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Improving Service Delivery in Peru

July 25, 2014


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World Bank

Focusing on the connection between public expenditures and results, technical assistance supported the Government of Peru’s work to improve service delivery by strengthening the performance of national and subnational public entities. Analyses contributed to a better understanding of the issues associated with these key public sector development priorities and helped to continue dialogue on future engagement.

Challenge

In Peru, there is significant dispersion in municipal-level service delivery and outcomes; the percentage of the population without access to water ranges from 3.1 to 100 percent (2007), while municipal level poverty rates range from approximately 0.1 to 97.8 percent (2009). Over recent years, the Government has been particularly concerned with improving service delivery and, through raising awareness of this progress, strengthening the social compact between the Government and the general population.  While a lack of financial resources can complicate service delivery, as evident in some municipalities in Peru, the availability of funds does not guarantee their use. (Municipal budget execution was 72.9% in 2011, pointing to a suboptimal use of resources.) Given the gaps in service delivery and the availability of public resources, the focus of dialogue has shifted from the availability of funds towards how funds can be used more effectively and efficiently to support development outcomes.   

Solution

Building upon recent decentralization efforts, work undertaken in previous years, and the growing importance of extractive industries, a set of analytical products designed to assess the determinants of public expenditure, propose recommendations to strengthen public spending and development outcomes, as well as improve institutional capacities at national and sub-national levels was prepared. These products were intended to inform decision-makers, serve as a basis for generating dialogue around complex questions in state modernization, and provide inputs for more targeted future engagement. 

Results

Understanding the constraints on implementation is critical for improving local governments’ performance as well as for informing national-level considerations, like subnational capacity-building strategies and resource allocations. In order to understand these constraints and possible solutions, three analytical pieces were produced:

  • Case studies of municipal development and public management in mining areas
  • A literature review of recent analyses of public management, investment and outcomes in Peru (with an emphasis on the subnational governments)
  • A municipal-level analysis linking public financial management and outputs/outcomes. Work also contributed to identifying activities within the scope of the Local Governance and Mining (PKS) (P143505), emphasizing the Apurimac region.

Work focused on improving national government capacity to monitor national goals supported the Presidency of the Council of Ministers (PCM) in identifying potential areas for institutional strengthening and possible future improvements to administrative systems under the PCM’s responsibility (civil service, strategic planning, and public sector modernization).

The NLTA also fostered dialogue and helped to identify areas for future engagement, on topics such as tax and customs administration, logistics, and civil service reform.



Bank Group Contribution

Analytical products were developed under the scope of a non-lending technical assistance activity. The project drew upon Bank expertise, international consultants with experience in both national and sub-national modernization, and discussions with authorities.

Partners

No other partners were involved in this particular NLTA. However, the Integral Analysis of Logistics in Peru NLTA (P145783) and discussions on possible future technical assistance on tax administration and customs intervention that were developed under the scope of this NLTA involve partnerships with the IFC and the Swiss State Secretariat for Economic Affairs (SECO). 

Moving Forward

Supporting public sector management at the national and subnational levels remain key priorities for both Peru and the Bank, and technical assistance in these areas is continuing.  Recent engagement includes collaboration with IFC to carry out municipal public management assessments in Apurimac, and a new non-lending technical assistance activity focused on fiscal resources and improving the quality of public investment and public spending.

Beneficiaries

The main beneficiaries of this NLTA were the Ministry of Finance (MEF), the Presidency of the Council of Ministers (PCM), the National Fund for State-Led Business Activity (FONAFE), and the Regional Governments of Apurimac and San Martin, as the analytical products developed under this NLTA were targeted at informing the decision-making and public management practices of these institutions. In addition, dialogue fostered with the Ministry of International Trade and Tourism (MINCETUR) and the National Superintendence of Customs and Tax Administration (SUNAT) helped to identify additional areas of collaboration with these agencies.






Peru - Map of Projects