US embassy cable - 01HANOI1554

UNCLAS SECTION 01 OF 04 HANOI 001554 
 
SIPDIS 
 
STATE FOR EB/IFD/ODF, EB/IFD/OMA, EAP/EP, EAP/BCLTV 
STATE PASS USAID/ANE AFERRERA AND DMCCLUSKEY 
STATE PASS USTR 
TREASURY FOR OASIA 
USDOC FOR 4431/MAC/OKSA/HPPHO 
USDA FOR FAS/ITP/SCHIKH/HUYNH 
PHNOM PENH FOR USAID LCHILES 
MANILA PASS USADB 
                       UNCLASSIFIED 
 
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E.O. 12958: N/A 
TAGS: EAID, ECON, EFIN, VM, SOE, FINREF 
SUBJECT:  MID-TERM CONSULTATIVE GROUP MEETING FOR VIETNAM - UPBEAT MOOD, IMPROVED DONOR COORDINATION 
 
REF: A) HANOI 1521, B) HANOI 1497 
 
1.  SUMMARY:  ON JUNE 18 AND 19 IN HOI AN, IN VIETNAM'S CENTRAL 
REGION, DONORS GATHERED FOR AN INFORMAL CONSULTATIVE GROUP 
MEETING TO TAKE STOCK OF PROGRESS.  IMF AND WORLD BANK GROUP 
REPRESENTATIVES WERE PLEASED THEIR EXECUTIVE BOARDS HAD APPROVED 
MAJOR STRUCTURAL REFORM/POVERTY ALLEVIATION CREDITS FOR VIETNAM. 
IN ADDITION, PAPERS PRESENTED AND DONORS STATEMENTS REFLECTED A 
GENERAL OPTIMISM FOR VIETNAM'S ECONOMIC OUTLOOK.  MUCH OF THIS 
HAS TO DO WITH THE FACT THE U.S.-VIETNAM BILATERAL TRADE 
AGREEMENT HAS MOVED TO THE CONGRESS WHERE ALL  HOPED IT WILL SOON 
BE APPROVED.  AS THE U.S. AND OTHER DONORS HAD URGED, THE AGENDA 
CONTAINED MANY ITEMS REVOLVING AROUND VIETNAMESE COMMITMENTS ON 
TRADE, STATE-OWNED ENTERPRISE, AND FINANCIAL SECTOR REFORM.  THE 
GOVERNMENT ELABORATED ON ITS PLANS FOR IMPLEMENTATION.  KNOWING 
WASHINGTON AGENCIES ARE INTERESTED IN FISCAL DEVELOPMENTS IN 
VIETNAM, WE HAVE INCLUDED A NOTE PREPARED BY THE GOVERNMENT ON 
PLANS TO IMPROVE TRANSPARENCY AND DIAGNOSTICS IN THIS CRITICAL 
AREA. 
 
2.  AMBASSADOR PETERSON, ACCOMPANIED BY REGIONAL USAID DIRECTOR 
CHILES AND EMBASSY HANOI ECONCOUNS DRY, MADE A NUMBER OF 
INTERVENTIONS AT THE MEETING.  AMBASSADOR NOTED U.S. DESIRE FOR 
VIETNAM TO MOVE RAPIDLY ON ITS GROWTH TRAJECTORY.  BUT IN ORDER 
TO DO SO, HE SAID, THE GOVERNMENT MUST CREATE POLICIES WHICH THE 
                       UNCLASSIFIED 
 
