## sipea2025080

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### A. Introduction and mining outlook
- Peru’s mining wealth can substantially accelerate potential growth, but baseline projections for the sector are modest.
- Historical and projected mining sector growth:
  - Sector grew 3.5 percent per year on average between 2004-2014.
  - BCRP projects the mining and hydrocarbons sector will grow 3.2 and 1.3 percent in 2025 and 2026, respectively (December 2024 inflation report).
  - MEF projects the sector will grow on average 2.3 percent per year between 2025-28 (2025-28 Multi-year Macroeconomic Framework).
- Pipeline and social conflict:
  - A US $64 billion pipeline of mining projects has been mostly stalled for many years due to social conflicts.
  - Example: Tía María, a US$1.4 billion copper project in the Arequipa region, delayed since 2009.
  - Since 2019, social conflicts related to mining have steadily increased, while remaining below 2016 levels.
- Fiscal decentralization as transmission channel:
  - Since the start of fiscal decentralization in 2002, more than 50 percent of 2023 real GDP has been cumulatively transferred to subnational governments.
  - The fraction of households with unmet basic needs declined from 35 percent in 2004 to 20 percent in 2014, with the pace of decline slowing over the past decade.

### B. Overview of the fiscal decentralization framework
- Institutional and timeline features:
  - Process began in 2002; current arrangement: central government, 26 regional governments, provinces and districts (districts used for simplicity).
  - 2002 Constitutional Reform transferred political power to subnational governments; 2004 Fiscal Decentralization Law assigned resources and spending responsibilities to subnational governments.
  - A 2005 referendum to consolidate 26 regional governments into 12 macro-regions was rejected, halting the intended transfer of authority and completion of decentralization.
- Revenue and transfer composition:
  - Regional budgets rely almost entirely on central government transfers split among ordinary resources (recursos ordinarios), FONCOR (Fondo de Compensación Regional), and resource-based revenues (the canon).
  - Ordinary transfers make up approximately 70 percent of regional revenues and are discretionary and earmarked.
  - District spending: about 80 percent funded through central government transfers, primarily the canon and the FONCOMUN (Fondo de Compensación Municipal).
- Canon, FONCOMUN, and FONCOR mechanics:
  - Canon funded by 50 percent of corporate income taxes and royalties on natural resource production; distribution principle of origin favors producing districts; includes revenues from metal and non-metal mining, gas and oil extraction, hydroelectric power, forestry, fishing, and customs collection at border posts.
  - FONCOMUN financed by a 2 percent surcharge on VAT (total VAT rate 18 percent since 2011, of which two percentage points correspond to the municipal promotion tax, IPM); distributed according to population with higher weight for rural populations and development needs.
  - FONCOR equalizing transfer earmarked for capital spending and distributed by investment needs and fiscal capacity.
  - Canon distribution example (largest component funded by corporate income taxes from mining, gas, hydro-energy, fishing, forestry):
    - i) 10 percent producing district;
    - ii) 25 percent districts in producing province;
    - iii) 40 percent districts in producing region (with weights based on resident population and unmet basic needs, including the producing district);
    - iv) 20 percent for producing region’s government;
    - v) 5 percent for universities.
  - Mining royalties use 20, 20, 40, 15 and 5 percent for i)-v), respectively.
  - FONCOMUN allocation process: province-level index weighing district populations by share without water, electricity, sewage; within province 20 percent stays with provincial government and 80 percent assigned across districts by a district-level index (population 85 percent with rural twice urban weight; size in squared kilometers 5 percent; managerial performance 10 percent), with a minimum monthly transfer of at least 8 UITs per district.
- Vertical imbalance and local taxing powers:
  - Regional and district governments raise only 5 percent of total public revenues.
  - High dependency on central transfers results in a very high vertical imbalance compared to peers.
  - Local taxation powers unchanged since early 1990s: regional governments collect user fees and small sources; provincial governments collect motor vehicle, public entertainment, lotteries and gambling taxes; district governments collect urban property tax (impuesto predial) and real estate transaction tax (impuesto de alcabala).
- Public investment execution and capacity:
  - Regional and district governments comprise about 40 percent of total public spending, but around 60 percent of public investment (about 2.5 percent of GDP per year).
  - About 40 percent of public investment (1.7 percent of GDP) is executed by district governments alone.
  - Many district projects are small and districts have limited capacity—the median district population is fewer than 5,000 residents.
  - Reported incidence of corruption: regional governments 15.4 percent and district governments 13.1 percent in 2023 (Contraloría General de la República, 2024).
  - In 2022-2024 the Fiscalía de la Nación investigated over 1,300 cases of potential corruption of public officers related to public investment.

