Peru: Selected Issues
IMF Staff Country Reports, June 10, 2025
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- Peru: Selected Issues
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Bibliographic details
- Published: June 10, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229013741.002
Overview
- This Special Issues paper explores the impact of revamping fiscal decentralization to secure Peru’s position as a leading critical mineral exporter.
- After 20 years, fiscal decentralization has failed to fulfill its goals.
- While fiscal decentralization has the potential to enhance local governance and improve public service delivery, significant challenges persist.
Key findings
- Reducing horizontal inequality could allow for a better targeting of resources.
- Enhancing the capacity for medium-term planning in regional and district governments would improve spending efficiency.
- Closing development gaps will require enhancing the scale and impact of investment projects.
- Traceability of the final use of central government transfers at the subnational government level is critical for effective oversight.
Policy recommendations
- Amendments to the decentralization framework should be accompanied by strengthening accountability and oversight from the central government.
- Establishing internal controls and revamping audit processes to shift the focus away from intrusive, legalistic monitoring and toward facilitating project implementation would both promote more efficient investment while preventing corruption.
- Improve the fiscal decentralization framework to better position Peru to benefit from the green transition.
Fiscal decentralization challenges (summarized)
- Two decades of decentralization have not met intended objectives.
- Persistent horizontal inequality undermines resource targeting.
- Limited medium-term planning capacity at regional and district levels reduces spending efficiency.
- Current audit and oversight practices are overly intrusive and legalistic, impeding project implementation.
Priorities for implementation
- Strengthen central government oversight mechanisms while preserving local decision-making where effective.
- Increase traceability of transfers to ensure final use aligns with intended investment and service-delivery objectives.
- Reorient audit processes toward facilitation of project implementation and corruption prevention.
- Scale up and enhance the impact of public investment projects to close development gaps.
Peru: Selected Issues, IMF Staff Country Reports, June 10, 2025.
Content in this bundle
- Peru: Selected Issues; IMF Country Report No. 25/126; May 20, 2025