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PEOPLE FULLY SUPPORT.  "IMPROVING THE LOT OF THE PEOPLE SHOULD 
ALWAYS BE THE GOAL."   THE AMBASSADOR URGED THE GOVERNMENT TO 
AGGRESSIVELY TACKLE STATE-OWNED ENTERPRISE REFORM TO REDUCE THE 
"DRAG" THIS SECTOR IMPOSES ON THE ECONOMY AS A WHOLE.  THESE 
ENTERPRISES, THE AMBASSADOR CONTINUED, MUST STAND ON THEIR OWN IF 
THEY ARE TO BE ALLOWED TO EXIST AT ALL.  THE AMBASSADOR ALSO 
EXPRESSED CONCERN ABOUT THE "MANIPULATION" THESE ENTERPRISES CAN 
ENGAGE IN WITH SEVERE IMPACT ON PRIVATE SECTOR DEVELOPMENT.  THE 
AMBASSADOR ALSO STRESSED THE IMPORTANCE OF UNIVERSAL AND IMPROVED 
EDUCATION IN VIETNAM.  HE OBTAINED A COMMITMENT FROM THE 
GOVERNMENT THAT THE GOVERNMENT WOULD SUPPORT A NATIONAL SAFETY 
CONFERENCE LATER IN THE YEAR TO DEAL WITH VIETNAM'S HORRENDOUS, 
PREVENTABLE INJURY PROBLEM. 
 
3.  THE GOVERNMENT SUBMITTED THE FOLLOWING PAPER ON BUDGETARY 
MANAGEMENT WHICH WE BELIEVE USEFUL TO WASHINGTON AGENCIES AS A 
REFERENCE TOOL.  BEGIN TEXT: 
 
JOINT MINISTRY OF FINANCE, MINISTRY OF PLANNING AND INVESTMENT & 
WORLD BANK NOTE ON PUBLIC FINANCIAL MANAGEMENT 
THIS JOINT NOTE SUMMARIZES THE ANALYSES ON PUBLIC FINANCIAL 
MANAGEMENT AND ACCOUNTABILITY THAT HAS BEEN UNDERTAKEN BY THE 
GOVERNMENT OVER THE LAST THREE YEARS, IN COLLABORATION WITH THE 
DONORS AND THE PROCESSES THAT HAVE BEEN ESTABLISHED TO CONTINUE 
DISCUSSIONS ON THESE ISSUES ON A CONTINUING BASIS.  IN PARTICULAR 
IT HIGHLIGHTS THE AGENDA OF ACTIONS THAT HAVE BEEN DEVELOPED BY 
THE GOVERNMENT BASED ON THE ANALYSES AND THE DIALOGUE, ESPECIALLY 
THE FOUR MAJOR INITIATIVES THAT ARE PLANNED IN TERMS OF WORK AND 
ACTIONS. 
 
BACKGROUND: 
                       UNCLASSIFIED 
 
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VARIOUS PIECES OF ANALYSES OF VIETNAM'S PUBLIC FINANCIAL 
MANAGEMENT AND ACCOUNTABILITY ARRANGEMENTS HAVE BEEN UNDERTAKEN 
SINCE SEPTEMBER 1998.  THE FISCAL TRANSPARENCY REPORT - TOWARDS 
FISCAL TRANSPARENCY- DONE JOINTLY BY THE WORLD BANK AND THE IMF, 
WAS COMPLETED AND PUBLISHED WIDELY IN EARLY 1999.  IT LAID OUT A 
MEDIUM-TERM AGENDA OF ACTIONS FOR IMPROVING TRANSPARENCY OF 
BUDGETARY INFORMATION AND PROCESSES - INTERNAL (OR MANAGEMENT), 
EXTERNAL (I.E. FOR DONORS AND IFIS) AND PUBLIC. 
 
THE SECOND PUBLIC EXPENDITURE REVIEW (PER) - MANAGING PUBLIC 
RESOURCES BETTER- DONE JOINTLY BY THE GOVERNMENT AGENCIES AND THE 
DONORS IN A HIGHLY PARTICIPATORY PROCESS, WENT FURTHER TO 
INCREASE AND EXPAND TRANSPARENCY OF INFORMATION ON PUBLIC 
SPENDING.  THIS PER WAS FIRST DISCUSSED IN DALAT AT THE MID-TERM 
CG IN JUNE 2000 AND SUBSEQUENTLY PRINTED IN TWO VOLUMES IN 
NOVEMBER 2000.  IT IS NOW AVAILABLE WIDELY ON THE WEB SINCE. 
 
