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Peru Public Expenditure Tracking Survey

Peru Public Expenditure Tracking Survey. José R. López-Cálix, LCSPE Highlights from PER Task Managers PEAM Core Course January 14, 2004. PERU PETS. First in LAC Covered 2 sectors: Municipal Spending and Education (in reality 2 PETS)

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Peru Public Expenditure Tracking Survey

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  1. Peru Public Expenditure Tracking Survey José R. López-Cálix, LCSPE Highlights from PER Task Managers PEAM Core Course January 14, 2004

  2. PERU PETS • First in LAC • Covered 2 sectors: Municipal Spending and Education (in reality 2 PETS) • Municipal PETS covered 2 aspects: overall transfers (3 types) and the “Glass Of Milk” program • Education was a mix of a QSDS and a PETS on payroll and G&S budget

  3. Literature: Previous PETS Results • Leakages are bigger in non-recurrent spending • Leakages depend on the institutional structure (location of executing units, spending capacity and organization is critical) e.g. Uganda (local government), Ghana (transfer between CG and local) • Leakages are bigger in Education than in Health • Factors like children’s absenteism and ghost teachers have significant fiscal costs (Peru: US$100 million a year=annual investment level)

  4. Motivation of the Study • Social spending increased from 3.9 in 1993 to 6.9 % of GDP in 2002 • Protected pro-poor spending was about 2 percent of GDP • Big Questions: Where is the money? And why do we not see major progress in social outcomes? • Hypothesis: Poor targeting and leakages are the answer. How to prove it? PETS

  5. Issues on Spending Effectiveness • Gov spends on wrong goods and on a non-poor population • Gov spends on right goods and on poor population • Gov spends on right goods and on poor population, but these are not delivered • Gov spends on right goods and on poor population but these are “misused” by beneficiaries

  6. The Glass of Milk Program • Created by President Garcia (1984) under a populist platform—US$100 million a year (3.5% of total social spending, 20 % of extreme poverty) • Direct target: children 0-6 years and pregnant mothers and in post maternity. • Previous findings: • No nutrition impact • Some progressive targeting • Poor official audits • Important network of CSO (Mothers’s Committees)

  7. Vaso de Leche:Leakages Central Government Leak 1 Municipality Proceso de Compra Leak 2 Municipality-VdL team Leak 3 Committee VdL Leak 4 Household Leak 5 Beneficiaries

  8. Conclusions

  9. Policy Recommendations • Redefine rules: start by the basics: a good registry (Mothers’ Ctes and beneficiaries) • Good case for “conditioned transfers” • Cash transfer program could be an alternative (deviation vs leakage is an issue) • Mis-targeting needs different tests • Proper auditing procedures are the solution to the lack of controls

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