamation and territorial expansion that more than
doubled Vietnamese territory from 1069 to 1884. Since the
kings had to decide about the way of spending this income,
we can speak of fiscal management, implying a certain amount

(1) Le-Thanh-Khoi: W (Editions de Hinuit. Paris,
1955) Fages 369 sqq.

:I

- g -

of planning and control of the local powers by the central
power.

Fiscal management in Viet-Nam prior to 1862 had
the following characteristics:

(1) As far as planning is concerned, there was
a certain amount of cooperation between the central power
and the regional powers. The reports of Nguyen Cong Tru (a
nineteenth century province chief) to the Emperor Minh Hang
show that many details were dealt with in the communication
between the mandarin and the king ‘/. As might be expected,
the power of decision was theoretically in the hands of the
king who gathered information and suggestions about taxes
and needs for governmental actions and issued orders to his
subjects. This spending process may not have followed the
principle of annuality; at present nobody knows whether the
king thought in terms of one year or of a shorter period.
However, the king was assisted in his decisions not only by
general administrators but also by specialists in fiscal
management, such as the treasurer.

(2) There could be no separate budget author-
ization for the simple reason that there was no separate
legislative power. Moreover, the "budget” had no form
other than a mass of directives, suggestions, and estimatesa/.

(”Lo lime: W (Hanoi 1928). Le Thanh Ehoi:
35 i - (Editions de Hinuit. Paris 1955) Page! 39. 347,

(2)1'ran Trong Kim: W (Hanoi 1928).

 

_- u—‘i-fl-

 

-9...

(3) The expenditure procedure was simple, but a
minimum standard of behavior was expected from the adminis-
trators. The prosecution of Dang Tran Thuong under the
reign of Gia-Long (1810) shows that expenditure procedure,
was regulated in such a way as not to allow the embezzlement
of royal funds with impunity 1/. Although the mandarins
were supposed to be disciples of Confucius, few of them
lived the Gonfucian ideal in their practical life.

(4) Government income was meagre, and was not
exclusively composed of money. In effect, a great part of
government income was in the form of labor contributions.
These contributions were difficult to handle but sometimes
had an undeniable moral value insofar as the citizens could
experience a sense of participation and could see for them-
selves the result of their contribution. The remaining part
of income was paid in kind; rice, silk, ivory, etc. Tax
collection was a complicated art and was generally entrusted
to the local authorities, with taxes being laid on villages
by the central government rather than on individuals.

(5) Government expenditures were cumbersome.
The mandarin was paid partly in rice, partly in coins. Rice
storage and coin storage posed serious problems because both
were bulky and perishable materials. The ancient copper

coins were so thin and so impure that they became brittle

_____

(I) Tran Trong Kim: Iigt—gam §u Luge (Hanoi 1928).

if they were not properly stored. Rice and coin storage was
a part of fiscal management technique. 0n special occasions,
in order to reward the exceptionally good mandarins, the

king gave them silk, ivory or gold. The king's treasurer

had responsibility, among other things, for keeping an
account of all expenditures. 7

(6) The villages and provinces enjoyed a great
degree of autonomy. Each village made contributions to
provincial expenditures, and each province made contri-
butions to national expenditures. The size of these contri-
butions was based on tradition rather than on a scientific
basis for taxation. The basic political unit was not the
individual but the village. Each village was required to
keep an inventory of land and men, but these inventories
. were rarely referred to by the province chiefs who found it
more feasible to deal with the village as a whole rather
than with individual citizens 1/.

!--The Budget From 1862 to 1828: The French
began to set up their budget system in the three captured
provinces, Bien-Hoa, Gia-Dinh, and Dinh-Tuong, then to three
others, Vinh-Long, Chan-Doc, and Ha-Tien. Budget adminis-
tration was in the hands of French commanders who were
more interested in war than in administration. Their policy
was first to rely on Vietnamese collaborators who helped

(1) Le-Thanh-Khoi: Lg Viet-yam (Editions de Minuit. Paris
1955) page 356 aqq.

-11..

them harness the peeple little by little. Budget adminis-
tration was characterized by enormous war expenditures. The
former system of tax collection was retained with only
slight modifications in order to avoid new troubles for the
French military commanders. By 1884, all of Viet-Nam was
French; the war was transdormed into pacification. The
relatively calm period after 1898 permitted the French to
devote more time to the reform of Vietnamese budget ad-
ministration.

c- The Budget Frgm 1898 to 1945: Under French
rule, the following modifications were put into effect in
the Vietnamese budget:

(1) Viet-Nam no longer had a national budget.

In place of the national budget there were three regional
budgets 1/. The regional budgets were not independent but
depended more or less on subsidies from the general budget
which included Laos and Cambodia as well as Viet-Nam.

(2) In addition to the general and regional
budget there was a royal budget which dealt with the royal
administration composed of six ministries: Education,
Interior, Justice, Rites, Army,and Public Wbrks.

(3) The scope of activities of these ministries
dwindled gradually in proportion to the decrease of the
royal budget. The income and expenditures of the royal

m u

(1) Le-Thanh-Khoi: L2 Xigt-Nam (Editions de Minuit) Paris
1955. Page 400.

- 12 -

budget were tightly controlled by French advisers.

(A) The royal budget received subventions from
the regional budget of Annam, one of the three regions of
Viet-Nam, the other two regions being Cochindhina in the
South and Tonkin in the North.

(5) A great part of the general budget income
was from custom duties and government monopolies such as
the production of salt, alcohol, and opium.

(6) A system of representation was devised, com-
posed of French settlers, French citizens of Vietnamese
birth, and outstanding Vietnamese collaborators. Its role
in budget authorization was very limited on account of its
structure and the administrative tutelage to which it was
subjected. First of all it was fragmented into two councils
and two chambers different from each other. The two most
important of them, the Indochinese Grand Council of Economic
and Financial Interests (Grand Conseil des Interets
Economiques et Financiers de l'Indochine) and the Colonial
Council (Conseil Colonial) in Cochinchina, contained a
majority of Frenchmen. The former was created by Governor
General Pierre Pasquier in 1928. It had fifty-one members,
including twenty-eight Frenchmen. The other had been created
in 1880 by the Governor of Cochinchina, Le Myra de Vilers.

It had sixteen members including ten Frenchmen. This
structure was statutory. Certain of its members were ap-

Pointed rather than elected and the whole system was subject.i

- 13 -

to the control of the administration which made use of
multiple means of coercion: adjournment for a period up to
six months, and administrative approval, alteration, and
even cancellation of decisions. In addition to these two
councils there were two Chambers of Representatives of the
People (Chambre des Representants du Peuple) vested with
consultative functions in budgetary matters. Representatives
were elected in Annam, partly appointed in Tonkin. These
chambers held session ten days a year, their internal regu-
lations had to be approved by the administration, and their
debates were not published 1/.

(7) Elaborate rules were devised, dealing with
taxation and the protection of government monOpolies. These
rules helped increase budget incomes.

(8) The Decree of December 30, 1912, provided
for the budget execution process, emphasizing the central-
ization of power and multiplying controls. Most of that
Decree is still in effect in the Republic of Viet-Nam while
better methods have yet to be found 2/.

(9) The general budget was prepared by the
Governor General and approved by the President of the French
Republic, confirming the previously existing practice.

_‘

(1) Le-Thanh-Khoi: Lg Viet-Nam (Editions de Minuit) Paris
1955. Page 405.

(2) Snyder, V.: Bu e er and Finan ial Administ at on i
list-flan (MSUG Saigon 1956 mimeo) page 3.

- 14 -

(10) The regional budget was prepared by the
Regional Governor and approved by the Governor General. In-
comes and expenditures of one of the regional budgets from
1906 to 1930 are shown on page 15.

(11) The general budget might contribute both to
the regional budgets and the French national budget. These
contributions were determined by a decree of the Governor
General in the former case and a law of the French govern-
ment in the latter case.

gr The Budget From 1945 to 1956: In 1945 the
Japanese military forces took over. The general budget
suffered grave deficits. The war that followed plunged
budget administration in Viet-Nam into great confusion and
abuses. Capable and experienced Vietnamese administrators
were lacking. A great number of them cooperated with the
Viet-Minh communists or were suppressed by them. A host of
adventurers, assumed high administrative functions. Taxes
could be collected only in pacified areas and the people
were so decimated by war that they had little to pay in
taxes. Moreover, in order to encourage people to live in
pacified areas, the government was not too eager to tax
them. Even if it wanted to do so, information about the
potential taxpayers was lacking. The French army relied
heavily upon American aid. This aid, begun during the war,
had two purposes: (1) to provide the French army with war
material, and (2) to help the Vietnamese peeple who traded
with the French army. Thus, one could refer to "invisible

FROM 1906 TO 1930
20 . In Million _ _ '
y of plasters ' ‘ ' ‘ ' &;////

18,

16

 

 

 

 

 

 

 

2‘ * * .____ Budget income
_ Budget expenditures

 

 

 

1906 08 10 12 14 16 I8 20 22 24 26 28 1930

Source: mghiem Dang and Le dinh Chan: Ngan sach. Hoc-vien
Qu°031a Hanh-Chanh. Saigon 1958. Page 233a.
Notes: (1) Cbchinchina forms the main part of the present
South Viet-Nam.

(2) The rate of increase is broken from 1914 to
1918. This is due to the first world war.

(3) The differences between income and expenditures

come into the Reserved Fund of Cochinchina.

-16-

exportations,” meaning the expenditures of the French army
on the soil of Viet-Nam. These invisible exportations gave
the Vietnamese government certain sources of income and made
a dozen cities bloom with prosperity while the rest of the
country was decimated by war. Certain cities even increased
in size. Budget preparation was chiefly the job of military
commanders; the needs of the civil administration were only
a minor part of it. In 1952 the war situation became
serious. The period of Viet-Minh offensive began with
massive aid from China which had been under the communist
regime since 1949. The French reaction was to enforce the
Bao-Dai government. Thus the Vietnamese government got its
own budget only in 1952 after asserting its intention to
fight the Viet-Minh. Fifty-eight per cent of the expendi-
tures were for military purposes. On August 8, 1952, a
provisional national council of twenty-one members was
created and vested with consultative functions on budgetary
matters 1/.

The Vietnamese government headed by Bao-Dai was
initially only an epiphenomenon of the war effort, but inso-
far as it could participate in certain operations and could
help provide the French army with soldiers it ended up by
having some importance. Great sums of money were entrusted

to the Vietnamese government in order to carry out some

 

(1) Le-Thanh-Khoi: Lg list-gem (Editions de Minuit. Paris
1955) Page 479.

pacification.

- 17 -

In view of the nature of the Vietnamese war,

pacification was more dangerous than the war itself and

necessitated more and more spending. The concept of the

program budget was applied extensively to the pacification

operations.

investigate,

Each cperation had an objective, an area to

and a definite sum to spend. A tremendous

amount of waste and corruption was suspected and some of the

money in France, in quest of security. This way of imple-

menting the budget had an unanticipated consequence: the

demand for French currency increased so much that the

Fbrei

gn Exchange Office did a siseable business granting

favors 1/.

Following are military expenditures of the

Vietnamese national government from 1952 to 1956 in millions

of VN$:

—*

1952 .................... 2,459
1953 .................... 4,091
1954 .................... 13,400
1955 .................... 5,118
1956 .................... 7,600 3/

(1) J. Despuech: kg Trafic de la Pgaaggg (Editions des Deux
Rives. Paris 1953 .

Le-Th
Pages

(2) ugh

Gia H

anh-Khoi:
481 sqq.

“11‘0th e

Le Viet-Nam (Editions do Minuit. Paris 1955)

ism-Dan and Le-Dinh-Ghan: figm-flgh (Hoc-Vien Quec-
8 so P ‘

Saigon 1958, min ages 22-28.

-18-

These figures show the increasing participation
of the Vietnamese government in the war. In 1954 the
Vietnamese budget showed a great increase in military ex-
penditures because of the withdrawal of the French army after
Dien-Bien—Phu. In order to make a comparison between French
expenditures and Vietnamese expenditures in the war, let us
look at French expenditures in Viet-Nam in millions of
francs:

1953 .................. 163,254 (for the whole
of Indochina)
1954 .................. 215.749
1955 .................. 40,300 1/
These figures are given by the Vietnamese Office of Foreign
Exchange; they do not include the value of war material that
was not imported through that office.

d- The Budget From 1956 to 1959: In 1956 a Con-
stitution was promulgated. Viet-Nam stepped into the era
of constitutional government. From a quasi-absolute mon-
archy tightly controlled by the colonial power Viet-Nam
stepped into a presidential regime. Many important reforms
in budget administration were put into effect in order to
give to the nation more facilities to cope with its new
economic, political, and social conditions.

(1) The Directorate of Budget was transferred

from the Ministry of Finance to the Executive Office of the

—.__

(1) Lindhom, R. W.: Viet—Nam' The First Five Years An
lytgggationag Symposium (M.S.U. Press, East Lansing, 1959)
Peace 292. 2 9.

- 19 -

President by Decree No. 16TTP of May 8, 1955. Combining
this agency with that administering foreign aid, a General
Directorate of Budget and Foreign Aid was created by Decrees
No. 732TTP/VP of April 24, 1957, and No. 689TTP/NSNV of
April 21, 1958 1/. The major reform in these decrees was a
shift in the responsibility of budget administration. In
effect, budget administration ceased to be a responsibility
of the Ministry of Finance to become that of an agency with-
in the Executive Office of the President.

(2) Approval of the budget became the prerogative
of a National Assembly elected by universal suffrage on the
basis of one representative for each district.

(3) The regional budgets were abolished beginning
in 1956 by Decree No._17 of December 24, 1955, because they
were a hindrance to the unity of the nation. In effect, the
regional budget was a vestige of the colonial period when
Viet—Nam was too big to be dealt with as a whole on equal
terms with Laos and Cambodia.

(4) The provincial budgets received more con-
sideration. Steps were taken to give more independence to
them by a judicious division of income and expenditures
between the national and the provincial budgets.

(5) An academic program of budget studies was
created in the National Institute of Administration in order

E

(1) Cong-Baa Viet-Nam Cogg-Hoa.mo. 20, 1958) Pages 1739 sqq.

- 20 -

to introduce modern concepts of budget administration to
future civil servants. A new classification of civil ser-
vants called budget examiners was created.

(6) Machine accounting was introduced in budget
administration. A classification system was devised and a
code was given to each kind of expenditures, which permitted
machine accounting.

(7) Budget preparation, authorization and exe-
cution were given more attention. New budgets began to ap-
pear at the beginning of each year, duly prepared and ap-
proved; the 1956 budget was the first budget written in
Vietnamese '/. The previous year's budget accounts were
closed by the legislative power only a short time after ex-
piration of the fiscal year. These were great achievements
for Vietnamese budget administration, since in the former
regime budget authorization came a long time after its exe-
cution and budget clearance five or more years after its

authorization.

(8) A group of American advisers of the Michigan
State University Group (MSUG) studied the Vietnamese budget
administration and made a number of criticisms and recom-
mendations. These actions helped to influence the Viet-
namese budget officers to reconsider their traditions and

g

(1) Law No. 17/58 of December 26, 1958, promulgating the

1:59 budget. 923g Bao Viet-nam gogg Hoa No. 1, 1959. Page
1 .

- 21 -

their problems 1/.

(9) Some of the MSUG recommendations have been
adopted. The authority of province chiefs to ask for ad-
vances from the Treasury was abolished, information concern-
ing past fiscal years was added to the budget document, the
expenditures proposed for each administrative department
were analysed in terms of work programs, and money was al-
lotted to different spending agencies at the beginning of
each quarter. For example, Presidential Decree No. 694
TTR/NSNV of April 22, 1958, allotted to different spending
agencies 3,456,059,500 VN8 to be spent during the second

quarter of 1958 2/. This was approximately twenty-four per

cent of the year's appropriation.

 

(1) Fishel, W. R. et a1: Budgetary Administration in Viet-

m. <MSUG, Saigon, 1956.
Snyder, V. w.: Bud star and Financi Administration in
1 t-Nam (Saigon 1956. Viet-Nam Project mimeographed docu-
ment 5 2).
(2) Cong Bao Viet-Nam Cong-Hoa 1958. Page 1855.

C H A 2 I E E I W 0

THE BUDGET CYCLE

1 d t e arm on:

a- Government Objecpives and Budget Preparation:
Budget preparation in Viet-Nam has evolved with the progress
of the political situation. During the war years, 1946-

1954, budget preparation was chiefly a concern of the French
administrators who subordinated other considerations to the
military effort. From the administrative and social point
of view, budget programs were more negative than positive,
great emphasis was put upon economy rather than on positive
programs that the war~did not permit.

In 1955 ninety per cent of civil budget expendi-
tures were for personnel services 1/. These expenditures
tended to be repeated from one year to another. How personnel
could be used efficiently was an important concern in pre-
paring the budget. From such concern stemmed frequent re-
organizations and personnel actions, transferring people
from one agency to another or grouping them into new agencies.

The present situation reflects the competition
with the Nbrth, competition in which the South tries to pro-

mote social, economic, and cultural reforms in spite of

(1) Snyder, 11.: End eta and lush ial Administration in
2111;!gg. (MSUG Saigon 1956) Page 13.

- 22 -

- 23 -

subversive activities from the North. The following passage
taken from the 1959 budget shows the Vietnamese government's
concern for reforms 1/.

Although the national revenue is not enough

to meet actual requirements, a good many large
scale works were carried out in the past two
years, which really proved the continuing ef-
forts of the government in the betterment of
the workers' living conditions, the re-
habilitation of culture, the enhancing of
human dignity and the educational level of the
people and at the same time, in the recon-
struction of devastated areas, the expansion
of productivity and exports, and in the
development of national industry with a view
to emancipation from foreign industry.

b- Budget Preparation in the Bao-Dai Regime:
Prior to 1956 budget preparation was the job of the Ministry

 

of Finance, which gathered information concerning government
income and expenditure in the preceding fiscal years and
made an extrapolation from this information as to what the
next budget should be. Then an instruction was issued to
the different Ministries. In the light of that instruction,
each Ministry prepared its own revenue and expenditure esti-
mates. Estimates from the various Ministries went to the
Ministry of Finance which prepared a budget proposal and
submitted it to the Prime Minister. The Prime Minister
conferred with the Ministers in a cabinet session in order
to reach agreement upon the budget proposal. If agreement

was reached, the budget proposal was submitted to the Chief

 

(1) gational Budggt 1252, General Directorate of Budget and
Foreign Aid, p. 1.

- 24 -

of State who promulgated it. If agreement was not reached,
the Chief of State intervened as a judge. The possibly
frustrated Minister or Prime Minister had the choice of re-
signing or abiding by the decision. The budget thus made
was sent to different Ministries for execution and to
different centers of obligation control for control 1/.

As the regions and provinces had their own bud-
gets, conflicts, duplications or gaps in budget preparation
often occurred. Conflict occurred when the same program was
considered to be under the exclusive jurisdiction of the
central government by the central government and under the
exclusive jurisdiction of the local government by the local
government. Duplication occurred when the same program was
taken into consideration by both the central and local
government. Gaps developed when a program was considered
to be under the jurisdiction of the central government by
the local government and under the jurisdiction of the local
government by the central government. The division of work
between central and local governments in Viet-Nam was chiefly
a matter of traditional practice stemming out of a.multitude
of tacit agreements between the different powers when no
written regulations were available.

2- Prepsnt pp: Pppcpgupes: Present day pro-

cedures are governed by the following documents: The Decree

(1) See Chapter II, Part 3. 988e 54, for a discussion of
obligation control.

- 25 -

of May 8, 1956, No. 1245 TTP/NS created a Directorate of
Budget attached to the Presidency. The Executive Order of
April 24, 1957, no. 732 TTP/VP created a General Directorate
of Budget and Foreign Aid, and the Executive Order of April
21, 1958, no. 689 TTP/NSNV set forth its organization.

Thus budget preparation today is under the direct super-
vision of the Presidency instead of the Ministry of Finance.

According to Article 60 of the Constitution of
October 26, 1956, the budget proposal must be submitted to
the National Assembly prior to September 30, three months
before the beginning of the fiscal year. The presidential
order of April 18, 1957, No. 45 TTP/NS gives the departments
a period of one month and a half to send their budget esti-
mates to the General Directorate of Budget and Foreign Aid.
The Presidential Order of June 8, 1957, No. 3343 TTP/NS/SIVP
gives the departments an extra period of fifteen days to
complete their budget estimates.

In the absence of a single document timing the
budget preparation process in Viet-Nam, the above mentioned
documents permit us to infer a schedule for budget prepa-
ration. The time spent to prepare the budget was four
months in the former system and is five and a half months
in the present system. However, former governments had the
great advantage of starting budget preparation in October.
They had ten months to observe how the current budget was

working as a basis for preparing the next budget. In the

- 25 -

new system budget preparation starts in mid-April, and the
time available for observation of experience with the current
budget is only three and a half months. This fact is due
to the existence of the National Assembly which spends three
months in budget authorization. But with an advanced system
of accounting based upon the use of IBM the new government
has improved over the former system in accuracy of esti-
mations. Following is the schedule for budget preparation:

: Approximate : Approximate

Date in the Date in the
Events : New System : Fbrmer System

Message from the President
(formerly from the Minister Mid-April First October

of Finance)

0.
0.

Budget estimates sent to the °
General Directorate of Budget Mid-June End December

and FOreign Aid (formerly to :
the Ministry of Finance)

Budget proposal sent to the Prior to January
National Assembly (formerly : September :
to the Council of Ministers) 30

d- The Agency Budget Office: Each department

has an office in charge of budgeting. The Defense Depart-
ment has a General Directorate of Administrative Affairs,
Budget and Accounting created by Arrete No. 305 QP/NP of
July 5, 1954. The General Directorate of Reconstruction and
City Planning has an Administrative Service responsible for
budgeting on the General Directorate level, another Ad-

ministrative Service responsible for budgeting within the

’|\ Ty.

- 27 -

Directorate of City Planning and Public Buildings, and a
Personnel and Accounting Bureau responsible for budgeting
within the Directorate of Reconstruction '/. The Department
of Finance still plays an important role in budget prepa-
ration because of its responsibility in fiscal matters. It
has a Directorate of Circulation of Mbney and External
Financial Affairs, a Directorate of Accounting, a Service of
Tax Coordination, a General Directorate of Treasury, a
General Directorate of Customs, a General Directorate of
Taxation, and an Inspectorate of Finance. These organi-
zations are powerful tools for budget preparation on the
revenue side.

The General Directorate of Planning is another
organization having some influence upon budget preparation.
Its Five Year Plan aims at developing agriculture, handi-
crafts, electricity generation, communication means, etc.

In addition to the overall Five Year Plan, the General
Directorate of Planning supervises the development of special
programs such as the exploitation of the Nong-Son coal mine,
the production of cement at Long-Tho, and the restoration

of the Bien-Hoa wood Plant. Through its involvement in

these developmental activities, the planning agency is in a
position to advise other agencies on program priorities and
on the cost of certain programs, for spending money requires

h

(1) i t-Nam Gov ent Or ani ation Manual (National
Institute of Administration, Saigon 195 .

- 28 -

as much technique and knowledge as earning it.

e- Methods Used in Budget Preparation and Their
Bgliabilitz: A method commonly used in the past was to
estimate the future by studying the past. Indeed, the level
of government income and expenditure has had a tendency to
increase regularly from one year to another.- For example,
referring to the chart on page 15, we see that the Cochin-
china regional budget increased regularly from 1918 to 1922
and again from 192# to 1928. The income in 1918 was 9.32
million, and in 1919 it was 9.66 million. The increase was
.3# million and the rate of increase was 3.6 per cent a
year. An extrapolation should permit one to have an idea
of the income in 1920. According to such an extrapolation,
the income in 1920 would be 10 million, but the actual in-
come was 11.1 million - a difference of 1.1 million, or 10
per cent. Thus the chart on page 15 shows that extrapo-
lation would not always provide accurate estimates, especially
during the periods 192t-1926 and 1914-1918.