### C. Assessing district public finances — key findings
- Shift in revenue composition since mid-2000s:
  - In 2004, FONCOMUN transfers were 38 percent of district revenues (excluding ordinary transfers); canon contributed less than 14 percent.
  - By 2023, FONCOMUN’s average budget share remained roughly stable while the canon’s budget share more than doubled to 36 percent, after peaking at over 50 percent a decade earlier.
- Reliance and inequality:
  - For most districts, the canon constitutes the primary source of revenue.
  - The canon heavily favors producing districts: 70 percent of canon is allocated to only 20 percent of districts.
  - Example: Moquegua region receives over 18 times more resources per capita at the region and district level than the Lima region.
- Targeting and equalization shortcomings:
  - Although canon and FONCOMUN include development needs in formulas, weights do not sufficiently mitigate economic development differences across districts.
  - Districts with the highest development needs do not receive proportionately greater shares of FONCOMUN or canon revenues.
- Volatility and predictability:
  - Canon introduces high volatility: in the median district, canon revenues fluctuate by nearly 30 percent year to year.
  - Median realized transfers are lower than budgeted:
    - Realized canon transfers authorized by the central government are 21 percent lower than budgeted in the median district-year.
    - Realized FONCOMUN transfers are 8 percent lower than budgeted in the median district-year.
  - High volatility and unpredictability impede medium-term planning and reduce the effectiveness and efficiency of public spending.

### D. District public investment execution: activity, performance, and constraints
- Public investment scale and efficiency:
  - Peru averages around 5 percent of GDP in public investment over the past two decades.
  - There is an Average Efficiency Gap of 29% relative to the efficiency frontier for countries with similar public capital stock per capita.
  - Over 40 percent of public investment is executed at the district level.
- Project registrations and execution:
  - Staff analysis covers more than 230,000 local investment projects registered in the Banco de Inversiones between 2006-2023 (projects include active, complete, and inactive projects registered between 2001 and August 2024; analysis focuses on projects registered after 2006 and excludes districts in the province of Lima).
  - Districts moved from registering on average 1.6 projects in 2006 to 15.8 in 2023, with nearly all districts registering a project in 2023.
  - Districts under-execute capital budgets by about 30 percent on average.
  - Excluding deactivated projects, fewer than 40 percent of projects registered before 2010 were completed as of August 2024.
  - Execution rates (percent of PIM capital budget accrued) show mean and median execution trends declining across 2012-2023 (data exclude districts in the Lima province).
- Project management metrics and scale:
  - Average project cost overruns: about 12 percent.
  - Average physical execution delays: 8 additional months to start, and 17 additional months to complete.
  - Average size of district projects between 2006-2023: 2.2 million 2024 real Soles at registration (approximately US$ 600,000).
  - Average district project is 3.6 times smaller than the average regional project.
  - Between 2002 and 2023:
    - 13 percent of all districts registered projects larger than 50 million 2024 real Soles (US$ 13.4 million).
    - 3 percent of districts ever completed projects larger than 50 million 2024 real Soles.
- Political economy and coordination:
  - Average programmed project duration: 7 months.
  - Average actual project duration: 16 months.
  - District elected officials serve four-year terms without the possibility of re-election (a constitutional reform including second terms for district and regional governors was rejected by Congress at end-2024).
  - Within two years of a new administration, project registrations and payments surge, then sharply decline as the next administration prioritizes new projects.
  - Lack of coordination between districts and regional governments prevents large-scale investment plans. The Comptroller General has identified thousands of dormant public projects (obras paralizadas) with no updates for several months.