THIS PER WAS CARRIED OUT BY GOVERNMENT'S WORKING GROUP.  SEVERAL 
DONORS - WORLD BANK (MANAGING THE EFFORT), IMF, NETHERLANDS, UK, 
DENMARK AND SWEDEN AS WELL AS ACTION AID, WORKED DIRECTLY WITH 
THAT WORKING GROUP AND CONTRIBUTED SUBSTANTIALLY TO THE REPORT. 
ALL DONORS WERE INVOLVED IN A SERIES OF FIVE CONSULTATIONS ON 
VARIOUS DRAFTS OF THE PER DURING THE PROCESS OF ITS PREPARATION. 
THE PUBLISHED PER REPORT WAS DISSEMINATED TO THE PROVINCES BY THE 
MOF THROUGH NUMEROUS WORKSHOPS AND SEMINARS DURING THE FIRST 
THREE MONTHS OF 2001. 
IN FEBRUARY 2001, THE GOVERNMENT LED A PERMANENT GOVERNMENT-DONOR- 
NGO WORKING GROUP ON PUBLIC EXPENDITURE REFORM (ARISING OUT OF A 
MERGER OF THE SEPARATE WORKING GROUPS OF GOVERNMENT AND OF THE 
DONORS CREATED FOR DOING THE PER) AND THE WORLD BANK AGREED TO 
PROVIDE LOGISTICAL SUPPORT TO THAT GROUP.  THE FIRST MEETING IN 
FEBRUARY 28 WAS CHAIRED JOINTLY BY MADAM LE THI BANG TAM, VICE 
MINISTER OF FINANCE, AND MR. ANDREW STEER, COUNTRY DIRECTOR OF 
WORLD BANK IN VIETNAM. THE SECOND MEETING ON JUNE 5 WAS CHAIRED 
BY MR. NGUYEN BA TOAN, DEPUTY DIRECTOR EXTERNAL RELATIONS, MOF, 
AND KAZI M. MATIN, CHIEF ECONOMIST OF THE WORLD BANK IN VIETNAM. 
 
THE GOVERNMENT AGENCIES DEVELOPED A DETAILED MATRIX OF ACTIONS 
BASED ON THE PER CITING THE STEPS TO BE TAKEN IN EACH YEAR (I.E. 
2001-2003) AND THE LIKELY TECHNICAL ASSISTANCE NEEDS FOR 
IMPLEMENTING THEM AND PRESENTED IT FOR DISCUSSION IN THE FIRST 
MEETING OF THE WORKING GROUP ON PUBLIC EXPENDITURE ISSUES. 
DONORS INDICATED THEIR INTEREST FOR TA TO THE GOVERNMENT AND THIS 
WAS INCORPORATED IN THE SECOND VERSION OF DETAILED MATRIX OF 
ACTIONS (SHOWN IN ANNEX 1 OF THIS NOTE). 
 
DONORS AGREED THAT THIS MATRIX DEVELOPED BY THE GOVERNMENT WOULD 
BE USED FOR FUTURE DONOR SUPPORTS TO PUBLIC FINANCIAL MANAGEMENT 
                       UNCLASSIFIED 
 
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IN VIETNAM.  IF NEW ISSUES ARISE AND THE GOVERNMENT AGREES TO NEW 
ACTIONS AS A RESULT, THEY WILL BE ADDED TO THE AGENDA, USING THIS 
MATRIX FRAMEWORK. 
MORE RECENTLY, A COUNTRY FINANCIAL ACCOUNTABILITY ASSESSMENT 
(I.E. CFAA) HAS BEEN CARRIED OUT JOINTLY BY ADB AND THE WORLD 
BANK IN THE LATER PART OF 2000 AND 2001.  THIS ASSESSMENT COVERS 
FINANCIAL MANAGEMENT ISSUES IN BOTH THE PRIVATE SECTOR AND THE 
PUBLIC SECTOR.  ADB FOCUSED MAINLY ON PRIVATE SECTOR 
ACCOUNTING/FINANCIAL MANAGEMENT ISSUES AND THIS HAS ALREADY BEEN 
PUBLISHED AS VOLUME 1 OF THE REPORT.  THE WORLD BANK FOCUSED ON 
PUBLIC FINANCIAL CONTROL AND ACCOUNTABILITY, AS WELL AS ON 
PRIVATE SECTOR CORPORATE GOVERNANCE AND THE WORLD BANK'S DRAFT 
CFAA IS CURRENTLY UNDER DISCUSSION WITH THE GOVERNMENT AGENCIES. 
THERE WERE A FEW NEW ISSUES AND SUGGESTED ACTIONS THAT HAVE 
EMERGED FROM THIS CFAA WORK ON PUBLIC FINANCIAL CONTROL AND 
ACCOUNTABILITY; THE GOVERNMENT AGENCIES WILL REVIEW THESE ISSUES 
AND RECOMMENDATIONS AND CONSIDER ADDING THEM TO THE MATRIX IN THE 
APPROPRIATE SECTION. 
 