To make a good estimate is not enough if the
estimation is only quantitative. In other words, Just as
the exact prediction of the number of highway accidents
might not ameliorate driving conditions, so the exact esti-
mation.of the level of a given kind of expenditure in the
preparation of the budget might not ameliorate the quality
of management. Therefore, the task today in budget pre-

paration is as much to choose the beat progrua as to have

 

Irv-l

an exact estimate. By best program is meant the one that
realizes the maximum benefit with the minimum cost. If the
benefit can be evaluated in terms of money, the best program
is the one that has the greatest benefit-cost ratio. By
benefit is meant the benefit over a certain number of years;
thus if we consider the benefit-cost ratio after x years a
program A can be retained but if we consider the benefit-
cost ratio after y years, program A.might not be better
than program B. In the case of benefits such as freedom,
knowledge, security, etc., it is difficult to make an ob-
Jective choice between these different benefits and adopt a
pregram that emphasizes one of them instead of another. In
spite of these difficulties, the benefit-cost ratio can be
and is calculated in a great number of cases, especially in
Viet-Nam today where so many programs have economic deve10p-
ment objectives. Expenditures for economic development pur-
poses increased from 1,420,536,000 VNQ in 1958 to
2,128,177,000 vns in 1959, or 49.81 per cent V. The latter
figure was twenty-six per cent of non-military expenditures.
Centralization of budget preparation in the hands
of the General Directorate of Budget and Foreign Aid makes
for the possibility of comparing the cost of different
Programs from different agencies. In effect, to the extent
that certain work like typewriting, mimeographing, or office

(1) General Directorate of Budget and Foreign Aid: gationa;

w. Peso 76o

.a

I-

- 30 -

cleaning does not differ from one agency to another, the
General Directorate of Budget and Foreign Aid is in a
position to state with enough accuracy whether typewriting
in agency A is done as economically as that in agency B if
coats are classified in the appropriate way for this. Such
comparisons have been introduced in recent years.

For a great number of other activities, such as
transportation or storage, it is possible to define a unit
of work and state the agency needs and performance in terms
of units of work. For example, agency A needs x ton-
kilometers of transportation, or agency B needs x men to do
y units of storage. This kind of cost analysis produces a
great many difficulties and Viet-Nam is still not very ac-
customed to such methods. In effect, a unit of transportation
at Dalat cannot be equivalent to a unit of transportation at
Saigon because the roads at Dalat are rough and bad while
the roads at Saigon are flat and well maintained. Standard-
ization of work activity units, which makes possible
factorial budgeting, presupposes standard conditions. Inso-
far as this can be done, factorial budgeting permits the
Vietnamese central budget agency to simplify its job of re-
viewing inasmuch as, with units of work preperly defined,
budgeting becomes "multiplicative rather than additive: 1/.
On the other hand, it brings to the spending agencies, in

h

(1) Burkhead: nggmgnt Budgeting (Wiley. New York 1959)
P3803 255 aqq.

- 31 -

the process of budget preparation, a focus on Operations and
programs rather than on personnel and material. This shift
of focus can be instrumental in the detection of wastes.

The American aid program has been an important
factor in initiating the new concept of budgeting in Viet-
Nam. Indeed, every Project Proposalzand Agreement must be
satisfactory fromthhat standpoint in order to be accepted.
To Judge by the volume of American aid, it is not an exag-
geration to say that budgeting in Viet-Nam has been given
considerable emphasis. However, as might be expected, this
modern technique of budgeting is not a panacea. The ad-
ministrators of programs tend to overemphasize the rigor of
the climate, the inadequacy of means of communication, and
the incompetence of local personnel, to increase the esti-
mated costs of programs in order to avoid shortcomings.
This situation is the raison d'etre of budget examiners
whose Job has been defined in the Presidential Order No.
689 TTP/NSNV, Article Iv, Section 2. Through wide know-
ledge of local conditions, they are able to inspire con-
fidence and respect from the field officers in charge of
Program estimation, placing them in a position to promote
economy from within if they do not wish it to be imposed
from without 1/ .

f- The Budggt Docume_t: The 1956 budget was a

_

(1) Burkhead: ngernment Budgetigg (Wiley, New York 1959)
Page 284.

-32-

voluminous document of about fifteen hundred pages, contain-
ing a lot of information apart from the allocation of money.
For example, it contained a list of all civil servants paid
through the expenditures for which it provided, giving their
positions, their basic salaries, and various allowances;
these civil servants were classified by agencies. At the
end of the budget document were two lists of all laws and
regulations affecting government income and expenditures.

On the other hand it did not include much detail on revenues
and government programs 1/. The present budgetary reform
tends toward less emphasis on personnel matters and places
more emphasis on programs and functional classification.

The budget documents become less voluminous, about one
hundred pages for the 1959 budget.

The 1958 budget, which can be considered as the
prototype budget after the reforms, was divided into two
major tables. Table A contained the estimates of receipts,
Table B contained the estimates of expenditures. Table A
was divided into two parts: Part I contained the ordinary
receipts and Part II contained the extraordinary receipts.
Table B was also divided into two parts: Part I contained
the ordinary expenditures and Part II contained the extra-
ordinary expenditures.

The difference between ordinary and extraordinary,

__

(1) Fishel, w. R., et a1: Badgetm fligistration in Viet-
ilss. (MSUG Saigon 1957) Page 17.

-33-

so far as receipts and expenditures are concerned, is not
clearly defined. Suffice it to say that under the rubrics
extraordinary receipts and extraordinary expenditures
nothing has been entered so far. Each Part or Subpart was
divided into Titles. For example, Title I of the first part
of Table A contained all estimated receipts from direct
taxation, Title II contained all estimated receipts from
indirect taxation, etc. Title I of Subpart A of Part I of
Table B contained all the expenditure estimates for the
National Assembly. Title II of Subpart A of Part I of Table
B contained all expenditure estimates for the Executive
Office, etc.

In the 1959 budget, each Title represented a
department of comparable agency. In the 1957 budget, each
Title could represent more than one Department. For example,
Title IX covered three Departments: Health, Welfare, and
Labor. Each Title was divided into chapters which in turn
were divided into sections. On the section level expendi-
tures were divided into personnel, material, and special
axpenditures in the 1958 budget.

Beginning in 1957, upon the advice of the MSUG,
more explanation about the economic role of the budget was
added to the document. Charts and graphs facilitated the
understanding of it. Classification by functions and by
objects of expenditure were added. These classifications

were worked out by a committee chaired by the Director

 

...__ .—-———

 

 

- 34 -

General of Budget and Foreign Aid and composed of Vietnamese
and American budget specialists 1/,

f- The Clasgification of Egpgnditures and Receipts:
Prior to 1958, two kinds of classification of expenditures
were used in the Vietnamese budgets: the classification by
organization and by object. The 1958 budget contained a de-
tailed report on budget reform in which two other kinds of
classification were used: classification by function and
classification by economic character 2/.

The function of an expenditure is indicated by
the first and the second digits of the code number. There
are nine functions (general government, international affairs,
national defense, justice and security, social welfare,
national economy, national debt, subsidy to provincial bud-
gets, and unclassified expenditure) represented by 1, 2, 3,
etc. Each function is divided into subfunctions. For ex-
ample, the function denominated ”social welfare" designated
by the digit 5, is subdivided into five subfunctions: edu-
cation, youth, health, labor and social work, and recon-
struction. These subfunctions are designated respectively
by the numbers 51, 52, 53, 54, and 55.

The spending agency is indicated by four digits:

(1) Fishel, w. R.: Fifth e ort on th MS . Saigon, June
1957. Page 15.

(2) Burkhoad. W. Wiley. New York. 1956.
PP. 110-243e

ta

-35-

the third, fourth, fifth, and sixth digits of the code
number. The third and fourth digits indicate the depart-
ment or equivalent organization to which the spending agency
belongs. For example, 03 means the Independence Palace
Office, 07 means the Department of the Presidency, 13 means
the Department of Foreign Affairs, etc. The fifth and
sixth digits indicate the spending agency itself be it a
General Directorate, Directorate, or some other subdivision
within the department. For example, 51 means the National
Institute of Administration, 21 means the Vietnamese Embassy
in Washington, 11 means the General Directorate of Social
Action, etc.

The economic character of an expenditure is indi-
cated by the seventh and the eighth digits of the code
number. The seventh digit indicates one of the five major
economic categories (operating expenditure, investment,
loan, payment of debt, and unclassified). For example, 1
means operating expenditure, 3 means investment expenditure,
5 means government loan, etc. The eighth digit indicates_a
detail attached to the economic character. For example, in
category 1, meaning operating expenditure, we can die-
tinguish classes 11 or civil personnel salary, 12 or mili-
tary personnel salary, 13 or material, etc.

The object of an expenditure is indicated by
the ninth and tenth digits of the code number. For example,
in class 11 (civil personnel salary) we can distinguish

- 35 -

divisions 111 or salary paid to members of the Cabinet, 112
or salary paid to full status personnel, 114 or salary paid
to the personnel recruited by contract, etc. In division
112 (salary paid to full status personnel), we can die-
tinguish subdivisions 1121 or basic salary, 1122 or contri-
bution to the retirement fund, 1123 or family allowance, etc.

As illustration, let us try to find the code
number of the basic salary paid to a full status professor
at the National Institute of Administration. The function
of that expenditure is "general administration," so the
first two digits of the code number must be 12. The
National Institute of Administration is attached to the De-
partment of the Presidency, so the third and fourth digits
of the code number must be 07. The fifth and sixth digits
attributed to the National Institute of Administration to
distinguish it from other agencies within the Department
are 51. The basic salary paid to a full status civil ser-
vant is translated into the code 1121. In recapitulating,
the basic salary paid to the said professor is translated
into the code number 1207511121.

Conversely, the code number 5323111334 can be
translated into intelligible language as follows:

 

 

- 37 -

5 ............ Social Welfare
3 ........... Health
23 ......... Department of Health

11 ....... Directorate of Administration, Personnel,
and Finance

1 ...... Operating Expenditure
3 ..... Material
34 ... Gasoline

The code in turn is translated into a series of
holes in a card. The cards are fed into the machines that
are capable of classifying them according to a given order
and adding up all the expenditures inscribed in a given
class of cards. For example, if we want to know the total
expenditure for social welfare we can use the machines to
sort out and add up all expenditures inscribed on all cards
having the digit 5 as the first digit of the code number.
If we want to know the total expenditure of the Deparhment
of Health, we can use the machines to sort out and add up
all expenditures inscribed in all cards having the digits 2
and 3 as the third and fourth digits of the code number,
etc. Since each card has eighty columns, an expenditure
can be theoretically indicated by a code number composed of
eighty digits; the possibility of combination is very
great 1/. d

(1) Salat, M., Role 9; an Electronic Computer in the list-

Admin s ati n, translated from French by Alfreda Abell,
nimeographed document of the Viet-Nam Project, pp. 69 sqq.

- 38 -

The classification of expenditures by function,
object, economic character, and organization permits the
executive, the legislature, or the citizens to gain a better
understanding of the budget. That understanding permits
the executive to plan better programs and to be objective
in the face of criticisms, cool-headed in the face of in-
vectives, and reasonable vis-a-vis demands.

In order to plan better programs the executive
should know as much as possible their benefit-cost ratio.
Indeed, government income is limited and the program of
governmental actions is vast, especially in this period of
reconstruction. Different programs must be conducted
harmoniously, in order to provide harmonious national
development. The possibility of obtaining data from past
and present programs with a reliable degree of accuracy,
thanks to different classifications of expenditures, pro-
vides the executive with valuable criteria to guide decisions.
Insofar as every work is translated by an expenditure, the
central budget agency can supervise the work of the spending
agencies by examining and analysing the reports of their
spending. In providing this analysis with a methodological
basis, the classification of expenditures is the best tool
of control in the hands of the General Directorate of Budget
and Foreign Aid. Moreover, to the extent that other
countries adopt roughly the same classification as Viet-Nam,

the comparative study of different budget policies would be

-39-

sere fruitful as reliable data take the place of inaccurate
conjectures.

Irresponsible criticisms and passionate in-
vectives night stem from those who believe they know some-
thing and are not in accord with the administration. Many
hostile groups in the nation are ready to take advantage of
every actual or imaginary inequity in the government policy.
Exorbitant demands might stem from a parochial view of the
budget policy. A.persecution complex might affect a pro-
vince or an agency as it might affect an individual. Indeed,
it is a well observed fact that organizations seek survival
and development; and excessive focus on their own prOblems
makes them believe that the central government does not care
enough for them. The classification of expenditures pro-
vides them with a panoramic view of the entire government
budget policy, hence an Opportunity to check and compare,
and the possibility of adjusting their beliefs to the
reality of circumstances.

That same understanding should permit the legis-
lature to assert its will in terms of numbers, to locate
shortcomings positively, and to control the executive more
effectively. However, the record of debates in the
Vietnamese National Assembly in the process of budget
authorization shows that, in general, the assemblymen do

not have enough information to make positive proposals with

- 40 -

full consideration of every factor 1/.

One political effect of expenditure classifi-
cation is to forestall or alleviate criticisms by presenting
beforehand a series of facts duly recorded and checked,
providing the people as well as the legislature with an ob-
jective view of government budget policy, satisfying some of
their interest in public affairs, organizing their thinking,
and placing the opposition in a defensive position by forc-
ing them to work on the basis of statistics and facts pre-
pared and presented by the government.

The economic character classification permits
one to study the effect of government expenditures upon the
different variables of the national economy. The 1958 bud-
get explained the necessity of a classification by economic
character in the following passage 2/:

As the government is responsible for pre-

venting inflation and deflation, for de-

veloping natural resources, for distributing
properties, classification by economic
character becomes indispensible. Above all,
with regard to a country in the course of.
development such as Viet-Nam, classification
by economic character is a basic condition

for the establishment of definite programs

to increase investments and improve the

population's living standard ... The classi-
fication by economic character has a close

 

(1) Scigliano, R. G., et al, "The Budget Process in South
Viet-Nam," Pacific Affairs, March 1960, pp. 48 f.

(2) National Bud et 1 8, General Directorate of Budget and
Foreign Aid, Saigon 195 . p. 41.

 

- 41 -

relationship with the national income ac-

counting and therefore becomes the best

tool for economic planning.

According to the 1958 budget, classification will
be extended to the local and autonomous budgets, providing
the planning agencies with a more complete view of the
national economy.

Unfortunately, classifications have their sub-
jective side. They are not automatic, and more than one
civil servant has to make painful decisions in order to code
certain kinds of expenditures; disagreement can arise. Fer
example, the National Institute of Administration can be
classified under the function "education” as well as under
the function "general administration." Nevertheless, what-
ever theyjmay be, these difficulties do not hamper classi-
fication seriously in view of their other utilities, and
the difficulties can be lessened through continuing experi-
ence with them.

What is said about the classification of expendi-
tures can be applied mutatis mutandis to the classification
of receipts. In order to plan better tax programs the exe-
cutive should know as much as possible about the economic,
political, and social consequences of tax policy. Classi-
fied information pertaining to past and present prOgrams
facilitates feedback to the administration, thereby helping
to prevent social unrest due to unwise tax policy.

Adam Smith laid down the principles that taxes

- 42 -

should be equitable, easy to calculate, convenient to pay,
and inexpensive to collect. Receipt classification which
permits one to know how much of a certain kind of tax has
been collected in a given area in a certain period of time,
how much has been spent to collect a certain tax, etc.,
supplies valuable data to judge a tax in the light of these
principles. Indeed, the three first principles are of great
concern to the citizens. Tax policy has often been the
subject of controversy between the governing body and the
opposition, controversy sometimes stemming from unanalysed
conjectures biased by political passions.

A.parochial view of the tax policy can cause
frustration in a locality or a class of citizens who have
the impression of being exploited. The panoramic and
analytical view of the government's tax policy, made possible
by classification, can be instrumental in dissipating these
feelings when they are not well founded. In the apposite
case, it can provide such citizens or localities with means
of action through their representatives in the National
Assembly.

Classification of receipts in Viet-Nam is only
in the first stage of its deve10pment, as the following
Passage indicates 1/:

 

(1) Na ional a 1 , General Directorate of Budget and
Foreign Aid, Saigon 195 s P. 42.

- 43 -

As to the receipts, because of the complexity
of the present financial mechanism, it is not
yet possible to present a system of classifi-
cation by function. But a classification of
receipts by origin has been established ...
Moreover, this classification of receipts by
origin has also been analysed in such a way
that it may be arranged again into a classi-
fication by economic character.

2. Budget Authorization:

a- Limitation on the Authorization Power of the
gationgl Assembly: Since 1956 Viet-Nam has had a National

Assembly with the power to authorize the budget. This
authorization power is subject to many limitations: (1) Much
government income and expenditure does not appear in the
budget. The autonomous budgets of some agencies and the
non-budgeted transfer accounts are not subject to legis-
lative authorization. (2) Proposals for the spending of
American aid that represents 50 per cent of the government
income are submitted to the Assembly for authorization,

but the power of the Assembly over them is very limited.
Indeed, the use of American aid funds is subject to agreements
between the Vietnamese administration and the American
government. Agreements are reached in terms of programs or
Projects. The Assembly has nothing to say during the
negotiation of these projects. When they appear in the bud-
set proposal in terms of expenditures, they are almost
eQuivalent to earmarked money. Theoretically the Assembly
can refuse to adopt the projects, but this would be tanta-

mount to refusing the aid. In view of its size and in view

- 44 -

of the threat of communism from the north, such a drastic
measure is difficult to envisage. (3) The Vietnamese bud-
get is not authorized in several appropriation acts. It is
authorized in a single set which includes both government
income and expenditure. Moreover, the tax power of the
government is not subject to budget authorization. The issue
was raised by Assemblyman Nguyen-van-Can during the dis-
cussion of the 1957 budget. In the view of Mr. Nguyen-van-
Can, budget authorization automatically empowers the ad-
ministration to levy only the taxes proposed in the budget.
But the majority of the Assembly decided on the ground of
tradition that the President can also levy taxes inde-
pendently of budget authorization 1/. (4) By authorizing
the budget, the Vietnamese legislature gives to the executive
a very broad power of decision. Once the budget is
authorized, the administration can sign contracts and
liquidate them without further action by the Assembly. The
U. 8. Congress can vote contract authorizations permitting
obligations to be incurred, but must make appropriations
before such obligations can be liquidated; such powers are
unknown in the Vietnamese National Assembly 2/. (5) When
aPDrOpriations cannot be passed prior to the beginning of

k

(1) Con -Bao Viet-Nam Co -Hoa, Vol. IV, No. 4QH, Saigon
1958. p. 1 7. The budgetary power of the executive is
Sgadi;ignally strong in Viet-Nam. See Historical Background,

(2) Burkhead, J., Govegggent Budgeting, Wiley, New York,
1956. p. 317.

- 45 -

the fiscal year, the U. S. Congress passes an act author-

izing the administration to spend within a certain limit;

the Vietnamese Constitution grants that prerogative to the
executive (Article 43 of the Constitution).

b- Constitutional Background: The Constitution
of October 26, 1956, provides in article 60 that "the bud-
get proposal must be sent to the Secretariat of the Assembly
before the 30th of September. The budget shall be definitely
voted on before December 31." Since its establishment, the
National Assembly has authorized four budgets. The budget
of 1957 was authorized on March 4, 1957. The budget of
1958 was authorized on January 25, 1958. The budget of
1959 was authorized on December 26, 1958. The budget of
1960 was authorized on January 2, 1960. The budget of 1959
met the constitutional requirements for the first time.

Article 61 of the Constitution provides that
"representatives have the right to initiate expenditures,
but at the same time they shall propose corresponding new
receipts." The meaning of this article is not very clear.
In reality, the consideration of budget receipts does not
take place at the same time as the consideration of budget
Olpenditures. In 1957 budget expenditures were authorized
first; in 1958 budget receipts were authorized first. The
Constitution implies that proposals for expenditures and
corresponding new receipts should be discussed at the same

time, but the parliamentary procedures render such a

- 45 -

provision impracticable.

Article 43 provides that:

In case the budget should not be voted within

the period prescribed in article 60, the

President may sign budgetary decrees for the

following fiscal period. Pending the final

vote of the National Assembly on the budget

proposal, the President of the Republic may

expend in each quarter, one fourth of the
credits entered in the budget proposal.

This obliges the representatives to approve the
budget before the fiscal year begins if they do not want it
to be put into practice without their authorization. A
small dose of filibuster would put Article 43 automatically
into action, enabling the President to execute one fourth of
a budget that is not yet authorized. Article 43 differs
from the procedures applied in the U. S. in two points: (1)
In the U. 8. action is taken by Congress and not by the
President. (2) The rate of expenditures authorized is taken
from the previous fiscal year's budget that has been duly
authorized and not from the budget in the process of author-
ization V.

The same Article 43 reads: "In the budgetary
law, the National Assembly must solve the consequences re-
sulting from the rejection or modification of the provisions

of the budget proposal." This provision, together with

Article 61, denotes a certain suspicion of the legislative

 

(1) Burkhead, J., ggvgmgnt Budggtigg, wiiey, New York,
1956, p. 1ooe

- 47 -

power. Indeed, the drafting of the Constitution of October
26, 1956, was undoubtedly influenced by awareness of the
political crises in France where cabinet after cabinet was
dismissed by the French National Assembly, rendering the
implementation of any consistent policy extremely diffi-
cult 1/. '
c- Organization and Procedure for Budget

0 a on: The unicameral system makes for simplicity
in the authorization procedure. Articles 27. 28, 30, and
31 of the National Assembly Internal Regulations establish
twelve standing committees. The Budget and Finance Committee,
composed of nineteen members, is one of the twelve standing
committees. Among the nineteen members are one Chairman,
two Deputy Chairmen, one General Rapporteur, two Rapporteurs,
and three Secretaries. There is no division into subcom-
mittees; the budget proposal is reviewed as a whole, and
representatives from the agencies are often invited to ex-
plain their programs and their proposed expenditures. Repre-
sentatives from other standing.committees of the National
Assembly can attend working sessions of the Budget Committee
but have no votes. The committee members are appointed by
the Presidents of the two blocs and must be approved by
the entire Assembly. The two blocs are the Majority bloc
and the Minority bloc. Affiliation to one of these blocs

(1) Grant, J. A. 0., "The Viet-Nam Constitution of 1956,"
Aygzigan Politicgl Science Review, 1958, p. 448.

- 4g -

is not a function of affiliation of one political party.
The two blocs are more or less pro-government; the Majority
tends to be more so than the Minority. The record of
legislative debates shows that the adjerence of a repre—
sentative to his bloc seems to be stronger than that to his
party 1/. Thus, the bloc system overcomes possible frag-
mentation of the Assembly due to the existence of too many
political parties in it.

The modifications of the budget proposal made by
the Budget Committee are very few. They are satisfied
generally with giving advice more than cutting appropri-
ations. When the work of reviewing in the committee is
done, the budget is discussed in a plenary session of the
Assembly. The Rapporteurs of the committee take turns pre-
senting to the Assembly their opinion of the budget and ask
for approval or modification as the case may be. Since the
budget is discussed as a whole and authorized as a whole,
the unit of discussion and authorization is not important;
they can discuss in terms of one or more chapters, one or
more agencies as they see fit.

Authorization is always given for a period of
one year. If a program requires three years to be completed,
it would be authorized three times, each time for the work

to be done and the money to be spent in one year. If an

—___

(1) Eng-Beg Vigt-gam Cogg-Hga, Vol. W, No. 40.3, p. 182.

 

- 49 -

appropriation duly granted by the assembly was not spent
during the fiscal year, action could be taken by the Presi-
dent to reauthorize the expenditure. For example, the
presidential Decree No. 513 TTP/NSNV of March 18, 1958, re-
authorised an appropriation of one million piasters for the
building of the Di-Linh supermarket 1/.

In the U.S.. the President can veto the modifi-
cations made by Congress. In Viet-Nam, such veto is not
very necessary because the President, by tradition, can in-
crease an expenditure beyond the limit authorized and trans-
fer money from one chapter to another 2/. However, Article
58 of the Constitution provides that:

During the period allowed for promulgation,

the President may transmit to the Assembly

for explanatory message calling upon that

body to reconsider one or several provisions

of a law which it has approved. With a

second reading of the bill, the Assembly,

if it rejects the modifications proposed by

the President's message, will enact the law

by a roll call vote of three fourths of its

membership.

The period allowed forppromulgation mentioned in
the article is thirty full days in ordinary cases and seven
full days in urgent cases (Article 57). Article 58 can be
applied to the promulgation of the budget considered as a

special kind of law having a limited duration of one year.

 

(1) ggng-peo Vigt-Ng ggng-gge, 1958. p. 1212.

