Public Finance Management
Effective, efficient and transparent public financial management is key to preventing corruption and other forms of misuse of public assets.
In Peru, where public expenditure is highly decentralised, the Basel Institute's Lima office is implementing a programme to strengthen Public Finance Management (PFM) in 11 regions and municipalities. The aim is to enhance the capacity of authorities to plan, implement and execute budgets and to increase standards of integrity and transparency in doing so.
Signed in 2015 by the Peruvian and Swiss governments, the programme is funded by the Swiss State Secretariat for Economic Affairs (SECO). It was renewed in 2019 for another four-year term (2020–2023).
What is Public Finance Management?
PFM is the administration of funds used to deliver public services like education, healthcare and infrastructure.
Sound and transparent management of public finances requires sound and transparent legislative, regulatory and policy frameworks, as well as their enforcement. The proper management of public finances promotes accountability and increases the credibility of the public administration for stakeholders.
Ultimately, proper PFM is essential to achieving development goals.
Programme goals and impact
Phase 1: 2015-2019
The SECO-funded Public Finance Management programme was launched in 2015 following a successful two-year pilot. The programme had the following goals:
- Improve and better coordinate budget cycle processes at subnational level.
- Strengthen transparency and accountability of public funds managed by subnational entities.
- Strengthen institutional PFM capacity at subnational level.
- Promote dialogue with the central government in order to improve the sustainability of PFM reforms at subnational level and disseminate them in other regions.
Read about some of the achievements of the first phase here.
Phase 2: 2020-2023
The second phase will focus on two areas:
1. Public Finance Management, including:
- optimising processes for managing public funds and priority basic services;
- strengthening the main processes for property tax collection;
- strengthening internal controls and public integrity within the subnational governments.
2. Asset recovery: including:
- support for the establishment of a specialised system for non-conviction based confiscation
- technical assistance and capacity building in this area for the Peruvian Attorney General's Office, judiciary and Ministry of Justice and Human Rights.
The strong performance of the Peruvian economy in recent years opens up greater opportunities to ensure that citizens enjoy quality public goods and services. This is especially important in the key areas of health, education, water and sanitation, as well as infrastructure to facilitate access to markets.
Our ultimate aims are to promote economic development and social inclusion, reduce poverty and cultivate greater trust in Peru’s governance and public institutions.