RECENT ACTIONS TAKEN BY GOVERNMENT: 
 
-- DESIGNATED THE STATE TREASURY AS THE MAIN AGENCY RESPONSIBLE 
FOR MAINTAINING THE CONSOLIDATED PUBLIC ACCOUNTS AND THUS FOR 
ESTABLISHING THE INTEGRATED PUBLIC FINANCIAL MANAGEMENT 
INFORMATION SYSTEM. 
-- INITIATED STUDY AND SURVEY ON THE UNIFICATION OF THE TREASURY, 
BUDGET AND TAXATION ACCOUNTING SYSTEMS. 
-- ISSUED REGULATION ON FINANCIAL REPORTING SYSTEM OF 
ENTERPRISES, INCLUDING SOES TO MAKE INFORMATION ON PERFORMANCE OF 
SOES SYSTEMATIC AND ACCESSIBLE (DECISION 167/2000/QD-BTC OF 
OCTOBER 25, 2000). 
                       UNCLASSIFIED 
 
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-- DEVELOPED COMPREHENSIVE INFORMATION/DATA ON THE "OFF-BUDGET" 
FUNDS SUCH AS DEVELOPMENT SUPPORT FUND, SOCIAL SECURITIES FUND, 
NATIONAL FUND FOR EMPLOYMENT, ETC. 
-- COMPLETED THE DRAFT AMENDMENT OF THE REGULATIONS FOR STATE 
BUDGET TRANSPARENCY AT ALL LEVELS (I.E. AMENDMENT OF DECREE 
225/1998/QD-TTG OF NOVEMBER 20, 1998). 
-- ISSUED RULES (CIRCULAR 118/2000/TT-BTC OF DECEMBER 22, 2000) 
ON COMMUNE BUDGET MANAGEMENT AND OTHER FINANCIAL ACTIVITIES AT 
COMMUNE/WARD/TOWNSHIP LEVEL AS WELL AS ON CLASSIFICATIONS 
APPLICABLE TO THE COMMUNE BUDGET (DECISION 209/2000/QC-BTC OF 
DECEMBER 25, 2000). 
-- COMPLETED INITIAL DRAFTS OF PROVINCIAL PERS IN HCMC AND QUANG 
BINH AND COPIES OF THESE PERS WILL BE PROVIDED TO INTERESTED 
DONORS AS SOON AS THEY ARE FINALIZED. 
INITIAL STEPS HAVE BEEN TAKEN TO DEVELOP THE MEDIUM-TERM SECTOR 
EXPENDITURE PROGRAM FOR EDUCATION BY MOET AND MOF AND FURTHER 
WORK WILL BE UNDERTAKEN DURING THE NEXT YEAR. 
 
PLANNED ACTIVITIES OVER THE NEXT SIX MONTHS: 
 
ACTIVITIES IN THE PUBLIC EXPENDITURE MANAGEMENT AREA OVER THE 
NEXT SIX MONTHS WILL COVER FOUR AREAS: BUDGET LAW REVISION; 
PUBLIC FINANCIAL MANAGEMENT & ACCOUNTABILITY PROJECT; FIVE YEAR 
PUBLIC INVESTMENT PLAN; AND MEDIUM-TERM SECTOR EXPENDITURE PLAN. 
THERE IS LIKELY TO BE CONSIDERABLE OVERLAP IN THESE AREAS OF WORK 
AND THUS THERE IS NEED TO COORDINATE AMONG THESE ACTIVITIES. 
 