(2) Thu-Tue Thi-Hanh Ngan-Bach ngc-Qia, General Directorate
of Budget and Foreign Aid, Saigon 195 . p. 113.

- 5o -

It is to be noted that Article 58 implicitly gives to the
Vietnamese President the power to veto specific items in
the budget, a power denied to the U.S. President '/.
Moreover, the majority of three fourths of the total number
of assemblymen required to overcome a presidential veto is
the same as that required to amend the Constitution (Article
92).
d- Observations: Budget authorization in Viet-
Nsm gives the representatives an occasion to state their
views on the administration, but the amount of expenditures
authorized is only a guide which can be modified as the
administration sees fit. Even in this condition, the recom-
mendation power of the Assembly is influenced by the faith
and devotion that most of the representatives profess for
the President, as the following passages taken from the
record of the legislative debates concerning the 1958 budget
might indicate 2/:
"We believe that in our general report about
the government's basic policy, we could not
find a better word to express our allegiance
to the beautiful policy of President Ngofl
(General Rapporteur of the Budget Committee)
"If the government's policy is to be con-

.firmed, do we have enough data and references
for that? Yes, my friends, we have plenty

(1) Burkhead, J., Q2. Cit., p. 100.
Browne, W. J., The Control of the Public Bud at, Public
Affairs Press, Washington 1949, p. 113.

(58) Cong-Bee Vigt-Nam Cong-Hoa, Vol. IV, No. 40,11, pp. 186,
1 .

- 51 -

of data and references because, as you know,

the President has come here at the beginning

of the session to read his message presenting

the government's policy in its entirety.”

(Assemblyman Cao-Van-Tuong)

The modifications proposed by representatives
are generally concerned with details rather than with policy.
This is due partly to the system of representation on the
basis of one representative for each district, making for
the over-consideration of district problems to the detriment
of national problems, partly to the fait accompli that
representatives are confronted with in many cases (e.g.,
American aid), partly to the awareness that lengthy dis-
course on policy would be considered overambitious at this
stage of political evolution in Viet-Nam. The general tone
is one of devotion to and faith in the policy of the ad-
ministration. For example, during the discussion of the
1958 budget, the majority leader claimed that the consumption
of electricity and gasoline was too high in government
agencies but exhorted the Assembly to authorize the whole
budget as an act that would show backing for’the government
program and policy 1/.

The legislative budget committee is markedly pro-
government; its members assume the responsibility for de-

fending the budget before the Assembly by answering criticisms
on behalf of the administration. If a criticism seems well

 

- 52 -

founded the answer is invariably "we shall bring it to the
attention of the executive." In general, answers are evasive
and unoriented. Sometimes they advocated economy because
government income was limited, sometimes they supported
expenditure on the ground that "budget expenditures are
revenues for the people" 1/. To the question of repre-
sentative Nguyen-Cong-Vien, that ”the General Commissariat
for Refugees was abolished by decree No. 524 TTP on
December 16, 1957, of the President; why is a sum of 150,000
VN8 appropriated in the 1958 budget for the expenditures of
that non-existent agency?" The answer was ”although the
General Commissariat for Refugees exists no longer, it is
now transformed into the General Commissariat for Land
Reclamation" 2/.

Pork barrel legislation and riders are unknown
in the Vietnamese process of budget authorization. This is
due to the fact that the power of representatives is limited
not only by quasi-earmarked revenue such as the American Aid
but also by the power of the executive to modify the author-
ization and by the prestige of President Ngo who brought

peace and order back to Viet-Nam.

 

(1.) M" p. 157.

 

- 53 -

3. gadget Qgecgtion:

a- Characteristics 2f thg Vietnamese Procgdurg:
The Vietnamese procedure generally emphasizes the pre-audit

to the detriment of the post-audit, concentration of power
to the detriment of agency responsibility, financial con-
trols on employees to the detriment of speed in admini-
strative transactions. This state of affairs is a carry-
over frcm colonial times when financial procedure permitted
a.minority of Frenchmen to control the entire administrative
machine.

Moreover, public administration was considered
as an activity sui generis, distinct from private admini-
stration where the fear of loss and the satisfaction of gain
suffice to produce in the organization a concern for economy
and efficiency. In contrast, the public interest was con-
sidered as strong enough to justify government privileges
but not strong enough to restrain the greed of high rank-
ing administrators vested with the responsibility to spend
public money. These considerations made for a system of
separation of powers and checks and balances in fiscal
management. Indeed, the power to dispose of public funds
was entrusted to two kinds of functionaries very different
from each other, the administrator who initiated expendi-
tures and the treasurer who disbursed and cashed money.
That distinction resembled vaguely the American distinction
between the certifying officer and the disbursing officer,

 

- 54 -

but the resemblance should not be pushed too far'because the
checks and balances between the Vietnamese administrator and
treasurer are unknown in the relationship between the
American certifying officer and disbursing officer. These
ideas and practices are retained in present Vietnamese
administrations.

The treasurer in the Vietnamese system checks
and pro-audits all papers handed to him pertaining to an ex-
penditure according to an elaborate set of rules and regu-
lations. His signature on the warrant is required to vali—
date it. In order to secure the liberty of the treasurer
the laws give him a special status that permits him a cer-
tain freedom of action vis-a-vis the administrator. As
might be expected, conflicts between administrator and
treasurer do occur and can be settled ultimately by an act
of the administrator expressly ordering the treasurer to
obey him. In that case and only in that case the treasurer
is subordinated to the administrator who assumes by so do-
ing all the responsibility of the treasurer.

b- Obligation Control: As in the common law,
Vietnamese and French jurists consider every government ex-
penditure as a contract in which the buyer obliges himself
to pay and the seller obliges himself to deliver the
merchandise. The act of purchasing thus creates an obli-
gation for the government. When the government spends

money to subsidize or aid a locality, a group, or an

-55—

individual, it does so in execution of a trust in which the
legislature which grants the subsidy represents the people
or trustors, the administrators who carry out the people's
will are trustees, and the individuals, groups or localities
who receive the grant are beneficiaries. Between the
trustors and the trustees there is a contract in which the
trustees oblige themselves to grant the money to the bene-
ficiaries. The act of granting money according to law is
an obligation of the executive vis-a—vis the people. It
follows that "obligation" in the Vietnamese terminology is
tantamount to expenditure. The term "obligation" has been
used by American scholars writing about the Vietnamese bud-
get administration to translate the above mentioned trustee-
ship concept '/.

The purpose of obligation control in Viet-Nam is
in the first place to make sure that the expenditure is
authorized by the budget. Expenditures of an agency are
generally authorized on a single chapter of the budget; for
example, expenditures of the General Directorate of Planning,
the National Institute of Administration, and the General
Directorate of Budget and Fureign Aid are authorized
respectively in Chapters 8, 9. and 10 of Title IV of the
1959 budget 2/. Each chapter is generally divided into

(1) Snyder, W., Budgetary and Financial Administration in
Viet-Nam, MSUG, Saigon 195 v P. 22.

(2) Natiggal Budget 1959. p. 25.

- 55 -

three sections, section one or personnel expenditure esti-
mate, section two or material expenditure estimate, and
section three or special expenditure estimate. If an agency
attempts to use money appropriated in section one (personnel
expenditure estimate) to buy material, the Directorate of
Obligation Control is there to stop it. In the second place,
obligation control is intended to make sure that the ex-
penditure is made within the limit of the allotment schedule.
In the third place, the obligation control is intended to
make sure that every fiscal law and regulation is observed
by the agency in making the expenditure. Obligation con-
trol is the first and third phase of a series of control
steps; it is made both before and after the delivery of
goods and services. Three possibilities can occur: the
amount obligated may be larger than the amount liquidated,
the amount obligated may be smaller than the amount liqui-
dated, or the amount obligated may be equal to the amount
liquidated. In the first case, what is not liquidated must
be de-obligated in order to have enough unobligated funds
for subsequent obligations. The second case is considered
as an irregularity of the spending agency, and the
Directorate of Obligation Control must refuse to visa the
documents and oblige the spending agency to recommence the
Procedure if enough allotted and unobligated money is left.

The third case creates no problem '/.

 

(1) Thu-tuo Thi-h ~sach uoc- a, General Directorate
of Budget and Foreign Aid, Saigon 195 . p. 143.

 

 

- 57 -

c- 39;; 9; 3h: Tgeasugy: The Vietnamese Treasury
has two major function in the execution of the budget. The

first is to control and disburse money; the second is to
collect budget receipts. In its first function, the
Treasury honors all warrants issued by the state; it can pay
in cash or in transfer if the beneficiary has an account
with the Treasury '/. Moreover, if the beneficiary is at
the same time a debtor of the state, the Treasury sees to it
that the beneficiary pays his debt to the state before cash-
ing his warrant. The Treasury can recover debts by this
method not only for the state but also for a third person
in certain instances. In the second place, the Treasury
checks the expenditure before paying; the signature of the
treasurer on a warrant is required to validate it. The
check carried out by the Treasury on the warrants and ac-
companying documents from the spending agency is as detailed
as the check carried out by the Directorate of Obligation
Control.

The role of the Treasury as a disbursing office
is not without problems. Due to the fact that it is
responsible for the payment of all government expenditures,
it must have enough money not only in its central vault but
also in its different branches. It must have in advance an
idea of the flow of money through its offices in order to

(1) Checks are not used for many government payments in
Viet-Nam. See page 66 for further details.

- 58 -

plan its payment schedule in the capital as well as in the
provinces. Another responsibility of the Treasury is to
keep an account of all government expenditures classified
by agency. At the end of each month a statement of trans-
actions is sent to different agencies; the comparison
between the account kept by the Treasury and the account
kept by the agencies permits detection of errors and em-
bezzlements. In its role as the central accounting agency
the Treasury is in constant relationship with the General
Directorate of Budget and Foreign Aid, responsible for the
supervision of budget execution 1/.

The second major function of the Treasury in the
execution of the budget is the collection of budget receipts.
The responsibility of the Treasury in the collection of
budget receipts varies with the kinds of receipts. Budget
receipts in Viet-Nam can be classified into three major
kinds: direct taxes, indirect taxes, and receipts of
government agencies. Direct taxes differ from indirect taxes
in that direct taxes are collected according to a pre-
established roll on which are inscribed the names of all.
taxpayers and the amount to be paid by each of them. There
is no such roll for the indirect taxes. The major responsi-
bility of the Treasury is in the collection of direct taxes.

L

(1) Because of the plural pre-audit system, the accounting
function of the Treasury is duplicated by that of the
General Directorate of Budget and Foreign Aid.

 

- 59 -

Theoretically, the Treasurer is bound to collect all direct
taxes inscribed on the rolls that are handed to him; if he
fails to do so, he must pay the balance with his own money.
This is a myth that the Vietnamese adopted from the French,
their former rulers. Practically, such an instance never
occurs because the property of a Treasurer is insignificant
in comparison with the size of direct taxes. On the other
hand, if the Treasurer can prove that he has taken every
necessary step in order to collect the taxes, his responsi-
bility is relieved. These steps are: first, a summons to
pay without charges; secondly, a summons to pay with charges;
thirdly, a seizure of therrecalcitrant taxpayer's property.
It is stipulated that the recalcitrant taxpayer's property
must be seized and sold by public auction. The sale can
immediately be stopped if an amount equal to the unpaid
taxes (with charges) is obtained. Personal belongings
necessary to the life of the taxpayer cannot be seized.
The role of the Treasurer in relation to indirect taxes and
the receipts of agencies is limited to receiving and keeping
the money handed to him by other agencies. Also, in the
present situation there is a great amount of money that the
Treasury does not handle; this is the counterpart fund of
the American aid in the National Bank.

d- Role of the General Directorate of Budget and
Foreign A; : The General Directorate of Budget and Foreign
Aid's responsibility in Viet-Nam is more than the

-60-

preparation and presentation of the budget. Through its
Directorate of Obligation Control, it is responsible for

the control of budget execution from the standpoint of the
lawfulness of expenditure and availability of funds. Through
its Directorate of Programs and Planning it advises the
President in the allotment of funds to different agencies
according to the needs of their programs, and takes care of
the flexibility of budget execution by examining requests
for modifications of appropriations authorized by the legis-
lative branch. Through its Organization and Methods Section
it seeks to assure the economy and efficiency in the exe~
cution of the budget in different agencies. Through its
Accounting Service it supervises the agencies' spending
schedule and follows the development of programs.

In order to secure flexibility in budget exe-
cution, a special appropriation is made under the title
"general expenditures" which includes such chapters as sun-
dry expenditures, grants, contributions, and pensions, re-
imbursement refunds and discounts, unforeseen expenditures,
and reserves for expenditures. In the 1959 budget the
appropriation for general expenditures amounted to
2,489,774,000 VNS 1/. Money from the chapter "reserves for
expenditures" can be used by the President to increase the
expenditures of certain agencies. Moreover, the President

—__

(1) National Budget- 1252, General Directorate of Budget and
Foreign Aid, Saigon 1959, p. 71.

- 51 -

can transfer money from one chapter to another; the General
Directorate of Budget and Foreign Aid gives the President
advice and facts for him to make decisions relating to these
operations. By the end of the fiscal year, all modifications
in the budget are recorded and presented to the National
Assembly for regularizing.

In the U.S. the President can modify the budget
only in cases specified by Congress, and this within an
equally specified limit, usually five per cent from one
title to another 1/. In Viet-Nam there is no such specifi-
cation.

As far as the department heads are concerned,
they must observe the budget section by section, the section
being a subdivision of the chapter which in turn is a sub-
division of the title. If an agency wants to spend beyond
the limit authorized in a section it has to ask for the
permission of the department head who assembles all the re-
quests for changes within his department and asks the per-
mission of the President through the General Directorate of
Budget and Fbreign Aid.

e- Expenditure Procedure: To make an expenditure,
five steps are necessary after a decision upon.who is the
supplier has been reached: allotment, obligation, liqui-

dation, authorization, payment.

_

(1) Burkhead, J., G_overnmggt Budgeting, Wiley, New York
19561 p0 3490

- 52 -

(1) Allotment: Money is allotted to departments
at the beginning of each quarter; however, each department
is required to establish an allotment schedule for the whole
fiscal year. In the light of that schedule, the Presidency
makes allotments for departments. As far as the allotment
for personnel expenditures is concerned, the money allotted
for each quarter is equal to one fourth of the annual
appropriation plus ten per cent. For example, if the annual
appropriation is 1,000,000 VN8, the allotment schedule must

be as follows:

 

First Second Third Fourth
Quarter Quarter Quarter Quarter
250,000 250,000 250,000

10% 25,000 25,000 25,000
275,000 275,000 275,000 175,000

This complication is due to the fact that personnel salaries

in Viet-Nam increase or decrease according to changes in the

family status of civil servants.

If a civil servant marries

or has more children, he is entitled to an increase in his

salary.

Moreover, even in the absence of family allowances,

salaries increase with the promotion of employees; sometimes

promotions are retroactive and back payments must be made.

The ten per cent increase is rarely absorbed in its an-

tirety; what is left is used to increase the allotment of

the fourth quarter.

If an increase in the salary of certain

employees is not counterbalanced by a decrease in the salary

of others, steps must be taken to ask for a larger allotment

- 53 -

at the beginning of the fourth quarter.

(2) Obligation: Only after money has been duly
allotted can obligations be incurred. This procedure in
Viet-Nam differs basically from the procedure in the U.S. 1/
In the U.S.

Contract authorizations permit obligation to

be incurred, but do not provide the funds to

liquidate the obligation ... Appropriations

to liquidate contract authorizations are a

separate type of budget authorization, which

must benenacted subsequent to a contract

authorization.

In Viet-Nam obligation is not subject to a con-
tract authorization by the National Assembly, and the spend-
ing agency is not allowed, without authorization by the
President, to obligate more than the amount allotted or to
liquidate more than the amount obligated: Liquidation g
Obligation.£ Allotment. The concepts of contract and obli-
gation in Viet-Nam seem to be wider than in the U.S., be-
cause almost every purchase is considered as a contract
between the government and the supplier which in itself per-
mits an obligation to be incurred, subject to obligation
control.

As a general rule, agencies are tightly con-
trolled by the Directorate of Obligation Control which can

refuse an expenditure not only because of lack of allotment

or incorrect imputation but also from multifarious fiscal

h;

(1) Burkhead, J ., Govemegt Easting, Wiley, New York
1956. Fe 3170

 

-54-

regulations promulgated in part in the Decree of December
30, 1912. If everything is according to regulations, a
code number is given to the obligated expenditure. This
pre-audit has been criticized by American observers as the
following passage might indicate:

In many governments so much emphasis is
placed upon the negative aspect, the control
of the spending of public funds through
multiple and elaborate systems of pro-audit
or authorization of expenditures, that it
becomes virtually impossible for Operating
agencies to accomplish their assigned pro-
grams. Today, it is becoming increasingly
recognized that a complex system of pre-
audit simply slows down the process and, in
the long run, fails to effectively control
expenditures. More importantly, it shifts
authority from the operating agencies, which
are responsible for carrying out the programs,
to staff officers who are sometim s more con-
cerned with form than substance 1 .

Mr. Nguyen Thuan, head of the Vietnamese Director-
ate of Obligation Control held that this control is dictated
by the imperfection of human nature that is prone to em-
bezzlement, and by the concept of public funds of Viet-Nam
which is not necessarily the same as in Anglo-Saxon nations 2/.

(3) Liquidation: When an expenditure proposal
is cleared through the Directorate of Obligation Control,
the next step is to take delivery of goods and services. An

officer called liquidator certifies that goods and/or

 

(1) Murphy, M. H., Bud eta Administration, NIA, Saigon
1957. -

(2) Nguyen Thuan, Budget Execution in list-flag, Viet-Num
Project, East Lansing. 1957.

- 55 -

services have been duly delivered from the standpoint of
quantity, quality, and punctuality. Sometimes a committee
is designated to take delivery of the material and an in-
ventory number is immediately given to each item except for
material of consumption. If everything is satisfactory,
the liquidator puts his signature and seal on the warrant.
The warrant and all certifying documents are sent again to
the General Directorate of Budget and Fbreign Aid Where
they are subject to two more steps of control by the
Directorate of Obligation Control and the Service of Ae-
counting to be sure that the amount liquidated does not ex-
ceed the amount obligated. If everything is proper, the
Controller of Obligated Expenditures puts his signature and
seal on the warrant.

(4) Authorization: The "ordonnator" puts his
signature and seal on the warrant authorizing the treasurer
to honor it. As far as the national budget is concerned,
there is in Viet-Nam only one ordonnator and he is the
President. The other members of the Cabinet are delegated
ordonnators; the province chiefs generally receive from the
cabinet members a delegated power to authorize expenditures
in their localities and are called secondary ordonnators.
When authorization is signed, the "administrative phase" of
the spending is over, three different certifying officers
haying put their signature on the warrant: the liquidator,

the controller of obligations, and the ordonnator.

_ 55 -

(5) Payment: It is the job of the Treasurer or
disbursing officer who once more pre-audits the warrant and
its accompanying papers and collects the debts of the bene-
ficiary of the warrant if a law or an order requires him
to do so. One member of the M.S.U. Advisory Group has pro-
posed to substitute the bank check, easy to handle and
negotiable, for the warrant. The advantages of such a
substitution would be the following 1/.

-1- Convenience, expediency, and added safety.

The actual paying is turned over to the

country's banking system which, as a general

rule, is better equipped and organized for

this purpose. Money is not so easily mis-

appropriated after it has been deposited in

a bank.

-2- It will encourage the use, hence the

development of the country's banking system.

The development of the banking system will,

in turn, foster and promote commercial enter-

prises, due to the facility of making and re-

ceiving payment for goods and services.

;- Observatigns: In analysing the Vietnamese
procedure in making an expenditure, certain observers were
able to distinguish twenty-two different steps 2/. However,
this analysis takes into account a certain number of steps
that are not necessary to the understanding of the procedure.
For example, the payment procedure is subdivided into six

secondary steps depicting the circulation of the warrant

 

(1) A Proposed Budgetary Accounting Procedure Manual for the
Reggblic o; Vigt-Nsm, MSUG, Saigon 1957, P. 113.

(2) Snyder, W., Budgetary gnd Financigl Administrgtion no
Vigt-Ngg, MSUG, Saigon 1956. P. 7.

- 57 -

from the Treasury to the National Ministry, from the

National Ministry to the Regional Ministerial Direction,

from the Regional Ministerial Direction to the Provincial
Ministerial Service, from the Provincial Ministerial

Service to the beneficiary, and finally from the beneficiary
to the Treasury where the warrant is cashed. These secondary
steps vary widely according to the geographic and hier-
archical location of the spending agency. Moreover, a
complete organization and methods analysis would include

the circulation of the warrant and its accompanying docu-
ments from desk to desk and building to building inside the
Treasury, circulation necessitated by such steps as the
registration of incoming mail, the control and pre-audit of
documents, the record of accounting purposes, the check for
opposition to payment, the presentation for signature, and
the registration of outgoing mail. With a certain know-how
the beneficiary can receive the warrant directly from the
Treasury and cash it at the same time. Moreover, certain
particularly resourceful beneficiaries are able to expedite
by informal means the processing of their warrants from the
obligation control step. Such beneficiaries often serve as
weapons of the spending agency to speed up the pace of the

controlling agencies 1/.

h

‘ fi v *W ‘

(I) In some respects present service to patrons seems more
like "self-service“ than "service.“ MSUG. Report on the

Study of General Directorate o; Treasppy Departmept of

Finance, Saigon 1958. P- 94.

- 68 -

The purchase of goods and services includes two
major phases, the first phase is the choice of the supplier,
the second phase is the purchase per se. The five steps
mentioned above are related to the purchase per so, not to
the choice of the supplier. In order to protect public
funds, to avoid conspiracy between the spending agency and
the supplier, the Directorate of Obligation Control also has
jurisdiction over the choice of the supplier as well as over
the purchase per se. The principle of suspicion, the as-
sumption that civil servants are morally imperfect, pre-
valent in the Vietnamese fiscal management, permits us to
infer that the phase relating to the choice of the supplier
is as complicated and tightly controlled by elaborate legis-
lation as the purchase itself. Procedures relating to the
choice of the supplier vary according to the size of the
transaction. In general, the government relies on compe-
tition between suppliers to eliminate the risk of paying
more than necessary, because competition lowers the price
and makes a civil servant think twice before entering into
a private deal with one of the suppliers in order to cheat
the government. For transactions involving no more than
5,000 VNS, the spending agency can choose the supplier as
it sees fit, but if the size of the transaction is from
5,000 VN$ to 100,000 VNS, a price inquiry must be held
where a minimum of three suppliers must be consulted ex-

cept in case of monopoly or duopoly. If the size of the

 

 

/I\ o‘er!

- 59 -

transaction is from 100,000 VN$ to 500,000 VN3 a call for
bids must be held. Beyond 500,000 VN$ an adjudication must
be held. Evasion of the regulations by fragmenting the
expenditures is forbidden. If the Directorate of Obligation
Control or the Treasury discovers that the spending agency
avoids conducting a price inquiry by making, for example,
two purchases of 4,000 VN3 each where one purchase of 8,000
VN3 can be made, it must return the documents to the spend-
ing agency and oblige it to lump the two expenditures to-
gether and conduct a price inquiry. The difference between
a call for bids and an adjudication is that in the former
the spending agency is not required to choose the lowest
price offer; the reputation of the supplier can decide the
choice. In an adjudication the lowest price offer must be
chosen.

The choice of the supplier is subject to control
by the Directorate of Obligation Control and is authorized
by the ordonnator. It includes three steps: the first step
can be a call for bids, an adjudication or a price inquiry
according to the size of the expenditure, the second step
is the visa of the Directorate of Obligation Control, the
third step is the approval of the ordonnator.

The Vietnamese expenditure procedure is reputedly

cumbersome and slow ‘/. Many attempts have been made to

 

(1) See MSUG, Re 0 t on the ud of the G neral Directors
of TreasuyyI Department of Finance, Saigon 1958, Appendix D,
for data on time actually spent.