### E. Impacts on public goods, social conflict, and development outcomes
- Data sources:
  - Public goods provision: Registro Nacional de Municipalidades (2004-2023).
  - Social conflicts: Reporte de Conflictos Sociales (2014-2023).
  - Economic development: censuses of 1993, 2005, 2007, and 2017.
- Estimated impacts and patterns:
  - Public goods provision:
    - Top recipient districts (high canon and high FONCOMUN) have more municipal employees, police officers, police post stations, and health care centers.
    - Higher FONCOMUN transfers associated with more health care centers; higher canon transfers associated with more police and police post stations.
  - Social conflicts:
    - High canon districts have more active conflicts overall, particularly social-environmental conflicts and conflicts involving mining activities.
  - Economic development:
    - Results are mixed and uneven. High canon districts show some improvements (higher fraction of households with indoor sewage; higher fraction of adults with at least secondary education) but do not consistently outperform high FONCOMUN districts across metrics.
    - High canon districts have 40 percent higher revenues per capita than high FONCOMUN districts, implying relatively low spending efficiency in high canon districts.

### F. Conclusions and policy recommendations
- Core conclusions:
  - After 20 years, fiscal decentralization has not fulfilled its goals of improving public spending efficiency, reducing regional disparities, and strengthening local democratic processes.
  - Nearly all districts conduct public investment projects, but execution and institutional challenges limit transformative impact.
  - Fiscal resources are not sufficiently directed toward districts with the greatest development needs; district governments undertake small projects and operate under short-term horizons, complicating medium-term planning and hindering high-impact projects.
- Policy recommendations:
  - Adjust the canon formula to reduce its concentration in a small number of districts, enabling a more equitable distribution of fiscal resources and better alignment with Article 66 of the Peruvian Constitution (natural resources belong to all Peruvians).
  - Increase the size of the FONCOMUN and adjust its formula to assign greater weight to development needs and local fiscal capacity to strengthen its equalization role.
  - Replace discretionary transfers with rules-based transfers; specific proposal: use a 5-year average of mining tax revenues to reduce volatility in canon transfers.
  - Scale and coordination:
    - Enhance the scale and impact of investment projects and improve coordination across all government levels.
    - Regional governments and central government institutions (such as the National Infrastructure Authority) should help develop regional development plans and coordinate public spending across districts.
    - Establish mechanisms for co-financing with the central government to encourage subnational governments to undertake high-impact regional projects (examples cited: irrigation districts, water and electricity generation, transportation infrastructure).
  - Capacity building and institutional reforms:
    - Increase subnational capacity in project formulation and implementation.
    - Create strong technical offices at regional and central levels, appropriately staffed with civil servants to assist district governments in standardizing, reducing the costs of, and improving the quality of project proposals and their implementation.
    - Full implementation of legal provisions determining the National Infrastructure Authority’s budget could facilitate project co-financing across government levels.
  - Accountability and oversight:
    - Strengthen accountability and oversight from the central government.
    - Ensure traceability of the final use of central government transfers at the subnational government level.
    - Establish internal controls and revamp audit processes to shift focus away from intrusive, legalistic monitoring and towards facilitating project implementation to promote more efficient investment and help prevent corruption.
  - Fiscal decentralization and the green transition:
    - Improve the decentralization framework to better benefit from the green transition by improving resource allocation, empowering subnational governments, and enhancing spending efficiency.
    - As mining operations expand, adopt and enforce the highest international environmental quality standards and practices to ensure mining dividends translate into sustainable and inclusive development and reduce the risk of social unrest.

*International Monetary Fund. PERU. May 20, 2025. Source: IMF staff analysis in sipea2025080.*

### References ___________________________________________________________________________ 16

### References ___________________________________________________________________________ 16

### A. Introduction
- Peru’s mining wealth can substantially accelerate potential growth, but baseline projections for the sector are modest.
- Historical and projected mining sector growth figures:
  - Sector grew 3.5 percent per year on average between 2004-2014.
  - BCRP projects the mining and hydrocarbons sector will grow 3.2 and 1.3 percent in 2025 and 2026, respectively (December 2024 inflation report).
  - MEF projects the sector will grow on average 2.3 percent per year between 2025-28 (2025-28 Multi-year Macroeconomic Framework).
- A US $64 billion pipeline of mining projects has been mostly stalled for many years due to social conflicts.
  - Example: Tía María, a US$1.4 billion copper project in the Arequipa region, delayed since 2009.
- Since 2019, social conflicts related to mining have steadily increased, while remaining below 2016 levels.
- Fiscal decentralization is a key channel to translate mining wealth into public services.
  - Since the start of fiscal decentralization in 2002, more than 50 percent of 2023 real GDP has been cumulatively transferred to subnational governments.
  - The fraction of households with unmet basic needs declined from 35 percent in 2004 to 20 percent in 2014, with the pace of decline slowing over the past decade.

