Transcript Peru: Use of PETS, link to lending, etc. -- Jose Lopez

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)
• 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
Literature: Previous PETS Results
1. Leakages are bigger in non-recurrent spending
2. 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)
3. Leakages are bigger in Education than in Health
4. Factors like children’s absenteism and ghost
teachers have significant fiscal costs (Peru:
US$100 million a year=annual investment level)
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
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
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)
Programa de Vaso de Leche
Major
Alcalde
Director VL
Administrative Committee
Mothers' Committee at district level
Mothers' Committee at local level
HH Beneficiaries
Vaso de Leche:
Leakages
Central Government
Leak 1
Municipality
Proceso
Leak 2
de
Compra
Municipality-VdL team
Leak 3
Committee VdL
Leak 4
Household
Leak 5
Beneficiaries
Conclusions
100%
80%
60%
100.00%
99.98%
99.92%
97.33%
40%
71.34%
20%
29.25%
0%
Initial Amount
CG to Mun.
Within Mun.
Mun to VdLC
VdLC to HH
Within HH
Conclusions
• Significant leakages
• Heterogeneous product delivered
• Lack of clear rules: no registry, no
information about its execution, no
operational manuals, no supervision
• Little training to mothers (preparation
and distribution)
• Corruption is not the main issue (but
exists!)
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