- 7o -

ameliorate it. A Presidential Order, No. 21TC, of March 22,
1955, limited the time allowed to an agency to pre-audit,
certify or record a case. As far as the choice of the
supplier is concerned, the spending agency has two days to
send all papers concerning the call for bids, adjudication,
or price inquiry to the Directorate of Obligation Control.
The Directorate of Obligation Control has two days to pre-
audit and give its decision. The ordonnator has two days
to authorize the choice of the supplier. As far as the
purchase per se is concerned, the liquidator has two days
to acknowledge the delivery of material, prepare a warrant
for the benefit of the supplier, and send the warrant and
its supporting documents to the Directorate of Obligation
Control for a second pro-audit, the Directorate of Obli-
gation Control has three days to make its second pro-audit,
the ordonnator has two days to authorize the payment of the
warrant, and the Treasury has four days to pro-audit for a
third time.

The maximum time allowed by the Presidential
Order would be eighteen days to conclude an expenditure if
no objections were raised in the three subsequent pro-audit
steps. When an objection is raised, the whole case is sent
back to the liquidation service for revision. Delays occur
in these revisions because of many factors:

(1) Incompetence of the personnel: with an in-

competent liquidator, the documents are not likely to meet

- 71 -

the requirements. Incompetent controllers can create
trouble here where it could otherwise be avoided. Unless
the controllers state the causes of their veto clearly, in
such a way that the liquidator can understand them, he can-
not make the required revision.

(2) Lack of cooperation: the efficiency of the
operations depend on honest cooperation (but not conspiracy
to cheat the government) between the certifiers and the
controllers. Under the French system, rivalry between con-
trollers and certifiers was encouraged and exploited in order
to detect irregularities. The administrative philosophy of
today is to promote cooperation without conspiracy. Thisis
a problem that affects not only budget execution but also
the whole Vietnamese administrative machine.

(3) Incompetence of the supplier: the Vietnamese
supplier is often not thoroughly acquainted with the ad-
ministrative procedure of expenditure. Such words as allot-
ment, obligation, liquidation, and authorization sound
strange to his ears; he is interested in only one thing, pay-
ment, and can have it only after his case has gone through
a labyrinth of procedures. The papers he produces are not
always acceptable, and the liquidator who is in contact with
the supplier sometimes knows that he cannot obtain better
papers from the supplier. This situation is not likely to
be understood by the controller who looks only for the best,
and the liquidator finds himself between two fires. It is

- 72 -

easy for the controller to reject a document but it is not
easy for the liquidator to obtain an acceptable document
from the supplier; thus the liquidator is always to be
blamed when delays occur as the following passage by the
head of the Directorate of Obligation Control might suggest 1/:

However, many investigations made by the

Inspection General of Administrative and

Financial Affairs at the Presidency of the

Republic, by the inspectors of the Depart-

ment of Finance, by the Direction General

of the Budget, and myself, have shown that

the delay mostly occurred in the liqui-

dation services.

The Directorate of Obligation Control pro-audits
a first time in the choice of the supplier and a second
time in the purchase per so. It should be possible to
eliminate the first pre-audit and combine the purposes of
the two pre-audits in the second pro-audit. But in doing
so, the government would risk facing a fait accompli because
the supplier would have been chosen and the merchandise
supplied. Nevertheless, if agency responsibility were ac-
cepted it would always be possible to prosecute the faulty
civil servant if rules that he was supposed to know were
not observed or if conspiracy between him and the supplier
to cheat the government were detected.

The pro-audit by the Treasury could be eliminated
in the opinion of an official from the Treasury itself, as

(1) Nguyen-Thuan, Budgep Execution in Viet-Npp, Viet-Nam
PrOJQOt’ MeSeUep 195 9 p0 0

 

 

- 73 -

this passage might suggest:

It is illOgical, indeed, that the Treasury has

to examine all warrants of every agency and

department to make sure that each warrant
issued by them is a bona fide claim, and the
appropriation to be charged in their books,

is available. Furthermore, it is against the

principle of separation of power between ac-

counting and administrative agencies that the

Treasurer has in his hand the right to certi-

fy the warrant and at the same time to pay it.

Thus, the appropriate solution is to lessen

the scope of the General Treasury, in the

field of disbursement by withdrawing its pre-

audit responsibility.

If two steps of pro-audit were eliminated, the
time limit of eighteen days given by the Presidential Order
could be reduced to twelve days provided that liquidator,
controller, and supplier know how to play their respective
parts.

g- Special Procedures: Certain kinds of work re-
quire a quick payment on a cash and carry basis; in order
to meet this requirement, the special fund, the petty cash
fund, the imprest cash fund, and the revolving fund were
created. The special fund is granted to high ranking
officers for secret or urgent expenditures. The petty cash
fund is used to cope with sundry and emergency expenditures.
The imprest cash fund, larger than the petty cash fund, is
particularly useful in areas where treasury and banking
facilities are lacking. The revolving fund originates with
a loan from the Treasury for a public interest purpose to
the administrator who is bound to pay it back when the work

is done.

- 74 -

The special fund is not subject to control, given
its secret character. The petty cash fund and imprest cash
fund are entrusted to the administrator for him to spend as
he sees fit without pro-audit. But he must keep track of
all his expenditures in view of a post-audit. A blank re-
ceipt book is given to him, and whenever he disburses he
must require the beneficiary to sign a receipt. At the end
of each month he has to report his expenditures to the
General Directorate of Budget and Foreign Aid. A post-
audit takes place at the end of each year or when the work
is done or when the administrator of the fund is transferred
to another office 1/.

Loans to revolving funds are taken from a special
chapter called "quasi expenditure." An example of the use
of the revolving fund is for building a road. Money spent
for that purpose is reimbursed at the end of each month by
the Treasury on the basis of justificatory papers. It goes
without saying that these papers are subject to audit be-
fore the reimbursement is authorized. Money used to reim-
burse the expenditures is imputed to the agency responsible
for it. When the work is done and the reimbursement ob-
tained, the initial amount of the revolving fund remains

unchanged, and it is then returned to the Treasury.
Special funds are granted to high ranking officers

 

(1) Thu-Tuc Thi-ngp Ngan-Sach guoc-Gia, General Directorate
0f Budget and Fureign Aid, Saigon 195 e p. 7.

- 75 -

as a matter of routine and do not necessarily require special
circumstances. But petty cash funds, imprest cash funds and
revolving funds are created by decree when needed. The
authorization period, limited to one year, can be repeated.
The use of funds permits speeding up operations and greatly
simplifying the procedure as the following passage might
suggest 1/.

During the interview, we were surprised at
first and later shocked at the frequency of
interruptions by minor officials - whispered
messages into the ear of our official who
would then reach across the desk to a large
brief case from which he would count out a
sum of money for the employee who would then
disappear into the outer offices. This was
repeated until we became rather amused,
sitting listening to the elaborate fiscal
system being described while witnessing the
world's simplest system, for indeed no visible
receipt of the disbursement was being made
by the official in front of us. Finally,
our credulity was surpassed, and we questioned
the official as to just how the disbursement
of funds we had witnessed that morning cor-
responded to the system that he had just
finished explaining to us. With an
astonished look he replied that it came from
his "Special Account" and no amount of prob-
ing led him to disclose the nature of source
of his special account.

h- Time Allotted for Budget Execution: The bud-
get is sometimes defined as a program of action of the
government for a period of one year. However, certain work
cannot be completed on schedule. In such a case, four

methods can be used in Viet-Nam to complete the implementation

 

(1) Synder, W., Bud star and Financial Administ ation in
Viet-Nam, MSUG, Saigon 1956, p. 25.

of a program.

(1) The first method is to include the unfinished
work in the next budget; this facilitates accounting because
the accounting agencies can avoid keeping the account of
two different budgets at the same time. This method is
generally used for elastic programs such as eradication of
malaria, psychological warfare, community development, etc.
These programs are called elastic because nobody can say
exactly to what extent they are fulfilled. The unobligated
expenditures are automatically returned to the Treasury.

(2) The second method is to extend the period of
execution of an unfinished program to part of the following
fiscal year. This facilitates program implementation by
giving administrators a feeling of responsibility and
urgency in carrying out the programs. This method is
generally used in rigid programs such as house building,
hospital equipment, water supply equipment, etc. These pro-
grams are called rigid because the extent to which they are
fulfilled can'be exactly measured. A presidential author-
ization is required to extend a program. According to
Article 65 of the Decree of December 30, 1912, (1) only
expenditures on material and public works can be extended;
(2) the funds necessary to these expenditures must be obli-
gated before the end of the fiscal year; (3) the admini-
strator of the program must produce acceptable reasons for

his delay; and (4) the work program must be completed before

- 77 -

February 28 of the next year.

The first condition precludes personnel expendi-
tures from being extended. Fer example, if the administrator
of a program is allowed to hire ten engineers in 1960, he
cannot hire only eight engineers and keep them for the ex-
tended period of two months in 1961. The second condition
puts an end to all obligations after the end of the fiscal
year and helps simplify the accounting for obligated ex-
penditures. The extended period is used only for the
liquidation and authorization of expenditures already obli-
gated. The third condition limits the extension to programs
delayed for reasons beyond control (cas de force majeure) or
for purpose of the public interest. The fourth condition
limits the extension only to programs that can be ended
soon. In case the extension is authorized, the administrator
must see to it that the remaining steps of the expenditure
(liquidation, authorization, pre-audit by the Treasury) be
ended prior to May 20; for example, all liquidations,
authorizations, pre-audits relating to the 1959 budget must
be ended before May 20, 1960. This helps simplify the ac-
counting of liquidated expenditures. After May 20, 1960,
if unliquidated expenditures relating to the 1959 budget
remain, the spending agencies to which these unliquidated
expenditures belong must report to the central budget agency
where steps will be taken to include these expenditures in
a chapter called "late expenditures" provided for that

- 73 -

purpose in the 1960 budget 11/.

(3) The third method is to reauthorize the ex-
penditure by a Presidential Decree. This method differs
from the previous one in that a whole section is transferred
from one budget to the next one; the effect is not an ex-
tension but a transfer. For example, Presidential Decree,
No. 513 TTP/NSNV, of March 18, 1958, reauthorized an appropri-
ation of one million VNS for the building of the Di-Linh
supermarket, the said appropriation having been authorized
by the Assembly in the 1957 budget 2/.

(4) The fourth method is to open an extra bud-
getary account that is not subject to the one year limit
imposed to budget expenditures. For example, Decree No.

881 TTP/NSNV of May 20, 1958, transferred a sum of
190,000,000 2N8 from the budget of 1957 to an extra budget-
ary account to carry out special public works 1/.

We have seen how the time limit set upon the
execution of a budget facilitates the accounting of obli-
gated and liquidated expenditures. There is a third kind
of expenditure, especially in the Vietnamese fiscal manage-

ment system, the accounting of which must also be made easy;

 

(1) Th - c i-Hanh N an- ach u c-Gia, General Directorate
of Budget and Foreign Aid, Saigon 195 s P. 145-

(2) gopg-Bao Viet-Nam Cong-Hoa, 1958, p. 1212.
(3) Lb g" No. 10, p. 2114.

- 79 -

this is the disbursed expenditures. Indeed, if the bene-
ficiaries of warrants did not cash them, there would be a
great discrepancy between the liquidated expenditures and
the disbursed expenditures. Two methods are used to
facilitate the accounting of disbursed expenditures. (1)
The beneficiary of a warrant has four>years to cash it. If
he fails to do so, his warrant becomes null and void. This
condition cannot be applied to warrants that the beneficiary
refuses to accept claiming, for example, that he is under-
paid or over-deducted. (2) In the past, the account of an
agency in the Treasury was debited when a warrant drawn on
its name was cashed by the beneficiary. Since certain
beneficiaries cashed their warrants only after a certain
delay, it was difficult for the Treasury to know the situ-
ation of an agency's account exactly. Today the difficulty
is overcome by debiting the agency's account when the war-
rant is nssued instead of cashed. This practice necessi-
tates the issuance of two copies of the warrant; one copy
is delivered to the beneficiary, the other copy is sent to
the accounting section to debit the agency's account.

i- The Administrative Contract as a Means of
Budget Execution: Long before the specialists coined the
term ”program budgeting" governments throughout the world
had been applying it like Monsieur Jourdain.who spoke prose,
without knowing it. Indeed, the contract signed between the

government and the entrepreneurs to do a certain piece of

- go -

work can be viewed as a budget expenditure for a program
meticulously stated in the contract.

In Viet-Nam, the administrative contract has been
widely used as a means of budget execution, especially in
public work and equipment programs and in the collection of
certain taxes. In order to protect the government's interest,
the administrative contract in Viet-Nam is a contract sui
generis pertaining to the jurisdiction of the Administrative
Court. According to the size of the transactions special
requirements must be met by the entrepreneur. In addition
to his financial status that must be compatible with the
work in question, special qualifications are often necessary
for him to sign a contract with the government to do certain
work. Before taking part in the adjudication, he has to
put a sum of money in the Treasury to prove his good faith.
If the government perceives that he takes part in the ad-
judication without being prepared, this money is confiscated
as punishment. In case he gets the contract more money has
to be consigned in the Treasury as a guaranty. If he fails
to execute his contract an administrative decision can for-
bid him to sign any other contract with the state and can
confiscate the money previously consigned in the Treasury.

The contract itself is very carefully studied by
specialists aided by experiences accumulated from previous
contracts and from a mine of regulations. For example, in

a building contract, everything is examined by engineers,

-81..

from the composition of the cement employed to the diameter
of steel bars used in reinforced concrete. The cost of pro-
grams is calculated item by item; in case of doubt the con-
tract writer can consult a manual that gives him such in-
formation as, for example, how much paint is necessary to
paint a shutter window. The call for bids or adjudication
is made on the basis of the cost calculated by that method.

When the contract has been signed a team of
government specialists supervise the work of the entre-
preneur. They are entitled to require the implementation
of everything stated in the contract; their control is ef-
fectuated step by step, in that one step must be approved
before the next step can be taken. For example, if they do
not approve the foundation of a building, the entrepreneur
is bound to rectify it before proceeding to build the
superstructure.

When the work is done, another team of specialists
takes delivery of it; they are entitled to refuse to accept
it if the contract has not been faithfully observed. In
most such instances they content themselves with imposing a
fine upon the entrepreneur for deviating from the contract.
A part of the price agreed upon in the contract is retained
by the government as a guaranty and is given to the entre-
preneur only after a period of time, if no other defect of
the work done has been detected.

The administrative contract gives the responsibility

- 82 -

to execute certain budget programs to entrepreneurs, with
the government retaining only the power of control. It is
a formula that brings the specialization, competence, and
dedication of a private enterprise to the service of the
public interest. This method of budget execution could be
made more effective if financial support were given to
public contractors by the government. In France, a National
Fund has been created to support them when they have to
borrow money from a bank. The support is generally no more
than a signature of acceptance on a draft, but it con-
stitutes a solid guaranty for the bank that loans money.

It would be greatly advantageous for such practices to be
established in Viet-Nam, together with easier conditions

for the Vietnamese public contractors and more administrative
control over the civil servants responsible for contract
implementation, to prevent them from dealing privately with

the contractors.

4. gpdget Accounting and Auditing:

a- Accoupting_at the_§pending,Ageppy; As far as
the general fund is concerned, each general directorate,
directorate or service has its own accounting unit. Eyery
agency has to establish payrolls and some agencies have to
deal with suppliers who provide them with goods or services.
Rules of government accounting must be followed if the
agency wants the Treasury to disburse money quickly and

without difficulty. From the accounting procedure viewpoint,

- 83 -

expenditures can be classified into three major kinds:
personnel, material, and work expenditures. The accounting
work of the spending agency is to establish documents con-
cerning the expenditure and to record it in the Appropriation
and Expenditure Ledger. There are many kinds of documents,
each of them to be used on specific occasions. The docu-
ments are generally established in several copies of differ-
ent colors, the green copy to be kept by the spending agency,
the yellow one to be kept by the Central Accounting Service,
the pink one for the Treasury, and the rose one for the
Directorate of Obligation Control.

As far as personnel expenditures are concerned,
each agency has to establish the following documents: (1)
An obligation statement (fiche d'engagement des depenses)
depicting the sum to be spent on personnel during each
quarter. This statement is subject to control by the
Directorate of Obligation Control; (2) a warrant signed by
the Ordonnator or his delegate authorizing the Treasurer
to disburse money. The warrant must be visaed by the con-
troller of obligations, the liquidator and the Treasurer
himself; (3) a payroll containing such details as the
chapter to which the expenditure belongs, the code number
reflecting the functional and organizational classification
of the expenditure, the name of beneficiaries, their
positions, their salary class index, their family statuses,

their basic salaries, their cost of living allowance,

- 84 -

family and other allowances, deductions from their salaries
such as the six per cent contribution to the retirement fund,
and other deductions ordered by the government, and twenty
per cent contribution to the retirement fund by the govern-
ment. Each beneficiary has to audit the different components
of his salary before signing his name on the payroll; (4)

a payroll voucher which is established for statistical pur-
poses, containing such details as how much salary is paid

to full status employees, and how much is paid to employees
recruited by contract, to employees recruited on a per diem
basis or on a temporary basis. Each of these divisions is,
in turn, broken down into basic salary, family allowance,
cost of living allowance, etc.

Warrant, payroll, payroll voucher, and obligation
statement are sent to different auditing and authorizing
agencies according to the expenditure procedure 1/.

As far as material expenditures are concerned,
the spending agency has to supply the following documents:
(1) Quotations from at least three suppliers if the expendi-
ture is from 5,000 VN3 to 100,000 VN3, or the report of the
call for bids if the expenditure is from 100,000 W3 to
500,000 VN8. This is to prove that the supplier has been
carefully chosen; (2) an obligation statement showing the

sum to be spent and the supplier to be chosen; (3) a purchase

 

(I) See pages 68 ff for discussion of the expenditure pro-
cedure.

- 85 -

order that must be visaed by the controller of obligations
and signed by the ordonnator and the liquidator before be-
ing sent to the chosen supplier; (4) an invoice voucher
that must be established upon reception of the material.
The invoice voucher is,in reality, a combination of two
ddcuments: the invoice filled by the supplier stating
different gooé and services supplied with their prices, and
the voucher stating that the merchandise has been duly de-
livered; (5) a warrant authorizing the Treasurer to dis-
burse money. Purchase order, invoice voucher, and warrant
must bear the code number of the specific expenditure given
by the Central Accounting Service.

Documents pertaining to work expenditures do not
differ very much from those pertaining to material expendi-
tures. The purchase order is replaced by a contract signed
between the government and the entrepreneur, and the voucher
is replaced or complemented by the report of the receiving
committee attesting that the work has been done according
to the contract. Generally ten per cent of the expenditure
is to be retained in the Treasury until the government is
sure that the work is well done. Sometimes the receiving
committee imposes a fine upon the contractor, and the
liquidator must take account of these facts in establishing
the warrant.

The spending agency keeps an Appropriation and
Expenditure Ledger in.which are inscribed such details as

- 35 -

the date of the expenditure, its purpose, the amount obli-
gated, the amount liquidated, the amount de-obligated, the
amount allotted, the code numbers and dates of purchase
orders, contract vouchers, obligation statements, de-
obligation statements, re-obligation statements, etc. The
account kept by the spending agency is to be checked monthly
with that kept by the Treasury which, in turn, checks its
accounts with those recorded by the Central Accounting
Service.

b- Accounting at the Central Accounting Service:
It has already been explained that each expenditure is
represented by a code number of ten digits, the last four of
which represent the economic character and object of the
expenditure 1/. It happens that an expenditure can have
several objects; for example, money paid to employees of an
agency can include basic salary, family allowance, cost of
living allowance, etc. Each of these objects has a parti-
cular code number. It follows that one expenditure can be
represented by several cards. The Central Accounting
Service uses machines to sort out and add up different cards
of a given combination and is in a position to keep accounts
of all agencies' expenditures. The eighty columns of the
card can be used to convey such data as the date of the
expenditure, the purpose of it, the name of the spending

h..—

(1) See page 35 ff for discussion of expenditure classi-
fication.

- 57 -

agency, the chapter and section to which the expenditure is
imputed, the amount obligated, the amount liquidated, etc.
The operators of the machines work according to a given
program, one program being characterized by the disposition
of holes in the cards. At present, the Central Accounting
Service not only keeps accounts of agency expenditures but
also establishes payrolls for nearly twenty thousand em—
ployees and performs various statistical works.

When the Central Accounting Service finds that
enough unobligated money is left to permit a given agency
to incur a given obligation it approves the obligation
statement and gives a code number to it. That code number
must be referred to by the spending agency in subsequent
operations. A close relationship between the Central
Accounting Service and the Treasury permits these two
agencies to compare their respective accounts and detect
possible errors ‘/.

c- Accounting_at the Treasury; The Treasury
keeps accounts of all budget receipts except American aid.
Receipts are classified into titles and chapters. For ex-
ample, in the 1959 budget, all direct taxes were included
in Title I, indirect taxes in Title II, custom duties in
Title III, etc. Each title was subdivided into chapters.

Fbr example, Title I was subdivided into Chapter One or

(1) Thu-Tue Thi-Hanh Ngan-Sach ngc-Gia, General Directorate
of Budget and Foreign Aid, Saigon 195 , pp. I IV 5.

- 88 -

income taxes, Chapter Two or land taxes, Chapter Three or
business license taxes, etc. Some budget receipts are col-
lected by other agencies and deposited in the Treasury. For
example, custom duties are collected by the General Director—
ate of Customs and deposited in the Treasury under Title III,
receipts from the Department of Public Works are deposited
in the Treasury under Title VI, and receipts from other
agencies are deposited under Title VII. These receipts are
recorded at the same time by the Treasury and by the col-
lecting agencies which reconcile their accounts periodically
with those kept by the Treasury.

As far as budget expenditures are concerned, the
accounting work of the Treasury has two main functions: (1)
To disburse money for the entire government, and (2) to
pro-audit all warrants before disbursing. The first function
necessitates the recording of all transactions between the
Treasury and the spending agencies. These transaction
records are kept day by day, agency by agency, and at the
end of each month a statement of transactions is sent to
different agencies for them to reconcile their own records
with those kept by the Treasury 1/.

The second function necessitates the recording of
all budget expenditures by title, chapter, section, the

amount obligated, the amount re-obligated, the amount

(1) Phan-Dinh-Ngoc, a; Accounting Work of the Treagun o;
Viet-Nam, Viet-Nal Project, M.S.U. 195 , P. .

- 89 -

de-obligated, the amount liquidated, etc. For each expendi-
ture or cancellation of expenditure, the Treasury receives
two notices, one from the Central Accounting Service and
one from the spending agency. If these two notices are
contradictory the Treasury returns the case to the spending
agency to investigate and reconcile itself with the Central
Accounting Service 1/. As might be expected, such procedure
can be a source of delay if form receives more concern than
substance.

Another aspect of the accounting work of the
Treasury is the centralization and integration of accounts
kept by twenty-five branches installed in most of the pro-
vinces. Indeed, each province chief is a secondary ordon-
nator who receives from cabinet members a delegated power
to authorize national budget expenditures in their local-
ities. Each local treasury keeps accounts of these ex-
penditures and sends periodical reports to the Central
Treasury.

d- The Pre-audit Function of the Directorategg;
Obligation Control and theflreasggl: The Directorate of
Obligation Control or the Treasury cannot refuse an ex-
penditure on the grounds that it is inopportune. But an
exorbitant price or the luxury character of an expenditure

can be the cause of rejection. At present, the purchase of

 

(1) Thu-Tuc Thi-Hanh Ngan-Bach Quoc-Gia, General Directorate
of Budget and Foreign Aid, Saigon 1958, p. I IV 5.

- 90 -

air-conditioners, carpets, expensive cars, etc., is looked
upon with suspicion and is accepted only on special occasions.
One problem that can be raised in relation to the
pre-audit procedure in Viet-Nam is the supplier's right to
be paid when merchandise has been delivered. Indeed, the
first pre-audit is a pre-audit of the obligation statement
and of quotations (not purchase orders) submitted by the
various postulants; if it were rejected the consequence
would not be very serious. But the second pre-audit is made
after the supplier has been chosen and the merchandise de-
livered. If it were rejected, who would pay the supplier?
It would be an act of organized robbery if the state refused
to pay for merchandise duly delivered for the mere reason
that the expenditure procedure was not well observed by the
spending agency which is part of the government. The solu-
tion of making the faulty civil servant financially responsible
for the irregular expenditure is unrealistic because his
property is often insignificant comparison with the irregular
expenditure. The same thing can be said about the third pre-
audit by the Treasury. One way to prevent such trouble is
to forbid the supplier to fill a purchase order without the
visa of the obligation controller on it. Thus, the purchase
order issued by a spending agency must have three signatures
on it, the signature of the liquidator, that of the obli-
gation controller, and that of the ordonnator. But even

with this measure trouble can occur if the irregularity is

- 91 -

not detected in the first and second pre-audit by the obli-
gation controller, but in the third pre-audit by the Trea-
surer.