### B. Overview of the Fiscal Decentralization Framework
- Decentralization timeline and structure:
  - Process began in 2002; current arrangement: central government, 26 regional governments, provinces and districts (districts used for simplicity).
  - 2002 Constitutional Reform transferred political power to subnational governments; 2004 Fiscal Decentralization Law assigned resources and spending responsibilities to subnational governments.
  - A 2005 referendum to consolidate 26 regional governments into 12 macro-regions was rejected, halting the intended transfer of authority and completion of decentralization.
- Revenue and transfer composition and characteristics:
  - Regional budgets rely almost entirely on central government transfers split among:
    - ordinary resources (recursos ordinarios),
    - FONCOR (Fondo de Compensación Regional),
    - resource-based revenues (the canon).
  - Ordinary transfers make up approximately 70 percent of regional revenues and are discretionary and earmarked.
  - District spending: about 80 percent funded through central government transfers, primarily the canon and the FONCOMUN (Fondo de Compensación Municipal).
- Canon and FONCOMUN details:
  - Canon: funded by 50 percent of corporate income taxes and royalties on natural resource production; distribution principle of origin favors producing districts; includes revenues from metal and non-metal mining, gas and oil extraction, hydroelectric power, forestry, fishing, and customs collection at border posts.
  - FONCOMUN: financed by a 2 percent surcharge on VAT (total VAT rate 18 percent since 2011, of which two percentage points correspond to the municipal promotion tax, IPM); distributed according to population with higher weight for rural populations and development needs.
  - FONCOR: equalizing transfer earmarked for capital spending and distributed by investment needs and fiscal capacity.
  - Canon distribution example (largest component funded by corporate income taxes from mining, gas, hydro-energy, fishing, forestry): i) 10 percent producing district; ii) 25 percent districts in producing province; iii) 40 percent districts in producing region (with weights based on resident population and unmet basic needs, including the producing district); iv) 20 percent for producing region’s government; v) 5 percent for universities. Mining royalties use 20, 20, 40, 15 and 5 percent for i)-v), respectively.
  - FONCOMUN allocation process: province-level index weighing district populations by share without water, electricity, sewage; within province 20 percent stays with provincial government and 80 percent assigned across districts by a district-level index (population 85 percent with rural twice urban weight; size in squared kilometers 5 percent; managerial performance 10 percent), with a minimum monthly transfer of at least 8 UITs per district.
- Vertical imbalance and tax authority:
  - Regional and district governments raise only 5 percent of total public revenues.
  - High dependency on central transfers results in a very high vertical imbalance compared to peers.
  - Local taxation powers unchanged since early 1990s: regional governments collect user fees and small sources; provincial governments collect motor vehicle, public entertainment, lotteries and gambling taxes; district governments collect urban property tax (impuesto predial) and real estate transaction tax (impuesto de alcabala).
- Public investment execution and capacity:
  - Regional and district governments comprise about 40 percent of total public spending, but around 60 percent of public investment (about 2.5 percent of GDP per year).
  - About 40 percent of public investment (1.7 percent of GDP) is executed by district governments alone.
  - Many district projects are small and districts have limited capacity—the median district population is fewer than 5,000 residents.
  - Reported incidence of corruption: regional governments 15.4 percent and district governments 13.1 percent in 2023 (Contraloría General de la República, 2024).
  - In 2022-2024 the Fiscalía de la Nación investigated over 1,300 cases of potential corruption of public officers related to public investment.

### C. Assessing District Public Finances — Findings
- Shift in revenue composition since the mid-2000s:
  - In 2004, FONCOMUN transfers were 38 percent of district revenues (excluding ordinary transfers); canon contributed less than 14 percent.
  - By 2023, FONCOMUN’s average budget share remained roughly stable while the canon’s budget share more than doubled to 36 percent, after peaking at over 50 percent a decade earlier.
- Reliance and inequality:
  - For most districts, the canon constitutes the primary source of revenue.
  - The canon heavily favors producing districts: 70 percent of canon is allocated to only 20 percent of districts.
  - Example of regional disparity: Moquegua region receives over 18 times more resources per capita at the region and district level than the Lima region.
- Targeting and equalization shortcomings:
  - Although canon and FONCOMUN include development needs in formulas, weights do not sufficiently mitigate economic development differences across districts.
  - Districts with the highest development needs do not receive proportionately greater shares of FONCOMUN or canon revenues.
- Volatility and predictability:
  - Canon introduces high volatility: in the median district, canon revenues fluctuate by nearly 30 percent year to year.
  - Median realized transfers are lower than budgeted:
    - Realized canon transfers authorized by the central government are 21 percent lower than budgeted in the median district-year.
    - Realized FONCOMUN transfers are 8 percent lower than budgeted in the median district-year.
  - High volatility and unpredictability impede medium-term planning and reduce the effectiveness and efficiency of public spending.

