Peru's PFM system is sound and at a basic level conforms reasonably well with international best practices. However, there are a number of weaknesses and major challenges that still demand attention in order to improve fiscal discipline, resource allocation and public service delivery. The reform actions undertaken in the past to address some of these issues have produced important results, but have also been, in general, narrowly focused and poorly coordinated and sequenced.

The objective of the PFM Reform Program or PMC is to make a significant contribution towards the advancement of PFM in Peru, and in particular the consolidation of aggregate fiscal discipline, the improvement of strategic allocation of resources and the attainment of a more efficient provision of public goods and services to the population. It aims to achieve this by providing the existing PFM reform effort with three important new elements: a) a common and explicit medium term vision for PFM, together with its corresponding strategic objectives- b) a management structure to promote coordination, cohesion and sequencing between all PFM institutions and reform actions being undertaken and c) specific funding to support this endeavor.

consolidate and expand a medium term framework for budget formulation-

build up and fortify results based budgeting-

modernize PFM with the implementation of a new and up-to-date integrated information system which is adequately linked to all other transversal management systems (public investment, procurement, human resource management)-

strengthen the systems for performance evaluation and accountability-

introduce effective mechanisms and instruments for asset/liability management.

Expected results:  

improve fiscal sustainability and lower fiscal risks.

better align public policy priorities with resource allocation.

increase transparency with regards to future demands for current expenditure derived from new public investment projects.

improve reliability and predictability of the budget process for public institutionsL.

optimize resource allocation to programs that are valued by society and its main beneficiaries.

ensure that resource allocation is prioritised towards public goods and services which deliver the intended results.

introduce flexibility and innovation in public sector management to reduce the costs of each intervention.

improve the decision-making process regarding budget programming and formulation.

improve coordination between the governing and regulatory bodies of the PFM system.

refine the instruments and mechanisms available for monitoring and evaluation of budget programs.

Phase 1 03.12.2010 - 30.06.2017   (Active)