The Vietnamese and French position in such cases
is to pay the supplier if his good faith cannot be doubted
and to use disciplinary sanctions on the faulty civil ser-
vant if his mistake is not made with the intention to cheat
the government, or to conduct criminal proceedings in court
against him if he is motivated by the intention to chest.
The Vietnamese penal code has provided a punishment going
from imprisonment to the death penalty for embezzlement of
public funds.

e- The Post Audit: Viet-Nam intends to create a
"Cour des Comptes" as in the French system. In the 1958
budget one chapter was allocated to the "Cour des Comptes"
but no money was appropriated 1/. With such a court, the
post-audit of government accounts would be entrusted to the
Vietnamese judiciary power. Until the day such an institution
is established, Viet-Nam is in need of a post-audit system.
The reinforcement of pre-audit cannot replace the post-
audit. In the first place, without post-audit the dishonest
civil servant who can get by the pre-audit is almost sure to
be able to act with impunity. Since the pre-audit is carried

out as quickly as possible in order to implement programs on

 

(1) National Budget 1258, General Directorate of Budget and
Fbreign Aid, Saigon 1958, V01. I, p. 29.

- 92 -

schedule, the threat of punishment if the irregularity is
discovered is of short duration and does not constitute a
sufficient deterrent to corruption. In the second place,
the practical possibility of taking action against a man
varies as he goes up or steps down in rank; sometimes a
civil servant can commit irregularities in financial matters
with impunity if he is politically influential. If the
pre-audit is not very effective when he goes up, the post-
audit is likely to wait for him when he steps down. The
threat of punishment is thus extended long enough to make
him think twice before cheating. In the third place, an
elaborate pre-audit tends to minimize the responsibility
of the spending agency. The post-audit gives it a free hand
to expend according to the spirit of the laws, but, at the
same time, reinforces its responsibility.
§;_§pecial_Accounting:Trocedures: When the
amount liquidated is smaller than the amount obligated, the
spending agency must fill out a de-obligation statement
(fiche de degagement des depenses) that enables the Central
Accounting Service to de-obligate the amount not liquidated,
thus permitting the spending agency to use it for subsequent
obligations. When the amount liquidated is greater than the
amount obligated the spending agency must de-obligate the
amount previously obligated and re-obligate an.amount suf-
ficient for the liquidation. De-obligation and re-

obligation statements must be filled out. In the former

- 93 -

case, there is no interruption of the expenditure procedure
because the spending agency has enough obligated money to
meet the liquidation. In the latter case, the procedure is
delayed until enough money is obligated to meet the liqui-
dation.

When the beneficiary of a warrant is overpaid,
the spending agency issues an expenditure reduction receipt
order (ordre de recette en degrevement des depenses). This
order has two effects: (1) To direct the Treasury to collect
the amount overpaid; (2) to direct the accounting agencies
to rectify their records. Needless to say, this order can
be issued only when it is certain that the amount overpaid
can be recovered. In case of incorrect imputation--for ex-
ample, if chapter A of agency A is imputed instead of
chapter B of agency B--agency B can issue an expenditure
reduction receipt order directing the Treasury to transfer
the amount incorrectly imputed from chapter A to chapter B.
The accounts kept by the Treasury, the Central Accounting
Service and the spending agencies must then be rectified 1/.
This procedure is restricted to cases of incorrect impu-
tations and is not intended to be used as an accounting
maneuver of agency heads to transfer’money from one chapter
to another.

The expenditure reduction receipt order can be

 

(I) -Tuc Thi-Hanh N an-Sach -G1a, General Directorate
ofBudget and Foreign Aid, Saigon 195 e p0 I V 50

- 94 -

used to transfer money from a petty cash fund or imprest
cash fund to the general fund when the former funds are no
longer needed. Indeed, when an agency creates a petty cash
fund or imprest cash fund, money allotted to the agency is
debited by an amount equal to the fund; to reintegrate un-
expended money from the used fund into the general fund is

equivalent to reducing an expenditure by a receipt 1/.

(1) Thu-Tuc Thi-Hanh N an-Sach uoc-Gia, General Directorate
of Budget and Foreign Aid, Saigon 195 , p. V I 7.

CHAP:I_'_ER THREE

THE LOCAL AND AUTONOMOUS BUDGETS

1, Prefectural and Municipal Budgets:

a- Budget Preparation and Execution: Prior to
1956 Viet-Nam had twelve municipalities and one prefecture.

 

After 1957 the number of municipalities was reduced to
three, and the other municipalities were changed into vil-
lages. Saigon is called a prefecture on account of its size
and its status as the capital of the nation. Saigon and the
municipalities are headed by mayors appointed by the Presi-
dent. Sometimes a single person combines theffunctions of
province chief and mayor. The people are represented in
prefectural or municipal councils. For example, the pre-
fectural council is composed of twenty-four members elected
on the basis of three members for each of the eight
districts of the prefecture 1/.

Budgets are prepared by mayors and authorized by
the President; the councils have only a consultative functiun.
The mayors are assisted in budget preparation by their ac-
counting bureaus and the General Directorate of Budget and
Foreign Aid is responsible for the standardization of bud-

get presentation.

 

(I) Le-Tai-Cuong, To-Chuc Hanh-Chanh Do-Thanh Saigon, Hanh-
Chanh Khao-Luan, 1959, No. 4, p. 38.

 

-95..

I I ‘\ r.“
Mk“ I Q“ \ue\hl,}.

 

- 95 -

Financial laws and regulations applicable to the
execution of the national budget are also applicable to the
execution of prefectural and municipal budgets. The mayor
is the ordonnator of the prefectural or municipal budget.
The General Treasury in Saigon disburses money for all ex-
penditures of the prefecture, and the branch treasury at
each municipality disburses money for all expenditures of
the said municipality. Expenditures of the prefecture of
Saigon and the municipality of Dalat are controlled by the
General Directorate of Budget and Foreign Aid in Saigon.
Expenditures of the municipalities of Hue and Da-Nang in
Central Viet-Nam are controlled by a division of the General
Directorate of Budget and Foreign Aid established at Hue.

pr Budget Receipts and_§xpenditupg: Prefectural
and municipal budget receipts in 1956 are classified in the

following table: (In thousands of piasters.)

% of % of
Nat. Nat.
Type of Receipt Ppefectg Rev. % Mgnicipal. Rev, z

Surcharges on
national taxes 121,608 0.87 25 11,060 0.08 13

Revenues from

public pro-

perties 18,351 0.14 4 3.527 0.03 4
Regies and

leases 187,636 1.36 39 42.910 0.31 50
Miscellaneous 55.030 0-42 12 20.031 0.41 23
Late Receipts 95.525 0.71 20 8.109 0.06 10
Tota1 478,152 3.50 100 85, 640 0.62 100

Source: Uong ngoc Thach, et a1, Financial Activities of the
Provinces, Prefecture and Municipalities of gist-Nam in 1256,
National Institute of Administration, October 1957, p. 26.

 

f 9? -

Surcharges on national taxes vary according to
the kind of taxes but cannot be more than two hundred per
cent of the national tax. The tax on occupation of side-
walk and river bank accounted for most of the revenues from
public properties. The sale of water and the lease of space
in different market places accounted for most of receipts
from regies and leases. Taxes on taxicabs, on transcripts
of certificates, and fines accounted for a great part of
diverse revenues. Late receipts are receipts entered into

the budgets of previous years; they were almost as much as

surcharges on national taxes.

Prefectural and municipal budget expenditures in
1956 are classified in the following tahb; (In thousands
of piasters.)

% of % of
Type of Gov. Gov.
Expenditure Prefectp, Exp, 1 Municipal, Exp. %

A___

 

General
Administration 71,488 0.42 11 39.497 0.24 21

Police and

Security 258,065 1.59 41 78,550 0.48 42
Social welfare 123,347 0.74 19 14,964 0.09 8
Economic 181,035 1.13 29 49,348 0.30 26
Miscellaneous 1,600 0.01 1
Extraordinary 5.746 0.02 2
Total 633,937 3.88 100 187.708 1.14 100

Source: Uong Ngoc Thach, et al, Ibid., p. 31.

The difference between expenditures and receipts

~98-

is made up by subsidies from the national budget. In 1956
the national budget subsidized the prefecture by 155,785,395
VN$, or twenty-five per cent of the total receipts of the
prefectural budget, and the municipalities received
102,067,864 VN3, or sixty-five per cent of the total re-
ceipts of the municipal budgets. It is thought to be ad-
visable that subsidies from the national budget be given
only to implement specific programs duly agreed upon between
the central and local governments in order to encourage pro-

gram budgeting on the local level.

g. Provincial_and Village_Budgets:

a- Budget Preparation and Execution: The thirty-
six provinces of Viet-Nam are headed by province chiefs ap-
pointed by the President. The 2,258 villages are ad-
ministered by village councils, the members of which are
appointed by province chiefs 1/. Among the 2,258 villages,
only 1,478 have budgets, the rest being too poor or too
small to have a budget. Local administration is then under-
taken by voluntary labor contribution. A consolidation of
small villages into larger ones is being attempted by the
central government so that each village can have a budget 2/.
Provincial budgets are prepared, according to instructions

k

(1) Nguyen Xuan Dao, Village Governmw, MSUG,
Saigon, 1958, p. 49.

(2) This was done before the creation of agrovilles in
1959.

-99-

issued by the General Directorate of Budget and Foreign Aid
and other central agencies, by province chiefs assisted by
their accounting bureaus. They are then authorized by the
President. Village budgets are prepared by the village
councils and authorized by the province chiefs if receipts
do not exceed 500,000 VN3, or by the Secretary of Interior
if they exceed that sum.‘ The execution of provincial bud-
gets is subject to control by the General Directorate of
Budget and Foreign Aid and by the Treasury. Treasury con-
trol prior to 1957 could not be very effective. Because
the branch treasuries did not have copies of the provincial
budgets, they could not know whether or not a given expendi-
ture was made within the limits of budget authorization.

In the absence of an allotment system, the pro-
vincial governments expended so much in the first part of
the year that they were obliged to ask for advances from
the Treasury in order to get through to the end of the year.
Indeed, prior to 1957 province chief had the right to ask
for an advance from the treasury when receipts could not be
collected to provide for expenditures. Consequently, re-
cetpt estimates were generally overstated by Budget makers
in order to present an apparently balanced budget. In
December 31, 1956, advances to local budgets amounted to
8,748,000,000 VNS 1/. The recovery of these advances would

(1) Nghiem-Dang, Van-De Quan-Binh Ngan-Bach Tinh, Hanh-
Wo 1959. NO- 3. 913- 25 If.

- 100 -

presuppose an excess of receipts over expenditures that can-
not be envisaged on a great scale for the time being, in
view of the present economic situation in Viet-Nam.

Beginning in 1957 advances from the Treasury
were replaced by subsidies from the national budget. The
main difference between these two practices is that sub-
sidies are fixed sums given to the provincial budgets with
full consideration of province needs and potentialities,
while advances were neither fixed nor included in the pro-
vincial budgets; they were given to province chiefs when-
ever they asked for them without any other justification
than the exigencies of the political situation.

The execution of village budgets is subject to
control by the district chief, the province chief or the
Secretary of Interior, according to the circumstances. For
example, expenditures over 50,000 VN$ must be approved by
the province chief, and the rent of village property yield-
ing more than 50,000 VN$ a year must be approved by the
Secretary of Interior. A curious form of administrative
tutelage is the limitation on the sums of money a village
can keep. According to the circular No. 36 DF/BD of
February 17, 1953, villages located in province headquarters
can keep a maximum of 100000 VN3, those located in district
headquarters can keep a maximum of 5,000 VN3, and those
located in other places can keep a maximum of 3,000 VNS.

Excess sums must be deposited in the Central Treasury or

-101-

its branches. Withdrawals of these deposits by the villages
must be approved by district and province chiefs who
periodically check the books kept by the village councils '/.
2; Budget Receiptggandégxpenditurepz Data from
village receipts and expenditures are not available. The
provincial budget receipts in 1956 are classified in the

following table: (In thousands of piasters.)

gzpe of Receipt South 2 Center z West %

Surcharges on
National Taxes 29,580 15 13,938 25 1,427 36

Regies and Leases 1,708 1 19,256 33 1,148 30

Late Receipts 1,001 1 5,674 10 -- --
Diverse Receipts 168,596 83 18,107 32 1,236 34
Total 200,885 100 55.975 100 3,838 100

Source: Uong‘Ngoc Thadfi, et al, 1pi_, p. 33.

The most important surcharge in the South and West
(High Lands) was the surcharge on the national business
license tax; in the Center it was the surcharge on the
national land tax. Receipts from regies and leases were one
per cent of total receipts in the South and ten per cent of
total receipts in the Center. This was due to the fact
that receipts from the lease of market places are provincial

*q

(1) Administrative 0r anization in the Province of -Tho,
MSUG, Saigon 1957. pp. A2 rt.

- 102 -

receipts in the Center and village receipts in the South.
The high proportion of late receipts in the Center was due
to political and economic conditions; the Center has less
land, less businesses and more war damages than the South.
Among diverse receipts, the pacification tax was the most
important in the South and amounted to 120,211,632 VNS in
1956, or twelve per cent of the total receipts. Charges
for government services, such as, garbage collection, tran-
script of certificates, etc., are the most important kind
of diverse receipts in the Center.

The provincial budget expenditures in 1956 are
classified in the following table: (In thousands of piasters)

Type of Egpenditure South 2 + Center Z West Z

General
Administration 419,117 42 38,081 35 3.403 33
Social Welfare 425,348 43 18,127 17 2,127 21

Economic Interest 137.801 14 18,671 18 1,249 12

Miscellaneous 662 -- 28,631 27 35 --
Unforeseen 6,170 1 3.242 3 3.534 34
Total 989,098 100 106,752 100 10,348 100

Source: Uong Ngoc Zhsch, et al, Lpig., p. 35.

The difference between expenditures and receipts
was compensated by subsidies from the national budget.
Thus, in 1956 the national budget subsidized the provinces
of the South by 788,213,000 VNS or eighty per cent of the

-103-

total receipts, the provinces of the Center by 49,777,000
VN3 or forty-seven per cent of the total receipts, the pro-
vinces of the West (High Plateau) by 6,510,000 VN$ or sixty-
three per cent of the total receipts.

g- cha; Bugget Pppblems: These problems stem
from the enormous percentage of national budget subsidies
to provincial budgets. They can be classified into two
major kinds: (1) Problems related to the relationship
between national and provincial budgets, and (2) problems
related to the ability of provinces to find new sources of
revenues.

In the relationship between national and pro-
vincial budgets, the first problem is the division of
charges between them. Subsidies from the national budget are
better than the former practice of advances from the Treasury,
but the basis for calculating subsidies varies from one
province to another because the division of charges between
the national budget and provincial budgets varies according
to the location of the province. In the South personnel
salaries are paid from provincial budgets, except for
salaries of high ranking personnel. In the Center personnel
salaries are paid from the national budget except for police
and temporary personnel salaries. Many proposals have been
made to standardize the payment of personnel in the pro-
vinces. One proposal is to pay all provincial personnel

from the national budget; another proposal is to pay all

~104-

provincial personnel from the provincial budgets. The
first solution emphasizes the centralization of control,
often the source of red tape and locally inadequate de-
cisions, to the detriment of local autonomy. The second
solution emphasizes local autonomy with its lack of co-
ordination and its parochialism to the detriment of central
control. The council of province chiefs proposed to divide
personnel into two classes, technical personnel and general
administration personnel. The technical personnel belong
to the department and would be paid from the national
budget; general administration personnel belong to the pro-
vinces and would be paid by the provinces. None of these
prOposals has been accepted so far because the government
has to cope with more urgent political problems.

The second problem is the division of revenues
between the national budget and provincial budgets. Revenues
from business license taxes and land taxes are collected for
the benefit of the national budget, and provincial budgets
share only a surcharge on these taxes. Since these
revenues are collected by provinces and handed over to the
national government which, in turn, subsidizes the provinces,
it is interesting to envisage the possibility of diminishing
national subsidies to provinces and allowing them to collect
these taxes for their own benefit. This solution has been

strongly urged by certain tax specialists 1/who contend

‘

(1) Rabies-Dong, Van-De Quan-Binh Ngan-Sach Tiuh, Eggp-
W. 1959. No. 3. p. 29.

-105.-

that better efficiency can be obtained if land taxes and
business license taxes are collected by the provinces for
their own benefit. The provinces are in a better position
to control the assessment of local taxable properties and
much paper work, due to the centralization of taxation, can
be ayoided.

In order to decrease national subsidies to pro-
vincial budgets new sources of revenues would have to be
found for the provinces. Much emphasis has been put upon
taxation but a point of saturation has been reached. One
solution to the problem might be labor contribution. Such
contributions were used on a large scale in the colonial
time by the French Governor General, Paul Doumer, to build
the trans-indochinese railroad and has been vehemently
criticized by the American writer, Joseph Buttinger 4/.
Today it is being reapplied with a new spirit in the com-
munity development program. The community members are in-
vited to join working groups to better pppip community by
building roads, bridges, wells, etc. The essential thing
is to inspire in the members a love for team work and a
longing for a better community, and to discard any form of
coercion. If the Vietnamese peasant has no money to pay

hhavy taxes, he has plenty of free time. The rice field

._K

(1) Joseph Buttinger, The Smaller Dppgon, Praeger, New
YOrk, 1958, D. 42 °

- 106 -

work keeps him busy only two hundred days a year; the rest
of the time is used to wait for nature to do her work. That
waiting time has been used to build schools, bridges, dams,
etc., under the community development program. The value

of this work was evaluated at 90,000,000 VNS from March 1,
1957. to August 31, 1957 V.

The ability of provinces to find new sources of
revenues varies widely. One of the practices commonly used
was to tax all merchandise going in or out of the provinces.
The tax was called pacification tax in the South and "Fee
for Verification of Local Products” in the Center. The
pacification tax brought to the southern provincial budgets
twelve per cent of the total budget receipt while the same
method of taxation used in the Center accounted only for
seven per cent of the total budget receipt. That kind of
taxation was a hindrance to the free circulation of mer-
chandise within the nation; it was abolished in 1959.

The hope of budget specialists in Viet-Nam today
is to bring about the autonomy of the provincial budgets.
But in Viet-Nam financial problems must be understood in
the wider context of her political situation. According to
an opinion of Winston Churchill, "finance is the servant
and not the master." The methods of fiscal management in

Viet-Nam must be made flexible to cope with the political

____

(1) Nghiem-Dang, Van-De Quan-Binh Ngan-Bach Tinh, flapp-
E!§2§.§Eé2:§2§2¢ 19599 N0“ 3! P° 29-

- 107 -

situation and not vice-verse. The conflict of ideologies
that is shaking the wofifl has a great bearing upon the
political situation of Viet-Nam and causes much unrest in
that country. So long as that unrest persists, more
centralization of control is preferable even at the cost of
red tape because centralization permits a better understand-
ing of the general situation, a better coordination of local
activities and, therefore, more effective intervention of
the central government to re-establish order in troubled

areas e

3, Apponomous Budgets:
a- Characteristics of_Agencies Havipg Autonomous

Budgetp: These agencies can be a public corporation, joint
stock company, an authority or a general directorate. Most
of them are on the general directorate level and are placed
under the general supervision of a director general. The
National Bank seems to be on a higher level and is ad-
ministered by a Governor. Some of them are attached to the
Presidency, such as:

The Atomic Energy Office

The Low Cost Housing Office

The General Commissariat for Cooperatives and
Agricultural Credit

The National Orphanage
Others are attached to the Department of Public Werks, such

88:

- 108 -

The Viet-Nam Railway
The Saigon Bus Transportation Corporation
The Port of Saigon Authority
The Port of Da-Nang Authority
The Electrical Re-equipment Office
The Water Distribution Office
Others are attached to the Department of Economy, such as:
The Saigon Chamber of Commerce
The Industrial Credit
The Nong-Son Coal Mine Authority
Others are attached to the Department of Finance, such as:
The Retirement Fund Administration
The National Bank
The Commercial Credit
The Viet-Nam Press is attached to the Department of In-
formation, and the Pasteur Institute is attached to the
Department of Health.
A public corporation in the U.S. and in Viet-Nam
is defined by the following characteristics V:
(1) It is created by a specific statute for
a specific purpose; (2) there are no shares
of common stock and therefore no shareholders;
(3) the government is ultimately responsible
for its management; (4) a management group
is appointed by the government and charged
with its day to day affairs; (5) the corpo-

ration has an independent legal status; it
is a legal person in the eyes of the laws;

_~

(1) Burkhead, J., W, Wiley, New York,
1959’ pe 4010

-109-

.(6) the corporation is subject to specified

standards of accountability including

financial accountability.

Among public corporations in Viet-Nam we can cite
the Commercial Credit, the Low Cost Housing Office, the
National Bank, the Electrical Re-equipment Office, the In-
dustrial Credit, the Cooperatives and Agricultural Credit,
the Viet-Nam Railway, and the Water Distribution Office.
These public corporations are characterized more or less by
their commercial activities. Some of them provide the
public with services and cash revenues for their operations,
such as, the Commercial Credit, the National Bank, the In-
dustrial Credit, the Saigon Saving Bank, the Cooperatives
and Agricultural Credit, the Viet-Nam Railway and Viet-Nam
Airways. Some others provide the public with goods or
facilities, such as, the Low Cost Housing Office, the
Electrical Re-equipment Office and the Water Distribution
Office.

The second kind of government agencies having
budget autonomy may be called public establishments. They
do not have a predominantly commercial characters Some of
them have a scientific or ethical character such as the
Pasteur Institute, the National Orphanage, and the Atomic
Energy Office. Some others are predominantly administrative
or informational in character'such as the Da-Nang Chamber‘of
Commerce, the Saigon Chamber of Commerce, The DapNang Port
Authority, the Retirement Fund ministration and the

~110-

Viet-Nam Press.

The third kind of government agencies having bud-
get autonomy is the joint stock company. Viet-Nam has so
far two joint stock companies; the Televietnam and the Viet-
Nam Airways. Fifty-one per cent of the shares in Tele-
vietnam, an international telecommunication company, belong
to the government; the rest are privately owned. Viet-Nam
Airways is owned by the government, the Air France Company
and the Indochinese Federation. More joint stock companies
are being organized in order to speed up national economic
recovery. The Cotton Industry Company with sixty per cent
of its shares owned by the government, the Sugar Company
with fifty-seven per cent of its shares owned by the
government, the Vinh-Hao Medicinal Source Company with
sixty per cent of its shares owned by the government, and
the Glass Company with fifty-one per cent of its shares
owned by the government, are in the stage of formation.

Public corporations, public establishments, and
joint stock companies are legal persons; that is, they can
own properties, receive gifts, issue bonds, sign contracts,
and sue and be sued in their own name. Their budget
autonomy can be considered a consequence of their legal
personality. The reason for their establishment can be
Politicallin the case of the Viet-Nam Press. The government
does not wish to appear to be supervising too closely the

information channels of the nation. But the major reason

- 111 -

is economic and stems from the distinction between the two
basic concepts of government: (1) The negative concept that
considers government as merely an umpire whose only task is
to settle the conflict of interests between various private
organizations in the nation. (2) The positive concept that
deems it necessary for the government to take action to pro-
vide services and promote development.

The negative concept emphasizes the non-profit
aspect of government and advocates strong measures of con-
trol as in the recruitment of personnel through the General
Directorate of Civil Service, or in the expenditure of
public funds through the General Directorate of Budget and
Foreign Aid. The positive concept of government emphasizes
the disadvantages of too tight a system of control for some
activities and advocates business-like management and ac-
counting methods for them. A reconciliation of these two
concepts has been reached by every government in the world,
namely that those functions that are considered strictly
governmental in character are to be exercised according to
the negative concept and those functions that are considered
commercial or industrial in character are exercised accord-
ing to the positive concept. The former functions are as-
signed to departmental agencies, the latter are assigned to
autonomous agencies.

