Public Expenditure and Fiscal Risk Management DPF-DDO

closed

The Development Policy Financing with a Deferred Drawdown Option (DPFDDO) in the amount of US$1.25 billion aims to support the Government of Peru (GoP) in their efforts to improve public expenditure and fiscal risk management. Against the backdrop of a less favorable external environment the GoP embarked upon the implementation of structural reforms to boost human capital and productivity, and to promote fiscal effectiveness and responsibility. Within this context, the proposed operation supports the GoP’s efforts to improve: (i) the management and reporting of public expenditures in subnational governments (SNGs), and (ii) the Government’s legal and institutional framework for public-private partnerships (PPPs). As part of its overall reform program, the GoP has focused on improving the public management and reporting framework for subnational levels, and the basis to evaluate fiscal risks coming from PPP projects. This operation supports the objectives of the authorities’ reform efforts to improve: (i) the management and reporting of public expenditures in subnational governments’ (SNGs), and (ii) the Government’s legal and institutional framework for public-private partnerships (PPPs). A parallel, and complementary DPF-DDO, would support a boost to firms’ human capital and productivity focusing on: (a) enhancing the education policy framework to enable better quality of skills, (b) facilitating the entry, operation, and exit of firms; and (iii) reducing transaction costs in trade. Other important factors, limiting growth are the country’s infrastructure gaps and managing the available resources for public investments adequately. The objectives of these DPF-DDOs are fully aligned with key parts of the 2012-16 Country Partnership Strategy (CPS).