Peru Public Expenditure Tracking Survey

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Peru Public Expenditure Tracking Survey

• José R. López-Cálix, LCSPE
• Highlights from PER Task Managers
• PEAM Core Course
• January 14, 2004

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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 GS budget

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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 childrens absenteism and ghost
  teachers have significant fiscal costs (Peru
  US100 million a yearannual investment level)

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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

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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

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The Glass of Milk Program

• Created by President Garcia (1984) under a
  populist platformUS100 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 (Motherss Committees)

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Vaso de LecheLeakages
Central Government
Leak 1
Municipality
Proceso de Compra
Leak 2
Municipality-VdL team
Leak 3
Committee VdL
Leak 4
Household
Leak 5
Beneficiaries
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Conclusions
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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