By emphasizing the relations between the central government and the provinces, the authors strive to design a system of intergovernmental fiscal relations ("IFRs") that reconciles the sometimes conflicting objectives of centralization and decentralization. First, the political system within which IFRs are imbedded is described. Second, an overview of IFRs in Vietnam is provided. Third, the assignment of expenditure responsibilities among levels of government is discussed. Fourth, the revenue aspect of IFRs is appraised. Finally, how the present system of subventions could be replaced by an improved system of intergovernmental transfers is proposed.