Institutional Capacity for Sustainable Fiscal Decentalization TAL

closed

The project development objectives are in particular: (i) to reinforce the fiscal and financial planning, accounting, budgeting, reporting and overall management capacity of subnational governments. At the same time, it strengthens the capacity of the national government to monitor and evaluate fiscal and financial performance in accordance with the ceilings and targets already established in legislation; (ii) to support the initial steps towards incentives for and evaluation of quality of expenditure at subnational levels, and (iii) to provide technical assistance to reduce transaction costs, enhance operational efficiency and mobilize idle resources at subnational levels. The project has the following five components: Component 1) will focus on providing the tools needed to support the Government of Peru's (GOP's) guiding principle of a fiscally neutral decentralization process and to manage any possible deviations from its medium-term goals. Component 2) will support the government's move toward greater performance orientation. It will support the goal of gradually constructing the basis for programmatic and multiannual budgeting, result indicators, and result-informed fiscal budget and financial medium-term indicators. Component 3) will build on existing systems and processes for public investment planning and public assets management and aims to upgrade them to meet the demands that decentralization has triggered. Component 4) will support government efforts to expand the coverage of its financial management system and upgrade it to provide tools for performance monitoring. Specifically, this fourth component will be geared to support: (i) expeditious adoption of Integrated Financial System (SIAF) by local governments, (ii) the creation of a SIAF debt module, and (iii) virtual registering of the national and regional governments' payroll control system in SIAF. Component 5) will support project implementation, monitoring and evaluation. It will also provide assistance in the area of communication strategy.