REVISION AND AMENDMENT OF THE BUDGET LAW.   ACCORDING TO THE LAW 
PROGRAM OF THE NA, THE GOVERNMENT WILL COMPLETE A PROPOSAL FOR 
REVISION AND AMENDMENT OF THE BUDGET LAW BEFORE NOVEMBER 2001 TO 
SOLICIT VIEWS AND COMMENTS FROM NA DELEGATES AT THE 10TH  SESSION 
OF THE NA (SCHEDULED TO BE HELD IN NOVEMBER 2001) AND TO BE 
PRESENTED TO THE NA IN THE SUBSEQUENT SESSION. FOR THIS PURPOSE, 
THE MINISTRY OF FINANCE, IN COLLABORATION WITH MINISTRIES, 
CENTRAL AGENCIES AND 61 PROVINCES/CITIES, HAS BEEN WORKING ON 
PREPARATION OF THE PROPOSAL TO REVISION AND AMENDMENT OF THE 
BUDGET LAW.  THE WORK HAS FOCUSED ON TWO KEY AREAS AS FOLLOWS: 
UNDERTAKE THE REVIEW AND ASSESSMENT OF FOUR-YEAR IMPLEMENTATION 
OF THE BUDGET LAW AT ALL LEVELS OF GOVERNMENT AND ALL GOVERNMENT 
AGENCIES WITH A VIEW OF IDENTIFYING WEAKNESSES AND SHORTCOMINGS 
OF THE CURRENT BUDGET LAW AND PROPOSING SPECIFIC REVISIONS AND 
AMENDMENTS IN THE COMING TIME. 
 
UNDERTAKE INTENSIVE STUDY OF OTHER COUNTRIES' EXPERIENCE ON THIS 
ISSUE, HARNESSING ADVICE OF INTERNATIONAL EXPERTS THROUGH WORKING 
SESSION, SEMINARS AND INTERNATIONAL WORKSHOPS, RESULTS OF STUDIES 
CARRIED BY DONOR-FUNDED TA PROJECTS ON FINANCIAL MANAGEMENT 
CAPACITY ENHANCEMENT SUCH AS BUDGET REFORM PROJECT FUNDED BY 
GERMANY, UNDP-FUNDED PER CAPACITY BUILDING PROJECT (VIE/96/028), 
VIETNAM-CANADA FINANCIAL MANAGEMENT PROJECT, COLLABORATION 
                       UNCLASSIFIED 
 
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PROGRAM ON TAXATION FUNDED BY SWEDEN, ANALYSIS AND 
RECOMMENDATIONS OF PER-2000 ETC. 
 
PUBLIC FINANCIAL MANAGEMENT & ACCOUNTABILITY PROJECT.  THE 
GOVERNMENT HAS REQUESTED THE WORLD BANK (TOGETHER WITH OTHER 
DONORS) TO FINANCE AN INTEGRATED PUBLIC FINANCIAL MANAGEMENT AND 
ACCOUNTABILITY PROJECT THAT WOULD ADDRESS PROBLEMS OF 
COMPREHENSIVENESS, CONSISTENCY AND TIMELINESS OF RECORDING, 
REPORTING, MONITORING AND INTERNAL CONTROL OF BUDGET PREPARATION 
AND EXECUTION.  THIS PROJECT WOULD COVER THE BUDGET REPORTING AND 
RECORDING PROCESS IN THE MINISTRIES OF FINANCE AS WELL AS 
PLANNING AND INVESTMENT, AND INCLUDE SEVERAL SECTOR MINISTRIES, 
OVER TIME. 
 
