Selected Issues Papers

Revamping Fiscal Decentralization to Secure Peru’s Position as a Leading Critical Mineral Exporter: Peru

By Moya Chin, Enrico Di Gregorio, Jose L. Torres

June 17, 2025

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Format: Chicago

Moya Chin, Enrico Di Gregorio, and Jose L. Torres "Revamping Fiscal Decentralization to Secure Peru’s Position as a Leading Critical Mineral Exporter: Peru", Selected Issues Papers 2025, 080 (2025), accessed July 19, 2025, https://doi.org/10.5089/9798229014359.018

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Summary

Peru’s mining wealth holds the promise to substantially accelerate potential growth. However, many mining projects have been stalled for several years due to conflicts with local communities that feel excluded from the benefits. Although local governments receive nearly 2 percent of GDP in natural resource revenues per year and comprise over 40 percent of public investment, poor execution and institutional challenges limit their impact. To secure the country’s future as a critical mineral exporter, Peru needs to amend its fiscal decentralization framework to ensure that mining dividends translate into greater development for all citizens. Efforts should focus on improving the distribution of resource-based revenues, replacing discretionary transfers with rule-based transfers, strengthening central government oversight, and increasing capacity and coordination at the subnational level to support public investment efficiency.

Subject: Economic sectors, Environment, Expenditure, Expenditure efficiency, Fiscal federalism, Fiscal policy, Mining sector, Natural resources, Public investment spending

Keywords: Caribbean, Decentralization, District government, Expenditure efficiency, Fiscal federalism, Intergovernmental transfers, Mineral exporter, Mining dividend, Mining sector, Mining wealth, Natural resources, Peru's position, Public investment, Public investment spending

Publication Details

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