### D. Assessing the Execution of Local Public Investment (introductory points)
- Public investment by subnational governments represents a large share of total public investment (about 60 percent).
- District-level execution constraints highlighted:
  - Many projects executed by small districts with limited planning and appraisal capacity.
  - The concentration of capital spending at the subnational level underscores the importance of improving project execution capacity and oversight to convert resource revenues into effective public goods provision.

*International Monetary Fund. PERU. May 20, 2025.*

### 14. Peru’s public investment is high but has low efficiency. Since the height of the 2000s

### sipea2025080 - 14. Peru’s public investment is high but has low efficiency. Since the height of the 2000s

### Overview
- Peru has one of the highest levels of public investment as a share of GDP in Latin America and the Caribbean (LAC), averaging around 5 percent over the past two decades.
- There is a large public investment efficiency gap relative to the efficiency frontier for countries with similar public capital stock per capita; the report shows an Average Efficiency Gap of 29%.
- Over 40 percent of public investment is executed at the district level; this section examines district public investment projects to identify potential bottlenecks.

### District project activity and execution
- Staff analysis covers more than 230,000 local investment projects registered in the Banco de Inversiones between 2006-2023 (projects include active, complete, and inactive projects registered between 2001 and August 2024; analysis focuses on projects registered after 2006 and excludes districts in the province of Lima).
- District project registrations:
  - Districts moved from registering on average 1.6 projects in 2006 to 15.8 in 2023, with nearly all districts registering a project in 2023.
- Execution performance:
  - Districts under-execute capital budgets by about 30 percent on average.
  - Excluding deactivated projects, fewer than 40 percent of projects registered before 2010 were completed as of August 2024.
  - Execution rates (percent of PIM capital budget accrued) show mean and median execution trends declining across 2012-2023 (data exclude districts in the Lima province).

### Capacity constraints, cost overruns, delays, and project scale
- Typical project management metrics:
  - Average project cost overruns: about 12 percent.
  - Average physical execution delays: 8 additional months to start, and 17 additional months to complete.
- Project size and transformational potential:
  - Average size of district projects between 2006-2023: 2.2 million 2024 real Soles at registration (approximately US$ 600,000).
  - Average district project is 3.6 times smaller than the average regional project.
  - Between 2002 and 2023:
    - 13 percent of all districts registered projects larger than 50 million 2024 real Soles (US$ 13.4 million).
    - 3 percent of districts ever completed projects larger than 50 million 2024 real Soles.
- Small scale and limited capacity restrict districts’ ability to undertake large, high-impact initiatives.

### Political incentives and timing
- Project durations and political cycle:
  - Average programmed project duration: 7 months.
  - Average actual project duration: 16 months.
- Political cycle effects:
  - District elected officials serve four-year terms without the possibility of re-election (a constitutional reform including second terms for district and regional governors was rejected by Congress at end-2024).
  - Within two years of a new administration, project registrations and payments surge, then sharply decline as the next administration prioritizes new projects.
  - Political cycles increase risks of project abandonment, cost overruns, and delays.
- Coordination issues:
  - Lack of coordination between districts and regional governments further prevents large-scale investment plans.
  - The Comptroller General has identified thousands of dormant public projects (obras paralizadas) with no updates for several months.