A JOINT WORLD BANK-DONOR MISSION IS PLANNED FOR JUNE 20-JULY 2, 
2001, TO DISCUSS WITH THE GOVERNMENT AND THE DONORS THE CONCEPT 
OF THE PROJECT, THE WORK THAT NEEDS TO BE DONE TO DEVELOP THE 
PROJECT, THE TIMETABLE OF NEXT STEPS AND THE DONORS THAT WOULD CO- 
FINANCE PROJECT PREPARATION AND PROJECT FUNDING.  THIS MISSION 
WILL BE LED BY GEOFF DIXON AND WILL INCLUDE THE TASK MANAGERS OF 
THE PER AND THE CFAA, AS WELL AS CONSULTANTS ON ACCOUNTING AND ON 
PERFORMANCE MONITORING. DFID, UK, WILL FINANCE A CONSULTANT ON 
THE ORGANIZATION OF THE BUDGET DEPARTMENT AND ANOTHER DONOR WILL 
FUND A CONSULTANT ON INFORMATION TECHNOLOGY ISSUES. 
 
FIVE YEAR PUBLIC INVESTMENT PROGRAM (PIP) THE MINISTRY OF 
PLANNING AND INVESTMENT (MPI) EXPECTS TO FINALIZE A FRAMEWORK FOR 
THE PIP, INCLUDING OBJECTIVES, CONCEPTS, SCOPE, CRITERIA FOR 
ALLOCATION OF RESOURCES, FUNDING MOBILIZATION POLICIES, CRITERIA 
FOR SELECTION OF OVERALL OBJECTIVES AND THOSE OF INDIVIDUAL 
SECTORS, CRITERIA FOR SELECTION OF INVESTMENT PROJECTS.   BASED 
                       UNCLASSIFIED 
 
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ON THIS FRAMEWORK, A LIST OF THE MAJOR PROJECTS OF THE 2001-2005 
PIP WILL BE PROPOSED.  THESE PROJECTS ARE THE CORE GROUP OF THE 
PROGRAM AND APPROPRIATE ADJUSTMENTS CAN BE MADE DURING ITS 
IMPLEMENTATION.  THESE PROJECTS WOULD REPRESENT KEY PROJECTS NOT 
ONLY FOR THE COMING FIVE YEARS BUT ALSO FOR THE WHOLE PERIOD OF 
TEN YEARS AND WOULD AIM AT IMPLEMENTATION OF SOCIO-ECONOMIC 
DEVELOPMENT STRATEGIES ADOPTED BY THE NINTH PARTY CONGRESS. 
INITIAL SUBMISSIONS HAVE BEEN MADE BY PROVINCES AND SECTOR 
MINISTRIES ON THE FIVE YEAR INVESTMENT PLAN TO MPI AND 
DISCUSSIONS ARE UNDERWAY.  IT IS PLANNED THAT THE PIP FRAMEWORK 
WOULD BE SUBMITTED TO THE NATIONAL ASSEMBLY IN NOVEMBER 2001. 
FOLLOWING THE REVIEW BY NA, GOVERNMENT AGENCIES WOULD FINALIZE 
THE PROGRAM TO ANNOUNCE IT BY APRIL 2002. FOR THIS PURPOSE, 
SEVERAL KEY PIECES OF WORK - TO BE DONE BY MPI - WILL BE 
SUPPORTED BY THE BANK AND OTHER DONORS OVER THE NEXT FOUR MONTHS, 
AND THEY INCLUDE THE FOLLOWING: 
-- DEVELOPING OVERALL DEVELOPMENT OBJECTIVES AND THOSE FOR EACH 
OF INDIVIDUAL SECTORS, SCOPE AND ROLES OF PIP IN ACHIEVING THESE 
OBJECTIVES; 
-- DEVELOPING PRINCIPLES AND CRITERIA FOR ALLOCATION OF PUBLIC 
INVESTMENT ACROSS SECTORS TO ACHIEVE THE STATED GOALS OF THE TEN 
YEAR STRATEGY; 
-- ACTUAL DISTRIBUTION OF INFRASTRUCTURE PUBLIC SPENDING IN THE 
PREVIOUS FIVE YEAR PLAN ACROSS PROVINCES, RURAL VERSUS URBAN 
AREAS AND/OR GROWTH-POLE VERSUS OTHER AREAS AND THE CRITERIA TO 
BE USED FOR A MORE RURAL DISTRIBUTION IN THE NEXT PLAN; 
-- THE RECURRENT BUDGET IMPLICATIONS OF THE PUBLIC INVESTMENT 
PLAN IN ALL KEY SECTORS (E.G. EDUCATION, HEALTH, TRANSPORT AND 
AGRICULTURE); 
-- ECONOMIC AND SOCIAL SCREENING PROCESS FOR PROJECTS SUBMITTED 
BY THE SECTOR MINISTRIES AND PROVINCIAL PEOPLES' COMMITTEES FOR 
INCLUSION IN THE PROGRAM; 
-- PRELIMINARY PROJECTION OF THE RESOURCES AVAILABLE TO MEET THE 
NEED OF THE PROGRAM FOR THE PERIOD 2001-05. 
 
