[Research Contribution] Green Budget – A “Lever” for the Transition to a Circular Economy and Inclusive Growth in Vietnam
13 August, 2026
Keywords: Green budget; Circular economy; Inclusive green growth; Sustainable development; Green finance policy
Climate change, resource depletion, and the imperative of sustainable development are driving many countries to transition toward a circular economy model. In Vietnam, this process is being strongly guided through green growth strategies and the target of achieving net-zero emissions by 2050. However, to realize these objectives, the effective mobilization and allocation of financial resources remains a major challenge.
Against this practical backdrop, a research team from UEH Mekong, the University of Economics Ho Chi Minh City (UEH), conducted a study to analyze the role of the green budget in promoting the transition to a circular economy in conjunction with inclusive growth, thereby proposing relevant policy implications for Vietnam.
Green budget – A fiscal instrument to promote circular economy transition
According to the 2020 Environmental Protection Law, the circular economy is a model that optimizes resource use, extends product lifecycles, and minimizes waste in a closed-loop manner. Research indicates that the circular economy not only helps reduce environmental pressures but also promotes economic growth, creates green jobs, expands community opportunities, and advances the Sustainable Development Goals. To realize this transition, the green budget is seen as a crucial fiscal instrument that integrates environmental criteria into the budgeting and allocation process, prioritizing resources for sectors such as emission-reduction technologies, green transportation, resource efficiency, and circular economy development. In the context of Vietnam’s implementation of the Green Growth Strategy and the Circular Economy Development Project, the effective use of the green budget will contribute to accelerating the transition toward a green economy and sustainable development.
The role of the green budget in inclusive green growth
The study argues that integrating the circular economy with Inclusive Green Growth (IGG) contributes to building a development model that harmonizes economic, environmental, and social objectives, ensuring that all people benefit from the growth process. As many countries pursue economic recovery linked to sustainable development in the post-COVID-19 era, IGG has increasingly become an important orientation. To realize this goal, the study identifies four core roles of the green budget. First, it ensures stable financial resources for circular economy activities such as recycling, reuse, green technology innovation, and waste treatment. Second, it creates a framework for systematically integrating economic, social, and environmental objectives into the planning and allocation of budgets. Third, it prioritizes resources for strategic sectors such as renewable energy, green transportation, and circular infrastructure. Fourth, it expands the capacity to mobilize green financial sources such as green bonds, green investment funds, international financial cooperation, and carbon credit markets, thereby generating additional resources for the transition to a circular economy linked to inclusive growth in Vietnam.
Directions for enhancing the role of the green budget
While affirming the important role of the green budget in promoting the circular economy and inclusive green growth, the study also points out that implementation in Vietnam still faces numerous obstacles, including an incomplete legal framework, the absence of a unified set of evaluation criteria, limited guidance for implementation in the public sector, and insufficient in-depth research on green finance to meet practical requirements. These gaps indicate that improving institutions and enhancing implementation effectiveness are critical conditions for the green budget to fulfill its role in the coming period.
First, it is necessary to raise awareness among management agencies of the role of the green budget as a strategic fiscal instrument in promoting the circular economy and inclusive green growth. When effectively utilized, the green budget not only supports economic growth but also contributes to balancing development objectives, environmental protection, and improving people’s quality of life.
Second, the legal framework for the green budget needs to be further refined in alignment with sustainable development goals, while a unified system of criteria and indicators should be developed to integrate environmental factors into the entire process of state budget formulation, allocation, and monitoring. This will serve as an important foundation for improving the efficiency of public resource management and utilization, as well as ensuring transparency in the implementation of green transition objectives.
Finally, resources should be prioritized for sectors with spillover effects such as renewable energy, circular infrastructure, and green technology, while green financial instruments such as green bonds, green investment funds, and international financial cooperation should be expanded. The mobilization of diverse resources will contribute to accelerating the transition to a circular economy linked to inclusive green growth, toward achieving the net-zero emissions target by 2050 and Vietnam’s sustainable development goals.
Overall, the study helps clarify the role of the green budget as an important fiscal instrument in promoting the transition to a circular economy linked to inclusive green growth in Vietnam. These findings not only serve as a reference for policymakers in refining green finance mechanisms but also open up research and application directions aimed at realizing sustainable development goals and advancing the commitment to net-zero emissions by 2050.
View the full research paper “Green Budget – A ‘Lever’ for the Transition to a Circular Economy and Inclusive Growth in Vietnam” HERE
Authors: Assoc. Prof. Dr. Pham Quang Huy, MSc. Vu Kien Phuc – University of Economics Ho Chi Minh City (UEH)
This article is part of the series disseminating research and applied knowledge under the message “For a More Sustainable Mekong,” within the “Research Contribution For All” program conducted by UEH. UEH respectfully invites our readers to stay tuned for the next edition of the UEH Research Insights newsletter.
News, photos: Authors, UEH Mekong Admissions – Communications Office, UEH Department of Communications and Partnerships
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