Support to the National Public Finance Management Reform, Peru, Phase III


The programme supports Peru in the implementation of a stronger, more predictable and effective PFM system, that is consistent with OECD international standards and serves to improve the transparency, accountability and effectiveness of public spending.

Country/region Period Budget
Peru
21.02.2023 - 31.07.2027
CHF  6’160’160
Background

Over the past two decades, Peru has demonstrated remarkable economic and fiscal responsibility. This is evidenced by a reduction in public debt to 36.8% of GDP by 2021 and a fiscal deficit of 2.6% versus the originally budgeted 6.2%. This sound fiscal management has allowed the country to implement a robust package of measures to address the pandemic. Nevertheless, poverty has risen to worrying levels in 2021. At the same time, informality has increased putting more pressure on government expenditures and tax exceptions to alleviate social demands. In this context, efficiency in public expenses is more important than ever.

Objectives

The objective of the Programme is to consolidate and deepen PFM reforms in Peru that will be specifically oriented towards supporting Peru’s accession to the OECD. Phase III will put special emphasis on budget efficiency and predictability, efficient management of treasury liquidity, public investment management and digitalisation (GovTech), alongside improved coordination of reforms within the Ministry of Economy and Finance (hereafter the Ministry), and between the Ministry and other PFM institutions. All the activities will be specifically linked to the OECD reform roadmap.

Medium-term outcomes

The expected outcome is a stronger, more predictable and effective PFM system, that is consistent with OECD standards and serves to improve the transparency, accountability and effectiveness of PFM systems, and eventually leads to better public services for Peruvian citizens.

Results

Expected results:  

Adoption and implementation by the Ministry of a Strategic Framework for PFM Improvement, consistent with the recommendations of the OECD Peer Review and subsequently developed into 6 System Road Maps including sequenced sets of annual progress targets-

Establishment of comprehensive mechanisms for coordinating, monitoring and evaluating PFM reforms are established within the Ministry-

Institutional capacities and working methodologies are developed within the Ministry to design and manage PFM reforms and to better comply with OECD country practices-

Framework for oversight and monitoring of Subnational Budget Support established within the Ministry, as a way of piloting targeted incentives to subnational governments to improve local revenue collection, public investment management, and human resource management.


Results from previous phases:  

Despite an extremely challenging environment (Covid19, political instability), Phase II had significant achievements in several areas. Among them : i) the modernization of the legal and regulatory framework of the financial administration system - ii) the creation of the Directorate General for Public Procurement- iii) the creation of the Office of the Attorney General for Fiscal Matters- iv) the enhancement of the Integrated Financial Management Information System- v) the implementation of International Public Sector Accounting Standards (IPSAS)- vi) the institutionalization of Public Expenditure Reviews- and vii) the strengthening of results-oriented budgeting processes. Phase II also provided significant support to the Covid19 response, undertaking studies to assist the Ministry in the design of remedial measures, developing mobile phone applications to collect data to improve budget planning, and undertaking expenditure reviews.


Directorate/federal office responsible SECO
Budget Current phase Swiss budget CHF    6’160’160 Swiss disbursement to date CHF    0 Budget inclusive project partner CHF    6’776’176
Project phases Phase 3 21.02.2023 - 31.07.2027   (Current phase) Phase 2 01.09.2016 - 21.12.2023   (Active) Phase 1 03.12.2010 - 30.06.2017   (Active)