THE WORLD BANK ALSO PLANS TO PROVIDE A PRELIMINARY ASSESSMENT OF 
THE PIP FRAMEWORK THAT WILL BE COMPLETED FOR DISCUSSION IN THE 
NATIONAL ASSEMBLY IN NOVEMBER 2001. 
 
MEDIUM-TERM SECTOR EXPENDITURE PLAN IN EDUCATION.  A MEDIUM-TERM 
SECTOR EXPENDITURE PLAN IS EXPECTED TO BE PREPARED IN EDUCATION 
WHEREBY DONORS WILL BE SUPPORTING THE AGREED MEDIUM-TERM SECTOR 
GOALS IN EDUCATION AND A SECTOR STRATEGY ON POLICIES, 
INSTITUTIONS AND PUBLIC EXPENDITURES TO MEET THOSE GOALS.  THE 
MEDIUM-TERM EXPENDITURE PLAN WOULD THUS COMBINE RECURRENT AND 
CAPITAL EXPENDITURES, THEREBY ENSURING APPROPRIATE BALANCE AND 
PRIORITIZATION THAT IS CONSISTENT WITH THE POLICIES AND 
INSTITUTIONS.  THE MOET, THE MOF AND THE MPI HAVE ALREADY STARTED 
DISCUSSION ON THE STEPS THAT NEED TO BE TAKEN TO DEVELOP THAT 
PLAN.  A GOOD DEAL OF THE WORK THAT IS NECESSARY THAT NEEDS TO BE 
                       UNCLASSIFIED 
 
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DONE FOR THIS PURPOSE WILL OVERLAP WITH THOSE REQUIRED FOR THE 
ABOVE (E.G. NEW NORMS FOR ALLOCATING RECURRENT EXPENDITURE AND 
FOR CASH TRANSFERS TO POORER PROVINCES TO BE DONE FOR BUDGET-LAW 
REVISION; OR WOKRING OUT THE RECURRENT BUDGET IMPLICATIONS OF 
EACH SECTOR'S INVESTMENT PLAN BEING PREPARED FOR THE PIP; OR THE 
INTERNAL CONTROL PROCESSES AND REPORTING/RECORDING REQUIREMENTS 
TO BE IMPLEMENTED UNDER THE PUBLIC FINANCIAL MANAGEMENT PROJECT). 
MOET WILL TAKE THE LEAD IN THIS EFFORT, WITH MOF AND MPI 
PROVIDING STRONG DIRECT SUPPORT AND WITH PARTICIPATION IN 
PROVINCES.  THE DEVELOPMENT OF THE MEDIUM-TERM EXPENDITURE 
PROGRAM FOR THE EDUCATION SECTOR WOULD EXPECT TO DRAW ON THE 
RESULTS OF PAST AND ON-GOING PROJECTS AND PROGRAMS SUPPORTED BY 
UNDP, EU, DFID, THE WORLD BANK AND OTHER KEY PARTNERS. 
END TEXT OF JOINT PAPER 
 
PETERSON 
 
                       UNCLASSIFIED