Moreover, the per capita national income in

Viet-Nam is so low that private capital formation is

- 112 -

difficult. Most of the capital in the nation is in the
hands of Chinese, Indian, and French companies as a result
of the past colonial policy. With the emergence of Viet-
Nam as a sovereign nation, most of these companies reduced
their activities and withdrew their funds because they could
not have the same privileges as in the good old days. In
such a situation the government is able to act inasmuch as
the foreign aid provides it with powerful means of action.
It is in this spirit that most of the recent public
corporations have been created.

A third reason is governmental concern to give
these agencies more freedom of action. Although each of
them is attached to one department, the resulting depart-
mental control does not follow the same pattern as that ap-
plied to agencies within the department. Indeed, the fact
of having an autonomous budget often means the possibility
of planning, programming, and spending without passing
through the department head.

b- Budget Preparation and Execution: The agency
budget is prepared by the head of the agency who may be a
director, a director general, a governor or a board of
directors. The General Directorate of Budget and Foreign
Aid can issue instructions to assure that each budget does
not depart too much from the standard form. Some agencies
must have their budgets reviewed by administrative councils

before being presented to the President for approval as in

- 113 -

the case of the Viet-Nam Press, the National Orphanage, and
the Retirement Fund Administration. In some cases budget
review by administrative councils is not provided for by
the status of the agency as in the case of the Pasteur
Institute and the Agricultural Credit. Sometimes the agency
budget is submitted to a consultative council as in the
case of the Port of Saigon and the Port of Da-Nang
Authorities. The consultative council, a formal means of
cooperation, is generally constituted by representatives
from interest or clientele groups. They are entitled to
express their Opinion upon the budget but cannot make any
changes on their own. Sometimes, the budget is submitted
to the General Directorate of Budget and Foreign Aid before
being submitted to the administrative council and the
President for authorization as in the case of the Nong-Son
Coal Mine Authority. In general, the budgets are author-
ized by the President but the budgets of the Chambers of
Commerce of Saigon and Da-Nang are authorized by the Secre-
tary of Economy.

The agency head is the ordonnator of its budget.
If an agency is headed by a council of directors, the chair-
man of the council is the ordonnator. The Treasurer General
is, at the same time, the treasurer of these agencies.
Autonomous agency budget execution is controlled according
to one or more of the following patterns: (1) Internal

control is entrusted to a comptroller general as in the

-114-

case of the National Bank, the Commercial Credit, the Co-
operatives and Agricultural Credit, and the Industrial
Credit. (2) External control is entrusted to a post-auditing
committee composed of members external to the agency as in
the case of the Agricultural Credit and the Saigon Bus
Transportation Corporation. (3) Departmental control is
entrusted to the Department of Finance as in the case of
the Electrical Re-equipment Office, the Water Distribution
Office, and the Handicraft Development Center. (4) The
General Directorate of Budget and Foreign Aid may exercise
control as in the case of the Nong-Son Coal Mine
Corporation 1/.

The budget cycle of an agency can be different
from that of the national budget. For example, the National
Railway has a budget year beginning in July and ending in
June while the national budget year begins in January and
ends in December. Sometimes an agency can have two budgets:
an administrative budget and an Operating budget. This is
the case of the Cooperatives and Agricultural Credit and the
National Bank. The Viet-Nam Railway has an extraordinary
budget in addition to its ordinary budget. All expenditures
for re-equipment and extension are carried in the extra-

ordinary budget.
c- Budget Receipts and Expenditures: Not all of

 

(1) Nghiem-Dang, Cac Van-De Ngan-Sach Viet-Nam, National
Institute of Administration, Saigon 1959, p. 79.

- 115 -

the autonomous agencies are self-supporting but almost all
of them hays their specific revenues. The National Orphan-
age benefits from the tax on entertainment tickets, and the
Ports of Saigon and Da-Nang benefit from the tax on the
loading and unloading of ships. Agencies specializing in
banking operations, such as the National Bank, the Commer-
cial Credit, the COOperatives and Agricultural Credit, and
the Industrial Credit receive interest on their loans and
fees for their services. Agencies specializing in building
houses or producing water and electricity, such as the
Electrical Re-equipment Office, the Water Distribution
Office, and the Low Cost Housing Office earn their revenues
from the sale or loan of their products. Agencies
specializing in transportation, such as the Viet-Nam Airways,
The Viet-Nam Railway, and the Saigon Bus Transportation
Corporation earn their revenues from the sale of their
services.

In 1958 the three agencies having the greatest
amount of annual revenues were the Viet-Nam Railway with a
total revenue of 417,678,000 VN3, the Central Purchasing
Agency with a total revenue of 111,601,000 VNS, and the
Electrical Re-equipment Office with a total revenue of
111,073,000 VNS. The Central Purchasing Agency ceased to
beuan autonomous agency in 1959. The total receipts of

all autonomous agencies in 1958 amounted to about one

billion piasters.

- 116 -

In 1958 the three agencies having the greatest
amount of annual expenditures were the Viet-Nam Railway
with a total expenditure of 643,772,000 VN3, the National
Housing Office with a total expenditure of 144,436,000 VN3,
and the Port of Saigon Authority with a total expenditure
of 61,180,000 VN8. The National Housing Office ceased to
be an autonomous agency in 1959. The total expenditure of
all autonomous agencies in 1958 amounted to slightly more
than one billion pieasters.

Certain agencies had a surplus in 1958, especi-
ally the Electrical Re-equipment Office with a surplus of
about 89,000,000 VN8, and the Central Purchasing Agency
with a surplus of about 53,000,000 VN8. Certain agencies
had a deficit in 1958, especially the Viet-Nam Railway with
a deficit of about 226,000,000 VN3 and the National Housing
Office with a deficit of about 59,000,000 vut ‘/. Since
capital expenditures and disinvestments were often included
in total expenditures and receipts, it is necessary to take
a closer look at the balance sheets of these agencies in
order to have an exact idea of their financial situations 2/.

As a general rule, the autonomous agencies are

 

(1) Nghiem-Dang, Cac Van-De Nggp-Sach Viet-Nam, flatipnp;
Institute of Administration, Saigon 1959, pp. 110-111.

(2) dSnyder, W. W., et al, An Analysis of Revenues and m-
-_ 1 l- __

ernmental.

   
 

-1‘|7-

supposed to have something approaching self-financing capa-
bility. Certain agencies like the Commercial Credit, the
Cooperatives and Agricultural Credit, the Nong-Son Coal Mine
Authority, the Saigon Bus Transportation Corporation, the
Handicraft Development Center and the Industrial Credit re-
ceived to start with a revolving fund from foreign aid or
the national government or both. For example, the Com-
mercial Credit received at the start a revolving fund of
200,000,000 VNS from the national government.

Sometimes the earning ability of an autonomous
agency is too small in comparison with its spending require-
ments. Such was the case of the Viet-Nam Press, the
National Institute of Oceanography, the University of Saigon,
and the National Radio. In 1959, the National Institute of
Oceanography, the University of Saigon, and the National
Radio ceased to be autonomous agencies and were respectively
integrated into the Department of Public Werks, the Depart-
ment of Education and the Department of Information. This
seems to show that the ability to earn revenues of its own
sufficient to balance its budget without continuously asking
for subsidies from the national budget is often an important
factor in the establishment and the validity of an autonomous
agency. A number of agencies are chiefly supported by
specific taxes such as the tax on entertainment collected
for the National Orphanage, the tax on loading and unloading
of ships collected for the Port of Saigon and the Port of

 

- 118 -

Da-Nang Authorities, and the surtax on electricity con-
sumption collected for the Electrical Re-equipment Office.
The earning ability of these agencies is secured by special
taxes, therefore, their budgets can be balanced without
subsidies from the national budget; thereafter they are in
a relatively more stable situation. Indeed, according to
Assemblyman Pham Van Thung, an agency cannot be autonomous
and at the same time receive subsidies from the national
budget '/. This view seems a little extreme but it reflects
the tendency of the Vietnamese legislature to question the
legitimacy of an autonomous agency whenever subsidies to
autonomous budgets are voted on in the National Assembly.
This tendency is all the more justified because the budget
of an autonomous agency is not submitted to the National
Assembly for authorization; legislators in other countries
as well as in Viet-Nam have criticized it as the following
remarks by Congressman Wittington from Mississippi might
suggest: 2/
Authorities contemplate uncontrolled bureau-
cracy that leads to irresponsible bureau-
cracy. Authorities are the dream of bureau-
crats. They involve the establishment of a

super-agency responsible to no one but it-
self.

‘A

(1) Cong-Bao Viet-Nam Copg-Hoa, Vol. , No. 3QH. p.

(2) Selznick, r., 11A and the Grass Roots, University of
California Press, Berke ey, 1 , p. .

- 119 -

4. The Expra-Buggetapy Accounts:
a- Characteristics of Extra-Budgetapy Accounps:

Extra-budgetary accounts, entrusted to cabinet members or
high ranking officials, can be likened to revolving fund
accounts or accounts which receive earmarked revenues 1/.
They are supported not by revenues from the national budget
but by extraebudgetary revenues, the collection of which is
under the jurisdiction of the administration which decides
who pays how much. Certain autonomous agencies, such as
the Nong-Son Coal Mine Authority end the Retirement Fund
Administration may have extra-budgetary accounts.

The following accounts are entrusted to the
Secretary of Finance: the Coal Stock Account, the National
Economic Stabilization Account, the Rebels' Assets Con-
fiscation Account (following the civil war of 1955), and
the Enemies' Assets Confiscation Account dealing with pro-
perties illegally appropriated by the Japanese expeditionary
force during the period 1940-1945.

The following accounts are assigned to the
Secretary of Economy: the Rice Stock Account, the Loans to
Small Businessmen Account and the Compensation of Exported
and Imported Merchandise Account.

The following accounts are assigned to the

 

(1) Snyder, W. W., et al, An Analpsis of Revenues and E;-
penditures of Vietnamese Governmental ggencies Havipg Budggt
Auponppy Eiscal Yes; 125 , National Institute of Ad-

ministration, Saigon 1957. p. 48.

-120-

Secretary of Agriculture: the Chemical Fertilizers Account,
the Development of Sugar Cane Plantations Account, and the
Development of Jute Plantations Account.

The following accounts are managed by the
Secretary of Public W0rks: the Special Public W0rks Account,
and the Protection of Road and River Transportation Account.

The above classification is indicative rather
than eXhaustive. Since the number of accounts varies from
one year to another, an exhaustive study is impossible
without yearly revision. The authorizing officer is gener-
ally a cabinet member or a director general. The purpose
of an account can be economic, financial, or administrative.
Most of the accounts with an economic purpose are entrusted
to the Secretary of Economy and the Secretary of Agriculture
because agriculture is the first target of the Five Year
Plan. Mast of the accounts with a financial purpose are
entrusted to the Secretary of Finance, and other depart-
ments have most of the administrative accounts.

An extra-budgetary account is generally created
by a Presidential Decree. The decree also appoints an
authorizing officer for all expenditures of the account,
and specifies its sources of revenues and the kind of ex-
penditures the authorizing officer can make. This is to
prevent abuses and to provide a ground for control. All
expenditures must be submitted to the review of the General
Directorate of Budget and Foreign Aid. An account cannot

- 121 -

receive annual subsidies from the national budget but can
receive a working capital fund in order to start; it follows
that there must be no account deficit.

b- Account Eboeipts and Egpenditures: Receipts
of an account can be: (1) a tax in the case of the Compen-
sation of Exported and Imported Merchandise Account and the
Protection of Road and River Transportation Account; the
former'benefits from an additional tax on certain imported
merchandise while the latter receives an additional tax on
the circulation of cars and boats; (2) a working capital
fund given by the national budget as in the case of the
Development of Cane Sugar Plantations Account and the
Special Public Works Account; (3) a contribution from an-
other account especially from the Compensation of Exported
and Imported Merchandise Account as in the case of the Ex-
ploitation of Nong-Son Coal Mine Account, the Development
of My-An Area Account, the Development of Jute Plantations
Account and the Stabilization of Pork Price Account; (4) a
gift from the American Economic Aid as in the Rehabilitation
of Cal-San Account, the Aid to Refugees Account, and the
Publication and Sale of Text Books Account; (5) revenues
from the confiscation of rebels' assets, Japanese assets,
unclaimed properties, and wrecks; (6) revenues from the
sale of goods given by a friendly country as in the case of
the Coal Stock Account which received 30,000 metric tons of
coal from the American Aid and the Chemical Fertilizers

-122-

Account which received fertilizers from the American Aid.

In 1957, the three accounts having the greatest
receipts were: the Compensation of Exported and Imported
Merchandise Account with total receipts of 364,107,000 VNS,
the Vietnamese International Committee for Armistice Con-
trol Account with total receipts of 46,685,000 VN3, and
the Retirement Fund Administration Account with total re-
ceipts of 269,877,000 VN8. The Aid to Refugees Account
which occupied the top position in 1956 with total receipts
of 383,069,000 VN3 dropped to the fifth position in 1957
with a total revenue of 24,582,000 VNS. The total receipts
of all extra budgetary accounts in 1957 amounted to
approximately 843,351,000 VN$ 1/.

Expenditures from such accounts can be for such
things as: (1) the purchase of pigs, salt or rice by the
government in order to stabilize the supply of these
essential commodities in the market; (2) the financing of
economic programs such as the rehabilitation of My-An, Cai-
San, the development of cane sugar plantations, Jute
plantations and the reforestation of mountains; (3) the
financing of social programs such as refugee settlement,
land reform, and retirement benefits.

In 1957, the three accounts having the greatest

total expenditures were the Retirement Fund Administration

 

(I) Nghiem-Dang, Cac Van-De Ngan-Sach Viet-Ngm,‘van~Loi,
Saigon 1959, p. 111.

 

- 123 -

Account with a total expenditure of 137,649,000 VN$, the
Rice Stock Account with a total expenditure of 60,000,000
VN8, and the Coal Stock Account with a total expenditure of
46,510,000 VNS. The total expenditure of all extra budgetary
accounts in 1957 amounted to approximately 398,372,000 VN3.
There was a surplus of about 444,980,000 VN$ L/.

In the case of departmental agencies spending
within the limit of budget authorizations, unexpended money
at the end of the year often gives the impression that more
money than needed has been asked for and money allotted to
them can be diminished the next fiscal year. It follows
that they may tend to spend unnecessarily in order to avoid
this threat to their "security." The creation of extra-
budgetary accounts permits the government to avoid such an
effect. However, including an agency's expenditures in the
budget obliges it to plan its program of actions realistic-
ally under pain of being short of money at the end of the
year if expenditures are under-estimated, or of obtaining
less funds the next year if expenditures are over-estimated.
This motivation is not so strongly felt in the case of an
extra-budgetary account. Furthermore, money in extra-
budgetary accounts falls outside the control of legislative
policy making, thus reducing the scope of legislative

action.

 

(1) Nghiem-Dang, Cac Van-2e Ngan-Sash Viet-Nam, Van-Lei,
Saigon 1959, p. 111.

- 124 ~

The extraebudgetary character of extra-budgetary
accounts gives rise to the following remark from the MSUG t/.

The budget document should be comprehensive.

It should reveal the entire financial condi-

tion of the government and the total work

program for the present and future fiscal
period. It should show all revenues regard-
less of source and all actual and proposed
expenditures for every major purpose from

all funds.

However, one of the major reasons for opening an
extra budgetary account is the impossibility in certain
instances to predict how much money is to be spent for a
program in a given year. For example, Decree No. 881
TTP/NSNV of May 20, 1958, transferred a sum of 190,000,000
VN3 from the budget of 1957 to an extra-budgetary account to
carry out special public works, the completion of which can-
not be predicted because of political reasons. If the
Vietnamese legislature could authorize the program in a no-
year appropriation act, the need for opening an extra-
budgetary account would not be so strongly felt. In the
second place, such programs as the aid to refugees had been
the object of an extra budgetary account because the amount
of money to be spent for it could not be predicted. If the
Vietnamese legislature in like circumstances could authorize

the program in an annual indefinite appropriation act it

would be possible to include the program in the national

(1) Fishel, w. R., et a1, Budgetagz Administration in Viet-
Ngg, MSUG, Saigon 1957, p. 17.

-125-

budget. Since the only type of appropriation act that the
Vietnamese legislature is so far used to is the annual and
definite type, extraebudgetary accounts are means used by
the executive to overcome such limitations.

In the U.S., in addition to the annual and de-
finite type of appropriation, Congress can enact.according
to the circumstances, a multiple year, no year, permanent,
or indefinite appropriation. This complicated pattern of
congressional discretion leads necessarily to lack of
synchronization in budget authorizations. The U.S. budget
cannot be authorized as a whole by the Congress. It is
rather a series of executive proposals authorized by Congress
one by one for different periods of time, while the Viet-
namese budget is a single act of legislation authorized by
the National Assembly for a single period of one year. If
this practice does not fit certain programs that have to be
carried out by means of extra budgetary accounts, it at
least simplifies to a great extent the process of preparing,
authorizing, and executing the national budget, and permits
the legislature to authorize the national budget in a compre-
hensive spirit, an advantage that the U.S. does not have as
the following passage from Burkhead might suggest:

In the federal government the Congress does
not examine the budget as a whole; revenues
are authorized at a different point in time
than appropriations; the budget is enacted
piecemeal. The budget is never a single

project of law," but a series of executive
proposals, whichmust then be translated

--126-

into specific appropriation acts, whose

summation may or may not be related to the

enactment of revenue legislation. In fact,
the failure to look at the aggregates, to
achieve the overall view, is usually said

to be a major weakness in United States

budget practice.

In a word, extra budgetary accounts in Viet-Nam
fulfill the function of taking out of the national budget
programs that have to be authorized by multiple year, no
year, permanent or indefinite appropriations. They involve
advantages and disadvantages but their choice is no less
than the commitment of the Vietnamese government to one of

the different and conflicting fiscal philosophies.

C A P E F O

SPECIALIZED BUDGET PROBLEMS

1, The General Directorate of Budget and Foreign Aid:
a- Prior to 1251: The responsibilities presently

entrusted to the General Directorate of Budget and Foreign
Aid were formerly distributed among three different agencies:
(1) the Budget Directorate, (2) the General Directorate of
Foreign Aid, and (3) the Directorate of Obligation Control.

The Budget Directorate was an agency within the
Department of Finance and was transferred into the Executive
Office of the President in 1955. The General Directorate of
Foreign Aid was first established in 1950 as an agency with-
in the Department of Public Werks. It was transferred to
the Department of Finance in 1952 and to the Department of
Planning and Reconstruction in 1955, but an executive order
of the same year returned it to the Department of Finance.
The Directorate of Obligation Control was a part of the
Department of Finance.

Executive Order No. 732 TTP/VP of April 24,
1957, consolidated these three agencies into the General
Directorate of Budget and Foreign Aid which was reorganized
the next year into an agency composed of: (1) an Admini-
strative Service, (2) a Corps of Experts under the direct

supervision of the Director General, (3) the Directorate of

- 127 -

- 128 -

Program and Planning, (4) the Directorate of Obligation
Control, (5) the Central Purchasing Agency.
b- The Administrative Service and the Cogpg of

e ts: The Administrative Service is composed of two
sections, the Administrative Section and the Correspondence
Section. The Administrative Section performs such auxiliary
services as accounting, maintenance, filing, etc. The
Correspondence Section performs such works as typing, re-
cording, mailing of letters, etc.

The Corps of Experts is composed of:

(1) The Budget Preparation Division with two
sections, the Budget Section and the Legislative Reference
Section. Its general responsibility is to prepare the bud-
get after gathering information from different agencies and
to study the impact of administrative measures upon the
budget.

(2) The Financial and Economic Studies Division,
responsible for the adjustment of budget policy to the
general economic and financial situation of the country.

(3) The Organization and Methods Division, which
studies and evaluates the division of work in different
agencies in its structural and functional aspects with a
view to increasing economy and efficiency in the business
of governing. For example, it standardizes the design and

use of forms, seeks to improve accounting procedures in the

liquidating, controlling and central accounting agencies,

~ 129 *

studies methods of codification in collaboration with the
National Institute of Statistics, etc.

(4) The IBM Division, which performs all kinds
of work, not merely accounting, which can be performed by
IBM within the General Directorate.

c- The Directorate of Pregram and Planning:

Its responsibility is to supervise the execution of the
central, local, and autonomous budgets and the foreign aid
program, to determine the allotments granted to different
agencies, and to examine applications for funds. It is
composed of:

(1) The Service of Coordination which is divided
into two sections, the Section of Research and Analysis of
Accounting Reports which centralizes the monthly accounting
reports from different agencies, and the Section of Program
Centralization which decides whether or not a program needs
more funds, compares statistics from various agencies, and
arranges for the exchange of information on budgeting between
various agencies, etc.

(2) The Corps of Budget Examiners who collaborate
with the experts in preparing the budget and supervise the
execution of different budgets. There are two kinds of
budget examiners, the administrative examiners specialized
in administrative expenditures and the technical examiners
specialized in technical expenditures. They divide the

work between them as follows:

-130-

Three administrative examiners for the expendi-
tures of the Executive Office of the President, the Depart—
ment of Foreign Affairs, the Department of Interior and the
Department of Justice; one administrative examiner for the
expenditures of the Department of Finance and the Depart-
ment of Economy; one technical examiner and one administrative
examiner for the expenditures of the Department of Agriculture,
the Department of Land Reform, and the General Commissariat
for Land Reclamation; one technical examiner for the expendi-
tures of the Department of Public Wbrks and the General
Directorate of Reconstruction; and two administrative ex-
aminers for the expenditures of the Department of Education,
the Department of Labor, the Department of Health, and the
Department of Information and Youth.

(3) Four (field) divisions of Budget and Foreign
Aid responsible for the control of obligations in the pro-
vinces. They also assist provinces in the preparation of

their‘budgets.

d- The Directorate of Obligation Control and the
Central Purchasing Agency: The Directorate of Obligation

Control Eontrols the expenditures and centralizes the ac-

 

counting of the national budget and the extra'budgetary ac-
counts. It is composed of a Corps of Controllers and a
Service of Accounting. The controllers divide the work
between them as follows:

One controller for expenditures beyond 100,000

- 131 -

VHS, which cannot be made without a call for bids or an ad-
judication; one controller for civil and military personnel
expenditures; and two controllers for other kinds of ex-
penditures. The Service of Accounting is composed of the
Obligation and Liquidation Section, the working Capital
Funds Section, and the Statistics Section. It is in close
relation with the IBM Division for machine accounting.

The Central Purchasing Agency was formerly an
autonomous agency, its autonomous budget supported by Com-
missions on purchases. It has been absorbed by the General

Directorate of Budget and Foreign Aid.

ORGANIZATION CHART

'Director

jGeneralJ
Y 1 .
1Administrative
LService
‘Directorate 1 iCorps OQLCentral : ‘Directorate
‘of Obligation ‘Experts ‘Purchasing of Program
Control 1 ifiAgency land Planning1

1 ' ‘ I ‘” ' ‘ .

,,,L , T i I . 1 1.. i 'fr ,nflj
Corps Service IBM Budget Financial 0&M Corpsl Service
of = of 1 'Prepara— and Econ-1 E of ‘1of 1
‘ControI1Account tion 1 omic w 1 Budget Coordi-i
lers ling 1 1 14 HStudies 1‘1 ‘; lExam- \‘nation
n__l._'L_r_ , , 1 1.41 ,. .-in- 11L; ;_1ne.rs_._ -

 

2, The Introduction of Machine Aggounting:

Machine accounting was used first for the adminis-

tration of foreign aid. When the Director General of Foreign

-132—

Aid was appointed Director General of Budget and Foreign
Aid in 1957, he decided to introduce machine accounting
into budgetary operations.

a- Characteristics of Machine Accounting:

Machine accounting is based on the general principle that a
hole in a card can establish a contact in an electrical
circuit, put into action an electro-magnet, and perform a
given operation. Such a method is limited by the inertia
of mechanical contacts and can be improved by the use of
electronic tubes. Inertia can be greatly reduced when
mechanical contacts are replaced by an electro-static
mechanism. Viet-Nam is using an electro-mechanical machine
but is planning to use an electronic machine.

Since a hole in a card can operate a machine, the
first thing to do is to translate accounting data into code
numbers and to translate code numbers into holes in a card.
The card has eighty columns and ten lines representing the
ten digits 1/; each digit is translated by a hole in the
corresponding line. In order to translate letters into
holes, two additional lines are added at the top of the
card; a letter is translated by two holes on the same
column, one hole in the additional line and the other in
one of the lines below.

