Public Expenditure Review for Peru : Spending for Results

Abstract

The purpose of this Public Expenditure
 Review (PER) is to take stock of Peru's public
 expenditure since the last PER and identify the main
 challenges. The key underlying questions addressed are: (i)
 How did Peru's public expenditure and revenues develop
 over the past decade? (ii) How have decentralization and the
 shift towards results-based budgeting impacted this
 development across levels of government and sectors? And,
 (iii) to what extent are public expenditures allocatively
 and technically efficient? This report aims to contribute to
 the policy discussion in Peru about the broad challenges
 faced by public expenditure. Since the last PER was prepared
 in 2002, a number of important developments have affected
 the management of public finances. First, the country has
 engaged in a decentralization process in which regional and
 local governments are increasingly assuming responsibilities
 for public service delivery. Second, as fiscal discipline
 was successfully restored, the policy focus shifted towards
 improving the efficiency and quality of public spending; and
 results-based budgeting has been gradually introduced to
 support policy and expenditure decisions. In addition, the
 increase in the level and volatility of the price of
 minerals has highlighted issues related to natural resource
 taxation and revenue sharing across different levels of
 government. This report aims to speak to these issues to
 help inform the policy debate on public expenditure in Peru.