### Impact on public goods provision, social conflicts, and economic development
- Data and outcomes used for analysis:
  - Public goods provision: Registro Nacional de Municipalidades (2004-2023) — municipal employees, police, police post stations, health care centers, machinery and equipment.
  - Social conflicts: Reporte de Conflictos Sociales (2014-2023) — onset month, status, location, parties involved, issue description.
  - Economic development: censuses of 1993, 2005, 2007, and 2017 — household access to electricity, water connection, indoor sewage, literacy rate, fraction of adults with at least secondary education.
- Identification of high-recipient districts:
  - High canon and high FONCOMUN districts defined as top quartile of total real canon and FONCOMUN transfers per capita between 2002-2014 (real transfers deflated by public sector deflators; per capita transfers use district population estimates from the most recent census). Districts in the province of Lima are excluded.
- Estimated impacts:
  - Public goods provision:
    - Top recipient districts (high canon and high FONCOMUN) have more municipal employees, police officers, police post stations, and health care centers.
    - Relative magnitudes: higher FONCOMUN transfers associated with more health care centers; higher canon transfers associated with more police and police post stations.
  - Social conflicts:
    - High canon districts have more active conflicts overall, particularly social-environmental conflicts and conflicts involving mining activities.
    - Evidence suggests canon regions/districts experience higher levels of social conflict.
  - Economic development:
    - Results are mixed and uneven. High canon districts show some improvements (higher fraction of households with indoor sewage; higher fraction of adults with at least secondary education) but do not consistently outperform high FONCOMUN districts across metrics.
    - High canon districts have 40 percent higher revenues per capita than high FONCOMUN districts, implying relatively low spending efficiency in high canon districts.

### Conclusions and policy recommendations
- Main conclusions:
  - After 20 years, fiscal decentralization has not fulfilled its goals of improving public spending efficiency, reducing regional disparities, and strengthening local democratic processes.
  - Nearly all districts conduct public investment projects, but execution and institutional challenges limit transformative impact.
  - Fiscal resources are not sufficiently directed toward districts with the greatest development needs; district governments undertake small projects and operate under short-term horizons, complicating medium-term planning and hindering high-impact projects.
- Recommendations:
  - Adjust the canon formula to reduce its concentration in a small number of districts, enabling a more equitable distribution of fiscal resources and better alignment with Article 66 of the Peruvian Constitution (natural resources belong to all Peruvians).
  - Increase the size of the FONCOMUN and adjust its formula to assign greater weight to development needs and local fiscal capacity to strengthen its equalization role.

*Source: IMF staff analysis in sipea2025080 - 14. Peru’s public investment is high but has low efficiency. Since the height of the 2000s*

### 29.      Enhancing the capacity for medium-term planning in regional and district

### 29. Enhancing the capacity for medium-term planning in regional and district governments

### Predictability of transfers and medium-term planning
- Regional and district governments are heavily reliant on transfers from the central government which are highly unpredictable.
- Recommendation: Replace discretionary transfers with rules-based transfers.
- Specific proposal to reduce volatility in canon transfers: use a 5-year average of mining tax revenues.

### Scaling and impact of public investment projects
- Closing development gaps requires enhancing the scale and impact of investment projects and improving coordination across all government levels.
- Role of institutions:
  - Regional governments and central government institutions (such as the National Infrastructure Authority, or Autoridad Nacional de Infraestructura) should help develop regional development plans and coordinate public spending across districts.
  - Establish mechanisms for co-financing with the central government to encourage subnational governments to undertake high-impact regional projects (examples cited: irrigation districts, water and electricity generation, transportation infrastructure).
- Capacity building:
  - Increase subnational capacity in project formulation and implementation.
  - Create strong technical offices at regional and central levels, appropriately staffed with civil servants to assist district governments in standardizing, reducing the costs of, and improving the quality of project proposals and their implementation.
- Institutional detail: Full implementation of legal provisions determining the National Infrastructure Authority’s budget could facilitate project co-financing across government levels.

### Accountability, oversight, and controls
- Amendments to the decentralization framework should be accompanied by strengthening accountability and oversight from the central government.
- Traceability of the final use of central government transfers at the subnational government level is critical for effective oversight.
- Recommendations:
  - Establish internal controls.
  - Revamp audit processes to shift focus away from intrusive, legalistic monitoring and towards facilitating project implementation.
  - These measures would both promote more efficient investment and help prevent corruption.

### Fiscal decentralization and the green transition
- Improving the fiscal decentralization framework is essential for Peru to better benefit from the green transition.
- Key objectives for a revamp of the decentralization framework:
  - Improve resource allocation.
  - Empower subnational governments.
  - Enhance spending efficiency.
- Environmental governance:
  - As Peru increases its mining operations, the country should strive to adopt and enforce the highest international environmental quality standards and practices.
  - Aim: ensure mining dividends translate into sustainable and inclusive development and reduce the risk of social unrest.

*Source: sipea2025080 - 29. Enhancing the capacity for medium-term planning in regional and district governments*

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_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025080.pdf_