In order to make holes in a card perforators are

 

(1) Cherry, C., On Human Communication, J. Wiley, New York,
1959. p. 34.

 

 

-133-

used. They look like typewriters but make holes instead of
letters. In order to check the accuracy of these holes,
verifiers are used; the Operator types a second time on the
verifier What is supposed to be inscribed in a card by the
first typing on the perforator. If there is any discrepancy
between the two typings a red light appears, indicating to
the Operator that corrections are necessary. Selectors are
used to sort out all cards of the same class, that is, hav-
ing certain common characteristics. Tabulators are used to
translate the holes in the cards into digits and letters
again. Adders are used to add up figures inscribed in a
certain number of cards of the same class. Cards can be
reproduced quickly by copying machines.

The machines are rented to the Vietnamese govern-
ment by the IBM Company. A deposit of 1,570,769 VN$ with
the Company must be made. Operating costs amount to about
400,000 VNS a month, and training costs amount to nearly
165,000 VN$ a year 1/.

b;gProblems Arising with Machine Accounting: The

first problem to arise was doubt vis a vis anything new and

 

untraditional; also the deposit and the cost of training and
operation were considered high in view of the number of

civil servants one could hire to do the work of the machine.

 

(1) Montgomery, J. D., Cases in Vietnamese Administration,
National Institute of Administration, Saigon 1959, p. 26.

-134-

The necessity of coding every expenditure, of filling new
forms, and of supplying additional copies of the monthly
accounting report creates problems for the spending agencies.
A state of unpreparedness in a new situation caused some
delay at the beginning. Management was placed before a
dilemma, whether to make a swift change or a gradual one.
The swifter the change the stronger the reaction, but a
gradual change would be incompatible with the capacity of
the machines which would function uneconomically if not
enough work was given to them. Management decided to make
a swift change. Even in the present state of affairs the
machines are capable of doing more work than needed and
many projects of research in statistics, economics, taxation
have been envisaged in order to give full employment to the
machines.

The main advantage of the machines is the swift-
ness with which data are processed, therefore, creating the
possibility of obtaining the needed information in a short

lapse of time.

2. The Foreign Aid Administration:
a- Introduction: Foreign Aid has helped Viet-Nam

 

recover from a succession of devastations since 1940. As
the result of an agreement between the French and the
Japanese, all expenditures of the Japanese expeditionary

forces in Viet-Nam were to be borne by the Vietnamese

-135-

people. Food, housing, means of transportation, and many
other national resources were requisitioned for the Japan-
ese. More and more paper money was printed to pay for
their expenditures, causing a monstrous inflation. The
requisition of means of transportation rendered impossible
the transportation of rice from the South to the North and
coal from the Nerth to the South. People in the South used
rice as fuel and people in the NOrth died of starvation by
thousands. The withdrawal of the French expeditionary
corps after the Geneva Agreement deprived the Vietnamese
government of a sizeable source of foreign currency and
caused an estimated 50,000 employees to be out of work.
While the communist camp enjoyed peace and reconstruction
after five years of all out and merciless war, the national-
ist camp began its career of self rule in an atmosphere of
crisis. The American aid was a economic substitute to the
French expeditionary corps. The two camps compete with
each other in a race not unlike that between the U.S. and
Russia. Each competitor is sponsored by a specific kind
of foreign aid in order to leave the other behind 1/.
Viet-Nam receives aid from many countries, such

as the U.S., France, West Germany, Japan, and the member

(1) Ho's Success Story. W. July 16. 1955. p.
210.

Ho's Begging Bowl, The Economist, July 2, 1955, p. 18,
dealing with the communist aid to the North.

 

-136-

nations of the Colombo Plan, but aid from the U.S. is the
most important of all and represents about ninety per cent
of the total aid. Budget receipts in 1955 were approxi-
mately fifteen billion piasters of which foreign aid
amounted to approximately eight billion piasters or fifty-
two per cent of the total budget receipt. Moreover, more
than two billion of foreign aid was received outside of
budgetary channels. Customs duties were not included in
the above mentioned eight billion piasters of foreign aid,
although most of them were paid to the government by im-
porters who imported commodities through foreign aid. It
is not an exaggeration to say that more than forty per
cent of the Vietnamese budget expenditures depend on the
American foreign aid program prepared and authorized in the
U.S., through the executive and legislative process of that
country. A study of the Vietnamese budget would not be
complete if the mechanism of American aid was not clarified.

b- American Aid Procedures: The American aid can
be divided into two kinds: the direct aid and the commer-
cial aid. In direct aid, gifts are transferred from the
American government to the Vietnamese people without further
ado. In the commercial aid the equivalent of the aid in
piasters is deposited in a "counterpart" fund by Viet-
namese importers. The use of the counterpart fund is sub-
ject to agreement between the U.S. and the Vietnamese

government. The question of what is to be imported is

-137-

dealt with on the Vietnamese side by the National Council
of Fbreign Aid, on the American side by the International
Cooperation Administration (ICA), and only those goods that
ICA is willing to give and Viet-fiam to receive can be im-
ported. As a general rule, ICA is against the import of
deluxe products probably on the grounds that a people who
receive aid cannot afford to live in luxury; on the other
hand, Viet-Nam is against the receiving of products Which
may compete with her nascent industries.

When an agreement is reached, a purchase author-
ization is issued by the U.S. Overseas Mission or USOM,
the representative of ICA in Viet-Nam. The purchase author-
ization enables the Vietnamese government to look for im-
porters. The latter must deposit in the counterpart fund a
number of piasters equivalent to the price of the imported
products. For example, if the CIF price of the imported
product is one U.S.8, the Vietnamese importer must deposit
in the counterpart fund 35 VN3. The same purchase author-
ization enables the ICA to release from the foreign aid fund
the dollars to pay for the goods; this is done only when
Vietnamese importers have deposited piasters in the counter-
part fund. Sometimes, in order to speed up the operations,
the Vietnamese National Bank can direct the payment through
its representative in the U.S., the Chase Manhattan Bank of
New York, and obtain a refund from ICA later (procedure A).
Most of the time, ICA, upon request of the National Bank of

- 138 -

Viet-Nam, issues a letter of commitment promising to refund
a given bank for its advance to pay for the goods (procedure
B). The foreign aid fund can be used to buy goods outside
the U.S. provided that prices are lower than in the U.S.
and transportation is by American ships. Products imported
from France can be paid in francs (French currency) from
the American reserve of francs ("Triangular Franc" Pro-
cedure).

The program of aid to Viet-Nam is elaborated in
Washington according to the ICA.program cycle, in coordi-
nation with the U.S. budget cycle. For example, from April
to June, 1958, the National Security Council, the Budget
Bureau and other policy agencies worked tOgether to plan
foreign aid policies and guidelines which, when enacted
into legislation, would be followed by ICA and taken into
account by Viet-Nam in their joint decisions upon what to
import and how to spend money from the counterpart fund.
Decisions on policy were worked out from June to September,
1958, and submitted to reviews in Washington by different
U.S. policy and technical agencies. These reviews took
place from around September to December, 1958. The Presi-
dent's program was issued in the period December, 1958 to
February, 1959, and submitted to congressional review and
legislative action from February, 1959, to August, 1959.
Out of congressional action stemmed an operational program

that could be implemented. Thus, programs planned by USOM

- 139 -

in June, 1958, may be implemented only in August, 1959,
fifteen months after initiation 1/. The time taken by USOM
and the Vietnamese government to work out a program is
generally from six months to one year.

USOM and government agencies of Viet-Nam.work to-
gether in order to establish a certain number of Project
Proposals and Approvals (PPA's). After review by the ICA,
a certain number of Project Agreements (Pro-Age) are worked
out. These Pro-Age serve as the basis for Project Imple-
mentation Orders (PIO's). For example, a PIO/T permits
Viet-Nam to sign a contract with an American University
which provides her with technicians, a PIG/C permits Viet-
Nam to buy commodities, a PIO/P permits Viet-Nam to send
participants to be trained in a given country, etc. Since
the develOpment of Pro-Ags takes time, and certain actions
must be taken quickly, it is possible to obtain some funds
through non-project aid. As the aid procedure becomes more
and more familiar to Viet-Nam and as the emergency period
passes, the percentage of project aid in total aid increases
gradually. That percentage increased from six per cent in
1953 to forty-two per cent in 1957 for the whole U.S. foreign

aid program.

The use of the counterpart fund in Viet-Nam is

 

(1) Hughes, A., Lecture on ICA Program Cycle, Viet-Nam
Project, msu, 195 . p. A-5-

- 140 -

controlled by USOM, which makes monthly releases of funds
to implement specific programs. The General Directorate
of Budget and Foreign Aid communicates to USOM monthly re-
ports on the accounting progress of different programs.
After studying these reports USOM sends reports to release
to the General Directorate of Budget and Foreign Aid which
issues receipt orders to the Treasury, enabling the latter
to receive money from the counterpart fund and to pay for
the expenditures of the programs 1/.

c- Observations: Generally speaking, the counter-
part fund provides the government with an effective means
to realize its program of developing the country economically
but some minor problems are raised by the nature of the
fund itself. These problems can be solved if the government
is aware of them.

Politically speaking, the present procedure for
using the counterpart fund gives the government a source of
revenue independent from the people. Through budget
authorization, the people originally decide how much they
will pay to run the government. So long as the government
spends "American money" and not theirs, the power of the
purse string of their representatives in the Assembly loses
most of its raison d'etre. That power may be shifted to

USOM which delivers purchase authorizations and releases

M ____

(1) Nghiem Dang, Tai-Chinh-Hoc Dan-gnong, Hoc-Vien Quoc-
Gia Hanh-Chanh, Saigon 1957, p. 230.

-141-

money from the counterpart fund to be used in developmental
programs. Foreign interference in internal politics is
often the greatest misfortune a small nation can endure 1/.
The exploitation of internal dissension by foreign powers
to achieve their own aims can be made easy if the latter
already have organizations in the country. Easy money and
material flowing from a foreign country can make some people
rich, not by the fruit of industry and virtue but by
ambition, pride and wickedness.

On the other hand, the habit of living at the
expense of another country is incompatible with national
dignity. God has provided every creature from the protozoan
to the mammal with means of living by itself. The species
that lives dependent on another is either a parasitic or
a domesticated species. This can be avoided if the "aid" to
Viet-Nam is considered as contributions from allied
countries for the common defiense but not as dole or mercen-
ary pay.

From the social point of view, the way in which
the counterpart fund is built up gives the Vietnamese people
a taste for foreign goods. They develop a need for such
thing as nylon, dacron, orlon, tourist cars, air condition-

ers, tape recorders, etc., things that they are unable to

 

(1) Machiavel, Le Prince, Classiques Garnier, Paris, 1955,
pp. 86 ff.

 

-142-

produce. If the government forbad the importation of these
goods, the counterpart fund would decrease and the govern-
ment would be in need of money. J. J. Rousseau had pointed
out that the interdependence among men may change into sub-
servience if it goes to the extent that a man cannot do
without another 1/. What is true in the relationship among
individuals is twice as true in the relationship between
nations. The opinion of Rousseau, overstated as it is, con-
tains a basic truth that, applied to foreign aid problems,
can be stated as follows:

The abuse of foreign aid can render a people un-
able to get on their own feet; they might be obliged to be
always waiting for the approval of a foreign power. They
might have the control of nothing, and having no control
over economic or cultural matters, they might lose at the
same time their power of bargaining vis-a-vis the nation
that holds the purse strings. In the present pattern of
international COOperation, a nation can be an end in itself
or merely a means, a pawn on the international chessboard,
susceptible of being sacrificed at any moment to the interest
of bigger nations.

From the economic point of view, the counterpart

fund permits the government to manage the economy of the

h

(1) Rousseau, J. J., Discours Sur l'Ori ine de l'Ine alite
Parmi les Hommes, Classiques Garnier, Paris 1954, p. 65.

- 143 -

country directly, creating more and more government enter-
prises. This situation has not been tolerated in the U.S. a/
However, government enterprises in Viet-Nam are
not condemned to perish insofar as competition with other
countries and with Communist North Viet-Nam can replace
competition within the country. Personal ambition and
esprit de corps can replace profit seeking. The effort
to be a stakhanovite, to gain general recognition, and to
render service to the nation are among personal ambitions.
The desire to work as a member of a group, to promote its
welfare, and to defend its reputation are among the factors
that characterize the esprit de corps. The promotion of
good employees to higher positions can be as effective an
inducement in government enterprises as it used to be in

private enterprises.

4. The MSQG Recommendations:
a- Introduction: The Michigan State University

Advisory Group, in virtue of a contract signed between the
Vietnamese Government and M.S.U., made a report to the

President and Cabinet of the Republic of Viet-Nam in March,
1957 entitled "Budgetary Administration in Viet-Nam." The

authors of that report were Messrs. Wesley R. Fishel,

(1) Stein, H., The Reconversion Controversy, Publig

Administration and Policy Development, Harcourt, New York,
1952, pp. 215 ff.

- 144

Chief Advisor; Marvin Murphy, Budget Specialist; Richard
Lindholm, Taxation Specialist; Robert Swanson, Accounting
Specialist; Mayne Snyder, Statistics Specialist; and David
Cole, Economics Specialist. Technical advice and consul-
tation were provided by staff members of the General
Directorate of Budget and Foreign Aid.

The report proper had only twenty-six pages; it
was put in a concise and positive form summarizing the
fruit of twenty months of research done by the M.S.U.
personnel in Viet-Nam and making use of such works as the
"Report on the Budgetary Process in the Government of Viet-
Nam" By L. C. Shepherd, Budget and Accounting Advisor USOM,
ICA.Manila.

In the field of taxation and revenue collection
the major points made by the committee were: the government
failed to collect most of the taxes, the amount of tax to
be paid was difficult to determine, statistical information
about taxes was lacking, the cost of tax collection was
relatively too high, and the implementation of tax regu-
lations differed from one locality to another.

In the field of budget formulation the committee
pointed out a number of defects, especially: an inadequate
system of budget classification rendered it difficult to
gather information for the President to determine his'budget
policy; specific policy guidance was lacking; certain
agencies, in making budget requests, did not state

-145-

expenditures in terms of goal and programs; in order to
avoid using the term deficit the government used such terms
as "drawing from cash reserve" or "receipt from advances;"
the autonomous budgets were not included in the national
budget; no data on past budgets and no summary of receipts
and expenditures was available in the budget document.

In the field of budget execution and control they
criticized especially the delay in making expenditures, the
difficulty in holding administrators responsible, the lack
of confidence in the government by those who dealt with it,
and the high price the government had to pay for goods and
services because of that lack of confidence. Their major
proposals were to train more budget specialists; to dele-
gate more authority to Operating agencies; to devise an
allotment system; to centralize the accounting work into a
single Central Accounting Agency; to simplify the expendi-
ture procedure limiting the jurisdiction of obligation
control to the availability of unobligated funds, giving
more discretionary power to operating agencies in the
choice of suppliers, eliminating the second pro-audit by
the Directorate of Obligation Control and the third pre-
audit by the Treasury; to improve the budgetary control
reporting system by requiring the spending agencies to
submit monthly reports to the General Directorate of Budget
and Foreign Aid; tb cut out duplication in accounting by
eliminating part of the accounting work of the Treasury;

- 146 -

to transfer the function of custody and disbursement of
government funds from the Treasury to the National Bank of
Viet-Nam; to create a Post Audit Agency responsible to the
National Assembly; to create a Central Purchasing Agency;
to reorganize the relationship between the national and
provincial budgets along either one of these lines: (1) To
render provincial budgets completely autonomous and inde-
pendent from the national budget, (2) to subsidize pro-
vincial budgets with firm and limited subventions instead
of making advances from the Treasury available to them, (3)
to subsidize the entire provincial budgets with national
funds, (4) to abolish provincial budgets.

b- Observations: (1) The MSUG recommendations
were written by a group of specialists from many fields.
Their purpose was to devise a system with full consider-
ation of the socio-political conditions in Viet-Nam as the
following passage might indicate:

The budget system we propose is not the

American system, the French system, the

English system, or any other national

system. It is a system we have designed

to meet the need of Viet-Nam. (Page 10.)

If you want to change the present system,

we will help you install any method you

may choose (concluding exhortation).

(2) In their proposed organization of the General
Directorate of Budget and Fbreign Aid (page 18) they elimi-
nated the Directorate of Obligation Control from the organi-

zation and urged the enactment of a "budgeting, accounting,

-147-

and auditing law to govern administrative procedures in the
area of fiscal administration." They thus ran counter to
the Vietnamese traditional system of having the Directorate
of Obligation Control within the General Directorate of
Budget and Foreign Aid and wished that agency to be based
on a budgeting, accounting, and auditing law possibly like
the GAO in the U.S. No mention was made of the Decree of
December 30, 1912.

(3) The Post Audit Agency had been intended, when
established, to be part of the judiciary like the Cour des
Comptes in France. The MSUG recommended that it be
responsible to the legislature as in the American system.

At present the Directorate of Obligation Control continues
to be a part of the General Directorate of Budget and
Foreign Aid and the future Post Audit Agency is still in-
tended to be a part of the judiciary.

(4) Most of the recommendations on the proposed
organization were accepted. For example, the functions of
the Economic and Policy Development Section, the Organization
and Methods Section, the Legislative Reference Section, and
the Internal Office Management Section are now carried out
by a Corps of Experts in conformance with Decree No. 689
TTP/NSNV of April 21, 1958. The responsibilities of oper-
ating units such as National Defense, Public Works, Health,
etc., are assigned to a Corps of Budget Examiners by the

same decree.

- 143 -

(5) The criticisms pertaining to the provincial
budgets (pages 28 ff) were not made with full consideration
of the socio-political conditions in Viet-Nam. If receipts
were not entirely collected, it was not entirely due to the
defects of the budgetary system but also to the state of
social unrest in the country. People were then controlled
at the same time by two governments; one was mostly active
during the day, the other at night. The daytime government
was considered by many Vietnamese as created by the French.
This inferiority compbx was the basis of much corruption
and defection. On the other hand, the night time govern-
ment exercised a veritable terror among those who directly
or indirectly supported its rival. The province chiefs had
no choice but to do the best they could in collecting taxes.
Advances from the Treasury were to a certain extent justi-
fied by the urgent and necessary character of many expendi-
tures of a nation in war. Administrators were chosen not
on the basis of their administrative skill but of their
military skill and their determination to take risks.

(6) In the light of these socio-political condi-
tions, many a practice of budgetary administration under
criticism by the MSUG could be justified. The criticism of
too much emphasis on pro-audit (pagé 21) did not take into
account the use of special funds which permitted certain
administrators to spend without even reporting the object
of their expenditures. The special fund was probably one

-149-

of the major incentives for administrators to take the
responsibility and the risk. Also, the emphasis on pre-

audit was justified by the incompetence of administrators.

5. Budget Policy and National Recovegy:

One of the most apparent phenomena of the post-
war period throughout the world is the growth of the size of
governmental budgets. The economically advanced countries
develop their budget policies in order to have more security
and to spread their sphere of influence as far as possible.
The underdevelOped countries use the budget as a means of
speeding up their progress and solving their socio-
political problems. The particular situation in which
Viet-Nam is placed permits it to develop itself with the
objective of self determination by individuals, and se-
curing freedom from wants for all as a condition sine qua
non of political freedom.

In the field of economic development, great sums
of money are spent to encourage the exportation of rubber
and rice through the General Commissariat for Land
Development; public works are undertaken to repair the
damages of war, to irrigate more land, and to make more
rice fields out of marshes and areas previously invaded by
salt water; money is loaned to private businessmen, entre-
preneurs, farmers, and fishermen by such lending agencies

as the Commercial Credit, the Industrial Credit, and the

..150-

Agricultural Credit. Autonomous agencies are created with
budgets of their own and a business-like system of account-
ing in order to facilitate their freedom of action and to
permit the realization of their programs in a minimum of
time. The creation of extra—budgetary accounts permits the
government to speed up national recovery by using govern-
mental means in the exploitation of national resources.

Budget expenditures are also instrumental in
activating social reforms. The crucial problem of the
government in this domain is to help the population live a
decent life with a greater opportunity to better themselves
through education and artistic culture. Energetic campaigns
against malaria and illiteracy have been undertaken, more
schools and hospitals have been created, better houses have
been built by the government and sold to the population
with easy conditions of payment, more public fountains and
public recreation centers have been built in populated areas,
and the Special Commissariat for Community Development was
created to teach the people how to improve their conditions
of life.

The political program of the government is intended
to inspire faith in the citizens after so many years of
unsecurity, destruction, and despair. Faith in a future of
peace and order is necessary to reconstruct a new Viet-Nam
based on justice and freedom. The program is also to se-

cure the value of freedom by encouraging private property,

-151-

and to create a class of men who are happy to live with
their prOperties, willing to defend them as a guaranty of
their political freedom instead of embracing communism be-

cause they have nothing to lose but their chains.

C 0 N C L U S I O N

The general characteristic of budgetary admini-
stration in Viet-Nam today seems to be the predominance of
the executive power. This predominance is a vestige of the
pro-colonial regime of absolute monarchy and of the colonial
time when the executive power was practically in the hands
of a minority of Frenchmen considered ipso facto as a
privileged class, when the legislative power of the nation
was fragmented into four different assemblies the members
of which were either appointed by the executive power or
elected among a minority of opportunists, and when, even
in these conditions, these legislative bodies were given
only a consultative function in practice.

Today, the predominance of the executive power
can be seen in the president's power of modifying the bud~
get authorized by the National Assembly of automatically
putting one-fourth of his budget proposals into execution
if the legislature fails to authorize it before the fiscal
year begins and of vetoing specific items in the legis-
lative budget. The three-fourths majority in the National
Assembly required to overcome such a veto is the same as
that required to amend the Constitution. The predominance
of the executive power can also be seen in the multitude
of local and autonomous budgets. The local budgets are

not authorized by the local legislatures but by the

-152-

~153-

President or his Secretary of Interior. The autonomous
budgets accounting for about ten per cent of the total
government expenditure, are not submitted to the National
Assembly for authorization, but the most important of them
are authorized by the President, and the rest by his
Secretaries.

When the formality of presenting an expenditure
for legislative authorization and the necessity of spending
within the limit of budget authorization present a hindrance
to the executive function, the administration has the re-
source of opening an extra-budgetary account. Sometimes
the Decree creating an extra-budgetary account not only
stipulates how much money is to be spent for the purpose of
the account but also what taxes are to be levied in order
to support the account. And this, without going through
the legislative process.

The predominance of the executive power can also
be seen in the absence of a post-audit system. In the U.S.
the post-audit function is exercised by the legislature.

In France, the post-audit function is exercised by the
judiciary. In Viet-Nam the post-audit agency, when created,
will be a part of the judiciary, but so far, it is not yet
created leaving the administration free to exercise a
selective post audit limited to those officials whose ir-
regular activities happen to come to the attention of the

republican regime.

-154-

Such execution discretion would seem to foster
abuse and corruption had not the genius of the race invented
precautionary measures. One of the precautionary measures
is the unusual development of the pro-audit system composed
of three different steps, the first step through the
Directorate of Obligation Control, before the liquidation
of the expenditure, the second step through the same agency
after the liquidation of the expenditure, and the third
step through the Treasury before the disbursement of money.

Another precautionary measure is the institution-
alized pattern attached to such fiscal procedures as the
assessment of taxable properties, the call for bids, the
sale of public properties, etc. These procedures are so
minutely determined and involve so many persons and oper-
ations that an irregularity is likely to arouse a lot of
complications. Such a mechanism is specially calculated
to discourage the desire to swindle in most of the civil
servants.

The special status given to the obligation con-
trollers and the treasurers can be cited as a third pre-
cautionary measure. The system of checks and balances, so
far as fiscal management in Viet-Nam is concerned, does not
apply between the three main divisions of power (legis-
lative, executive, and judiciary), but does apply within
the executive power itself between the three orders of

Vietnamese Civil servants: administrators, controllers, and

-155-

treasurers.

The major liabilities of the system are the ex-
cessive delay in making an expenditure, the shift of
authority from the administrators responsible for program
implementation to the controllers and sometimes to the
treasurers, the duplication of accounting due to the plural
pro-audit system and the lack of post-audit.

