Decentralized Budget Support in Peru, Phase I
The Decentralized Budget Support Program in Peru aims at supporting selected subnational governments in the implementation of structural reforms in the Public Finance Management (PFM) area. Essentially, it consists of performance based grants allocated to lower level government units under certain conditions.
As of 2002, Peru has begun a process of decentralization involving the gradual transfer of responsibilities and competences to subnational governments with the aim of reducing growing regional disparities and better tackling poverty. However, the process still faces considerable challenges of different kinds in particular the low capacity of subnational governments in the area of PFM. This operation will provide incentives to subnational governments for adopting and enforcing the required reforms and strengthen their capacity to manage their public finances more effectively. It will also leverage SECO's technical assistance in this area.
The overall objective of the Program is to support the improvement of access to quality local service delivery and contribute to inclusive economic development in Peru. The operation will aim at improving the decentralized PFM reform led by the Ministry of Economy and Finance (MEF) and how resources for locally-managed public services are increased and optimized. The contributions will be pooled with other funds transferred by the national government to improve service delivery at the local level, according to their priorities and in accordance with the national public financial management systems and budget procedures.
The primary beneficiaries of the DBS Program will be 4-5 largely urban provincial municipalities (Trujillo, Chiclayo, Cusco City, Abancay and Tarapoto) and a maximum of 10-11 district municipalities located at proximity to one of the 4 provincial municipalities.
to improve the quality of investments in local public services and infrastructure
to improve the financial sustainability of local public services with increased resources and local tax collection
to improve the delivery of public services at the municipal level
Income from local taxes increased
Capital budget more strategic and efficient
Enhanced institutional planning at the municipal level
Improved credibility of local budgets
Improved transparency and accountability
Local public services improved
Enhanced managerial and technical capacities
|Directorate/federal office responsible
|Current phase Swiss budget CHF 12’000’000 Swiss disbursement to date CHF 0 Budget inclusive project partner CHF 61’200’000
|Phase 1 01.10.2022 - 31.12.2027 (Current phase)