Delay in making an expenditure not only slows
down the implementation of programs but also increases the
costs of programs because public contractors charge more if
they are not paid promptly. This liability ia,to a certain
extent, overcome by the use of petty cash, imprest cash,
revolving and special funds. The shift of authority from
operating to staff agencies can be overcome by the ability
of the administrators to requisition the treasurers. But
nothing has been done so far in regard to the duplication
of accounting due to the plural pre-audit system and the
lack of a post-audit system.

With a post-audit assigned to a "Cour des Comptes"
responsible to the Judiciary or a "General Accounting Office"
responsible to the National Assembly, the traditional pre-
dominance of the Vietnamese executive power in budgetary
matters can be partly counterbalanced, and most of the pre-
cautionary measures, made necessary by the lack of post-

audit and check upon the administration, can be simplified.

B I B L I O G R A P H I

Annual Conference on Cooperatives and Agricultural Credit
Held in Saigon, News From LViet-Nam, Vol. VI
(Feb. 1960) No. 3, Press and Information Service,
Vietnamese Embassy, Washington, D. C.

Banque Nationals Du Viet-Nam, Les Estimations du Revenu

National du Viet-Nam en 1956, Saigon 1958.

Bo Thong-Tin, Tong-Ket Thanh-Tich De-Nhi Chu-Nigg, Saigon
1957.

B0 Thong-Tin, gy-Niem De-Tam Chu-Nien Ngo- Tong-Thong Chap-
Chanh, Saigon 1958.

Bo Thong-Tin, Ihanh-Tich Bon Nam float-Dong Cua Chinh-Phu,
Saigon 1959.

Bo Noi-Vu, Hanh-Chanh Khao-Luan, tap III, 1959, pp. 21-38.
Bo Noi-Vu, Hanh-Chanh Khao-Luan, tap IV, 1959.

Bouinais A., et a1, La Cochinchine Contemporaine, Challamel
Aine, Paris 1 4.

*Brandstatter, A. F., et al, Report of the Special FOA
Mission From Michigan State College for Public
Administration Public InformationI Police Ad-
ministration and Public Finance and Economics,
Saigon 1954.

 

 

 

Browne, V. J., The Control of the Public Bud et, Public
Affairs Press, Washington, D. C., 19 9.

Burkhead, J., Government Bud etin , Wiley, New York, 1959.

Buttinger, J., The Smaller Dra on, F. A. Preager, New Yerk
1958.

Cherry, C., On Human Communication, J. Wiley, New York 1959.

Cole, D. C., et al, Summary of Village Finances in the South
Region of 1123-Nam, Saigon, October 1957.

*Cole, D. C., et al, Provincial and Logal Revenues in Viet-
Nam, MSUG, Saigon 1957.

- 155 -

-157—

Despuach. J-. W: Editions Des Deux
Rives, Paris 1953.

*Fishel, W. R., Field Admini tration in Viet-Nam A.Memo-
pandum Fpr The President, MSUG, Saigon 1956.

Fishel, W. F., et al, Budgetapy Administration in Viet-Nam,
MSUG, Saigon 1957.

*Fiahel, W. R., et al, Administration Organization in the
Province of My-Tho, MSUG, Saigon 1957.

Fishel, W. R., Fifth Report of the MSUG in Public Admini-

stration to the Govepppent of Viet-Nam, MSUG,
Saigon, June 30, 1957.

*General Directorate of Budget and FOreign Aid, General

Explanation of the National Budget of the Republic

of Viet-Nam for 1957 Fiscal Year, Saigon 1957.

 

General Directorate of Budget and Foreign Aid, National
Budget 1258, Saigon 1958.

General Directorate of Budget and Foreign Aid, National
Budget 1952, Saigon 1959.

General Directorate of Budget and Foreign Aid, Thu-Tue IE -
Hanh Ngan-Bach Quoc-Gia, Saigon 1958.

*Hoc-Vien Quoc-Gia Hanh-Chanh, Heat-Dong Tai-Chanh Cua Cac
Tinh-Hat Do-Thanh va Thi-Xa o Viet-Nam Tai-Khoa
1956, Saigon 1957.

Ho's Begging Bowl, The Economisp, Vol. 176, No. 18.
Ho's Success Story, The Economist, Vol. 176, pp. 210 ff.

*Hughes, A., Outline of Lecture on ICA Program Cycle and
Project Type Assistance, Viet-Nam Project 1958.

International COOperation Administration, Background {op
Mutual Securypy, Washington, D. C., December,
1955.

 

*International Cooperation Administration, Project Proposal

and Approval Summapy, Washington, D. C., December,
1955.

Key, V. 0., The Lack of a Budgetary Theory, American Politi-
cg; Sciepcg Revipw, 1940, pp. 1137 ff.

- 15g -
*Landers, F. M., Some Aspects of Modern Budget Administration,
MSUG, Saigon 1957.

Le Dinh Chan, et al, Ngan-Sach, Hoc-Vien Quoc-Gia Hanh-
Chanh, Saigon 1958.

Le Thanh Khoi, Le Viet-Nam, Editions de Minuit, Paris 1955.

Le Thuoc, Ngyen Cong Tru, Tan-Viet, Hanoi 1928.
Lindholm, R. W., Viet-Nam the First Five Years, An Internal

fi—L

Symposium, MSU Press, East Lansing 1959.

 

Machiavel, Le Prince, Classique Garnier, Paris 1955.

Mikesell, R. M., Qdernmental Accountipg, Richard D. Irvin,
Homewood, Illinois, 1953.

Montgomery, J. D., Cases in Vietnamese Administration, Saigon
1959.

Mosher, F. C., Program Budgetipg: Theory and Practice,
American Books-Stratford Press, New York 1954.

*MSUG, Report on the Study of General Directorate of Trea-
sury Department of ngance, MSUG, Saigon 1958.

*MSUG, A Proposed Budgetapy,Accounting_Procedures Manual
for the Republic of Viet-Nap, MSUG, Saigon 1957.

*Murphy, M. H., degetary_Administration, National Institute
of Administration, Saigon 1957.

*Murphy, M. H., A Budgetary andrgiscal System for the Pro-
ppsed Field Adminigtration Prggram, MSUG, Saigon

1956.

National Institute of Administration, Viet—Nam Govegnment
Organization Manual 1252-58, Saigon 1958.

Nghi-Dinh 513 TTP/NSNV ngay 18/3/1958 cho phep chuyen qua
Ngan-Sach Quoc-Gia tai khoa 1958 so kinh phi
1.000.000 S thuoc tai-khoa 1957 de xay cat cho
Di-Linh, Cong:BaopV;et-Nam Cogg-Hoa, 1958, pp.
1212 ff.

Nghi-Dinh 694 TTP/NSNV ngay 22/4/1958 phan-phoi cho cac co-
quan chinh-phu mot ngan-khoan 3.456.059.500 8 de
su-dung trong de-nhi tam ca nguyet 1958, Cong-Bao
gist-Nam Cong-Hoa, 1958, pp. 1855 ff.

-159-

Nghi-Dinh 881 TTP/NSNV ngay 20/5/1958 cho phep chuyen not
so kinh-phi 190.000.000 $ thuoc ngan—sach tai
khoa 1957 sang muc ngoai ngan-sach "Tai Khoan
de Thuc-Hien Cong-Tao Dac-Biet," Cong-Bao Viet-

Nam Cong-Hoa, 1958. pp. 2114 ff.

Nghi-Dinh 974 TTP/NSNV ngay 6/6/1958 cho phep sat nhap vao
Ngan-Bach Quoc-Gia tai khoa 1958 so tien cua
chuong-muc "Cung-thac Tai-san Quan Nghich" Cong-
Bao Viet-Nam Cong—Hoa, 1958, pp. 2218 ff.

Nghi-Dinh 689 TTP/NSNV ngay 21/4/58 to-chuo nha Tong-Gian-
Doc Ngan-Bach va Ngoai-Vien, Cong-Bao Vipt-Nam
Cong-Hoa, 1958, pp. 1739 ff.

Nghi-Dinh 44 TTP/NSNV sua doi dieu 66 Nghi-Dinh ngay
11/6/1925 thiet-lap Ngan-Sach tinh Nan-Phan,
Cong-Bao Viet-Nam ConggHga, 1958, pp. 284 ff.

Nghi-Dinh 7307 TTP/NSNV/CT/2A trien han Ngan-Sach Quoc-Gia
tai-khoa 1957 Chuong 25 Dieu 3 de hoan-thanh
nhung cong-tac thuoc nha Tong Glam Doc Bao an,
Cong-Bao Viet-Nap,ConggHoa, 1958, pp. 823 ff.

Nghi-Dinh 1 TTP/NSNV ngay 2/1/1959 tro cap cho Ngan-Bach
Do-thi va tinh-hat mam-phan, trung-nguyen va cao
nguyen trung-Phan (dot mot), angrBao Viet-Nam

Nghi-Dinh 20 TTP/NSNV ngay 12/1/1959 thiet-lap mot quy tru-
bi ben canh moi ngan-sach tinh, Cong-Bao Viet-Nam
Cong Hoa, 1959, pp. 311 ff.

Nghiem-Dang, Tai-Chinh-Hoc Dai-Cuong, Hoc-Vien Quoc-Gia
Hanh-Chanh, Saigon 1957.

Nghiem-Dang, Sppucture Adplnistrative et Fonctions deg
Sgrvices Financiers du Viet-Npm, Onzieme Congres
International des Sciences Administratives,
Wiesbaden, Septembre 1959.

Nghiem-Dang, Cac Van:Qe Ngan-Bach Viet-Nap,‘Van-Loi, Saigon
1959.

*Nguyen Xuan Dao, Village Government in Viet-Nam, MSUG,
Saigon 1958.

Rousseau, J. J., Discours Sur L'Origine de L'Inegalite
Parmi les Hommes, Classiques Garnier, Paris 1954.

- 160 -

*Salat, M., Role of an Electronic Computer in the Viet-Nam
Administration, Viet-Nam Project, MSU, East

Lansing 1957.

*Schiff, F. W., Monetary Reorganization and the Emergence

of Centr§;_Banking in South Viet-Nam, MSUG,
Saigon 1957.

 

 

*Snyder, W. W., Budgetapy and Fpnancial Administration in
Viet-Nam, MSUG, Saigon 1956f

*Snyder, W. W., et al, An Analysis of Government Pa ments
lp Viet-Nam Duripg 1955, MSUG, Saigon 195%.

Snyder, W. W., et al, An Analysis o§;Revepues and Expendi-
tures of Vietnamese Governmental Agencies Having
Budget Autonomy Fiscal Year 195 , MSUG, Saigon
1957.

*Snyder, W. W., Autonomous State Organizations, Governmenp

Enterppgses and Public Corporations of Viet-Nam,
MSUG, Saigon 1957.

 

 

*Snyder, W. W., A Comparison Q£TVietnamese Government
Revenues and Expenditures for Fiscal Years 1954,
1955 and 1955, MSUG, Saigon 1957.

Stein, H., Publgc Administration and Policy Development,
Harcourt, New York 1952s

Tran Trong Kim, Viet-Nam Su Luoc, Tan-Viet, Hanoi 1928.

White, L. D., Introduction to the Study of Public Adminis-
tration, The MacMillan Company, New York 1957.

* Mimeographed document of the Viet-Nam Project, MSU, East
Lansing.

APPENDIX I

ENGLISHI VIETNAMESE, FRENCH GLOSSARY

Administrative tutelage, giam-ho hanh-chanh, tutelle
administrative.

Advisor, bien-lai, conseiller.

Agricultural Credit, Quoc-Gia NOng-Tin Cuoc, Office du
Credit Agricola.

Aid to Refugees Account, Chuong-muc Cuu-tro Di-Cu, Compte
pour l'Aide aux Refugies.

Allotment, giai-toa kinh-phi, deblocage de fonds.
Annexed budget, ngan-sach phu-thuoc, budget auxiliaire.

Atomic Energy Office, Nguyen-tu-luc Cuoc, Office de l'Ener-
gie Atomique.

Authority, cuoc, establissement public.
Authorization, chuan-chi, ordonnancement.

Autonomous budget, ngan-sach tu-tri, budget autonome.
Basic salary, luong chinh-thuc, salaire de base.

Central Purchasing Agency, Tap-Trung Cong-Mai Vh, Bureau
Central d'Achat.

Chamber of Representatives of the PeOple, Phong Dan-Bieu,
Chambre des Representants du Peuple.

Chapter, chuong, chapitre.

Coal Stock Account, Chuong-MUc Kho Tru Than, Compte pour le
Stockage du Charbon.

Colonial Council, Hoi-Dong Thuoc-Dia, Conseil Colonial.

Commercial Accounting, ke-toan thuong-mai, comptabilite
commercials.

Commercial Credit, Viet-Nam Thuong-Tin, Credit commercial.
Concession, lanh-trung, Concession.

- 161 -

- 162 -
Consultative Council, Roi-Dong Tu-Van, Assemblee Consul-
tative.
Corps of Experts, Doan Chuyen-Vien, Corps d'Experts.

Cost of Living Allowance, phu-cap dac-do, indemnite de
cherte de vie.

Cotton Industry Company, Cong-ty Ky-Nghe Bong Vai, Compa-
gnie Industrielle du Coton.

Counterpart Fund, Quy Doi-Gia Vien-Tro My, Fonds de
Contrepartie.

Cour des Comptes, Tham-Ke-Vien, Cour des Comptes.
Current Accounts, chuong-muc vang—lai, compte courant.
Customs, thue-quan, douane.

Da-Nang Chamber of Commerce, Phong Thuong-Mai Da-Nang,
Chambre de Commerce de Tourane.

Da-Nang Port Authority, Thuong-Cang Da-Nang, Port de
Tourane.

Delegate, Dai-bieu chinh-phu, delegue.

Delegated Ordonnator, uy chuan-chi-vien, ordonnateur
delegue.

De-obligation Statement, phieu giai-chi, fiche de degagement.

Development of Jute Plantations Account, Chuong-Muc Khuech-
truong Trong Bo, Compte pour le Developement des
Plantations de Jute.

Development of My-An Area Account, Chuong-Muc Tai-Canh Lang
My-An, Compte pour la mise en valeur de My-An.

Development of Sugar Cane Plantations Account, Chucng-Muc

Khuech-Truong Mghe Trong Mia, Cbmpte pour de
Developement des Plantations de Cannes a Sucre.

Directorate, Nha, Direction.

Discretionary Power, quyga thien-doan, pouvoir discretion-
naire.

District Capital, quan-ly, chef lieu de district.

-153-
Electrical Re-Equipment Office, Trung-Tu Dien-Luc Cuoc,
Office du Re-Equipment des Usines Electriques.
Executive Office of the President, Phy Tong-Thong, Presidence.

Expenditure reduction receipt order, lenh nhap ngan glam
chi, ordre de recette en degrevement des depenses.

Exploitation of Nong-Son Coal Mine Account, Chuong-Muc
Khai-Thac Mo Mong-Son, Compte pour l'Exploitation
des Charbonnages du Nong-Son.

Extra budgetary account, chuong-muc ngoai ngan-each, compte
hors budget.

Family allowance, phu-cap gie-dinh, allocations familiales.
Function, co-nang, fonction.
General Directorate, tong-nha, direction generals.

General rapporteur, tong thuyet-trinh-vien, rapporteur
general.

Glass Company, Cong-Ty Thuy-Tinh, Compagnie des Verreries.

Government corporation, hoi quoc-doanh, enterprise d'etat.

Government monopoly, cong-quan, regie.

Governor, thu-hien, gouverneur.

Grand Council of Economic and Financial Interests, Hoi-Dong
Toi Cao Kinh-Te va Tai-Chanh, Grand Conseil des
Interets Economiques et Financiers.

Handicraft Development Center, Trung-Tam Khuech-Truong
Tieu-Cong-Nghe, Centre de Deve10pement de
l'Artisanat.

Imprest cash fund, quy quan-quan, caisse ds regie.

Industrial Credit, Doanh-Te Cuoc, Office du Developement
Industriel.

International Committee for Armistice Control Account,
Chuong-Muc Uy-Hoi Quoc-Te Kiem-Soat Dinh-Chien,
Compte pour les Depenses de la Comite Inter-
nationale de Controle ds l'Armistice.

- 164 -

Interstate Properties and Wrecks Account, Chuong-Muc Tai-
San Vo Thus-Ks va Xac Tau vo Chu, Compte pour la
Nationalisation des Proprietes sans Successsurs
et des Epaves sans Maitres.

Joint Stock Company, cong-ty hon-hop, societe d'economie
mixte.

Land Reform Account, Chuong-Muc Cai-Cach Dien-Dia, Compte
pour la Reforms Agraire.

Local Personality, phap-ngan tu-cach, personnalite morale.
Liquidation, thanh-toan, liquidation.
Liquidator, thanh-toan-vien, liquidateur.

Low Cost Housing Office, Gia-Cu Liam-Gia Cuoc, Office du
Logemsnt a Bon Marche.

National Bank, Ngan-Hang Quoc-Gia, Banque Nationals.

National Orphanage, Co-Nhi Vien Quoc-Gia,0rphelinat
national.

Nong-Son Coal Mine Corporation, Cbng-Quan Khai-Thac Mo
Nong-Son, Regie dss Charbonnages du Nong-Son.

Notable, huong-chuc, notable.
Object, doi-tuong, objet.
Obligation, uoc-chi, engagement des depenses.

Obligation Control, kiem-soat uoc-chi, controls des depensss
engagses.

Obligation statement, phieu uoc chi, fiche d'engagement.
Operating fund, quy luu-hanh, fonds de roulement.
Ordonnator, chuan-chi-vien, ordonnateur.

Organization, co-quan, organisation.

Paper Company, Cong-Ty Giay, Compagnie du Papier.
Pasteur Institute, Vien Pasteur, Institut Pasteurl

Petty cash fund, quy ung-truoc, caisse d'avance.

Provincial capital, tinh 1y, chief leiu de province.

-165-

Public Accounting, ks toan cong, comptabilite publique.

Publication and Sale of Text Books Account, Chuong-Muc Su-
Dung tien Ban Sach Bao, Compte pour la Publi-
cation et la Vents des Livres Scolaires.

Public enterprise, cong cuoc, establissement public.

Quasi expenditure, dai-chi, depense d'ordre.

Quotation, phieu khao gia, devis estimatif.

Rebels' Assets Confiscation Account, Chuong-Muc Cung-Thac
Tai-San Phiem-Loan, Compte pour la Confiscation
des Proprietes des Rebels.

Regie, cong-quan, regie.

Re-obligation Statement, phieu dieu chinh uoc-chi, fiche
de re-engagement.

Retirement Fund Administration, Quy Huu-Bong, Direction ds
la Caisse de Retraite.

Retirement Fund Account, Chuong-muc Quy Hun-Bong, Compte de
la Caisse de Retraite.

Retroactive payment, truy-nap, rappel.
Revolving fund, quy luau-chuyen, fonds de roulement.

Rice Stock Account, Chuong-Muc Kho Tru Gao, Compte pour le
Stockage du Riz.

Saigon Bus Transportation Corporation, Quan Quan Chuyen-
Cho Cong-Cong Do-Thanh, Regie Saigonnaiss de
Transport Routier.

Saigon Chamber of Commerce, Phong-Thuong-Mai Saigon, Chambre
de Commerce ds Saigon.

Saigon Port Authority, Thuong Gang Saigon, Port de Saigon.

Saigon Saving Bank, Kho Tiet-Kiem Saigon, Caisse de'Epargne
de Saigon.

Salary class index, chi so luong, indice de solde.

Salt Stock Account, Chuong-Muc Kho Tru Muoi, Compte pour la
Stockage du Sel.

 

- 166 -
Secondary ordonnator, pho chuan-chi visn, sous ordon-
nateur.
Section, doan, article.
Self liquidating, tu tuc, auto-financement.
Special fund, quy den, caisse noire.
Stakhanovite, anh-hung san-xuat, stakhanovite.
Sugar Company, Cong-Ty Duong, Compagnie du Sucre.
Summon with cost, doc-thuc huu-phi, sommation avec frais.
Summon without cost, doc-thuc vo-phi-sommation sans frais.
TeleVietnam, Vien-Thong Viet-Nam, TeleVietNam.
Title, muc, titre.

Treasurer General, Tong-Giam-Doc Ngan-Kho, Tresorier
General.

Triangular franc procedure, phat lang tam giac, franc
Triangulaire.

Unclaimed Property Account, Chuong-Muc Tai-San Khuyet Chu,
Compte pour la Nationalisation des Proprietes
sans Maitre.

Viet-Nam Airway, Hang-Khong Viet-Nam, Air Viet-Nam.
Viet-Nam Press, Viet-Nam Thong-Tan-Xa, Viet-Nam Presse.

Viet-Nam Railway, Hoa-Xe Viet-Nam, Chemin de Fer du Viet-
Nam.

Vinh-Hao Medicinal Source Company, Cong-Ty Vinh-Hao,
Compagnie des Eaux Minerales de Vinh-Hao.

Water Distribution Office, Quoc-Gia Cap-Thuy Cuoc, Office
dss Eaux.

 

APPENDIX II

The Vietnamese Warrant and its English Trans-

lation.

Egplgnatgrl Notes :

(1) The color of the warrant is orange; it is
kept by the Treasury as a record. A capy of different color
is delivered to the beneficiary and is used by him to cash
money or to obtain a transfer if he has an account in the

Treasury.

(2) Boxes are provided for the Ordonnator, the
Obligation Controller, the Liquidator, and the Treasurer
to sign their names and put their reference number on the
warrant.

(3) Upon receipt of this warrant the Treasurer
automatically debits the account of the spending agency and
credits the "liquidated fund."

(4) The liquidated fund is debited when the bene-
ficiary uses his cOpy of the warrant to receive cash or to
obtain transfer.

(5) This two-step payment is to facilitate the
accounting work of the Treasury in case the beneficiary de-
lays in cashing his warrant.

(6) The end of the fiscal year mentioned in the
Notification to the beneficiary is May 20. If the warrant
belongs to the 1960 budget, the beneficiary can cash it

- 167 -

- 168 -

before May 20, 1961. Beyond that date the 1960 budget ac-
counts ars closed. The warrant has to be revalidated by
the Treasurer. The chapter, title, and section mentioned
in the warrant have to be changed, the expenditure has to
be imputed to the 1961 budget under chapter "late expendi-
tures." The warrant can be revalidated three times. After

May 20, 1964, it becomes null and void.

 

   

 

 

‘ M 1%‘1¥€'3 salute. .

 

N0. D1

Fiscal Year 1959

REPUBLIC OF VIET-NAM

NATIONAL BUDGET
NOTIFICATION:

WARRANT Cash

This warrant is

valid for four years from the
beginning of the fiscal year
to which it belongs.

If the beneficiary fails to
liquidate it within the above

mentioned period,

it will be-

come null and void.

No disbursement
ter the end of th

is made af-
e fiscal

year if the warrant is not

re-validatsd by the Treasurer.
THE GENERAL TREASURER IS AUTHORIZED TO DISBURSE OR TRANSFER THE FOLLOWING SUM '

Accompanying Documents

Visa
Treasurer:

Object of the Expenditure

Treasury
Transfer

Department or 0.00.00.00.0000000000000000000.

Directorate of ..............................

Beneficiary ........
Address 00.0.0000...
eeeeeeeeeeeeeeeeeeeo Func T1- Chap 830’ Ber-
Account No.......... tion tle ter tion vice

at ......OOOOOOOOOOO

Amount

Total...........

Amount deducted by the Ordonnator ......
Amount deducted by the Treasurer .......

Contra-validation ......................

Liquidated

NOOOOOCOOOOO

Date........

Obl ated
No : Date

 

 

The above men-
tioned amount
has been trans-
ferred from the
General Fund to
the Liquidated
Fund under N0.
Fiscal Year....
Date...........
Treasurer

Authorized
NOeoeeeepoee

Date.,,,,,,,
FundOOOOO...

Province....
Region......

Amount to be paid .......
I hereby certify that the amount of this war-

rant 18 .00.0.0.........OOOOOOOOOOOOOOOOO...
Date ......OOOOOOOOOOOO
LiquidatorOOOOOOOOOOOOO

 

Visa

Date.O.......OOOOOOOOOOOOOOOOO

Obligation Controller ........

g

The General Treasurer of Viet-Nam is ke-
quested to pay or transfer the above
specified amount according to laws and
regulations.

Date......................

ordonnatOPOCOOOOOOO0.0....

- 169

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