Public financial management

From budgets to bridges: how better public finance management improves lives in Peru and beyond

How public money is managed at the local level has a direct impact on people's lives – from whether children get their school books to the conservation of local environments on which many communities depend for their health and livelihoods. For more than a decade, the Basel Institute on Governance and the Swiss State Secretariat for Economic Affairs SECO have partnered with regional and municipal governments across Peru to strengthen public financial management and improve public service delivery. Through the Programa GFP Subnacional, a dedicated team combines practical technical assistance with innovative approaches, including data analytics, digital tools and behavioural interventions. Together, these help governments make better decisions, use resources more effectively and communicate better with the people they serve. In this Q&A, Programme Director Carlos Vargas explains how Programa GFP Subnacional – the Subnational Public Finance Management PFM programme – works, what it has achieved and why its lessons matter beyond Peru. How does the programme help governments deliver better services? Broadly speaking, the programme aims to enhance processes for public service delivery and improve the capacity of subnational governments to use public resources responsibly. In practice, this means really hands-on assistance with things like tax management or budget planning that both covers the required resources e.g. teaching materials and considers what’s needed to deliver a service e.g. enough vehicles to distribute the materials to schools . This in turn ensures that citizens receive public services in the quantity and quality they need and projects are completed within budget and on time. In other words, the programme aims to make a real difference in people's lives – particularly in areas like education, health, biodiversity conservation and the fight against climate change. Our advisors work hand-in-hand with local officials, providing technical assistance, training and support with technology in line with national priorities and systems. What difference has the programme made in terms of revenue generation? The results have been significant. One of the clearest examples comes from Tarapoto in the San Martín region. Through automated WhatsApp reminders, streamlined processes and a new online payment system, the municipality increased property tax collection. The additional revenue helped fund a bridge that now provides around 800 pupils with safe, direct access to their school. In the Municipality of Piura, we helped automate tax collection processes using algorithms and artificial intelligence to better understand taxpayer behaviour. This allowed us to group taxpayers into categories and design tailored communication strategies for each, which helped increase property tax revenue – funds governments need to invest in public services. How about in education or conservation? In education, we have assisted regions to ensure that around 95 percent of school materials now arrive on time before the start of the school year. The programme has also contributed to the timely delivery of vaccines and medicines. On biodiversity conservation, we have supported three regional governments in Peru to establish a baseline for deforestation, drawing on 24 years' worth of data to identify zones that are particularly vulnerable to deforestation and other illegal activities. Based on this, we have developed an early warning system that enables regional governments to act more quickly and direct their limited resources towards the most critical areas rather than trying to cover vast territories. Why are regional and municipal governments so important? In Peru, public spending is highly decentralised – around 35 to 45 percent of the budget is allocated to regional governments and municipalities. These are the entities closest to citizens. If this final link in the chain does not work well, citizens will not receive the services they need. How does better public finance management reduce corruption risks? By improving the efficiency and transparency of processes within public bodies, we limit discretionary power and reduce opportunities for corruption. The programme has generated concrete evidence of this. The regional government of Loreto – Peru’s largest region – for example, rose from 18th to 4th place in the national ranking of corruption prevention capacity after becoming a programme beneficiary. This kind of progress matters, because corruption ultimately undermines the delivery of public services and the responsible use of public resources. What can other countries learn from Peru's experience? We see the Programa GFP Subnacional as a laboratory for public finance innovation. Over more than a decade, it has generated proven tools and approaches that improve efficiency, reduce losses and help ensure the quality of public services. This body of evidence – tested and refined over time – represents a form of global learning. The lessons and best practices the programme generated can be shared not only across Peru but also with other countries, where they can be adapted to local needs. In this sense, the Swiss government's investment in the programme goes beyond impact in a specific region: it is an investment in generating knowledge and innovations that can inform public financial management reforms and help improve public services and the lives of citizens elsewhere.

Peru’s Integrity Week celebrates transparency and good governance, including for the environment

While most of the world celebrates International Anti-Corruption Day on 9 December, Peru has kickstarted a new tradition: an entire week dedicated to integrity, transparency and anti-corruption events and celebrations. The country celebrated its first Semana de Integridad Pública – Public Integrity Week – last December, following the passing of a law that dedicates the second week of December each year to the occasion. The aim is to reinforce the country’s commitment to transparency and ethics in public administration. Our teams were closely involved in the various events that took place across the country. Building integrity in public finance management Members of our Subnational Public Finance Management programme or Programa GFP Subnacional organised and participated in 14 events in nine different regions. In total, the events involved more than 2,000 individuals in person and a similar number online. Topics included ethical leadership, policies and strategies to mitigate risks and promote transparency in public administrations, and the role of asset forfeiture in fostering integrity and reducing impunity for corruption. The discussions and workshops underscored the commitment of the Swiss-funded programme to: Strengthen capacities: Provide tools and practical knowledge to identify and manage the risks that affect public integrity. Promote multi-stakeholder dialogue: Encourage collaboration between different parties, including government, the private sector and civil society, to address ethical and transparency challenges together. Inspire action: Promote a culture of integrity and accountability as the basis for inclusive and sustainable development. Green corruption high on the agenda Our Green Corruption prevention team, funded by the UK's Conflict, Stability and Security Fund, also participated in 18 separate events, reaching over 6,000 participants in person and more online. Our team drew attention to the fact that corruption is a key enabler of illegal trade in natural resources. Illegal logging in the Peruvian Amazon, illegal mining or wildlife trafficking pose serious threats to the country’s environment, people and economy. But these complex crimes can’t be addressed without an active focus on corruption prevention. The prominence of this topic during Integrity Week is an important achievement. It reflects increased awareness and interest in green corruption among Peruvian authorities, specifically from the Ministries of the Environment and Agriculture, as well as the national Secretariat for Public Integrity that led the organisation of the events. Learn more See the press release in Spanish . See photo highlights from events in Loreto. Watch a series of three debates about asset recovery law and practice in Peru, released at the same time as Integrity Week.

Cutting corruption in public procurement in Bulgaria: legal reforms and multi-agency training

Corruption and fraud risks in public procurement are a concern all over the world – including Bulgaria, where scandals around infrastructure and procurement projects damage trust in government, drain the public budget and may also affect EU development funds. The good news is that Bulgaria is taking steps to address these risks. On the prevention side, this includes important reforms to its procurement legislation in 2023 that will help it comply with EU legislative requirements and commitments under the National Recovery and Resilience Plan as well as to prepare for future OECD membership. The Public Procurement Act provides for the establishment of an expert advisory council to the Minister of Finance, which will analyse implementation of the law and issue guidelines to harmonise audit controls. The Basel Institute has been asked to provide assistance in establishing the council and advising its members. On the enforcement side, the country is also working hard to strengthen the capacity of law enforcement agencies to detect, investigate and prosecute corruption in infrastructure projects and procurement and to recover stolen funds. In support of these efforts, the Training Team of our International Centre for Asset Recovery ICAR led a specialised training programme on Corruption in Infrastructure Projects and Procurement in the Bulgarian capital Sofia last week. Funded by the Swiss Agency for Development and Cooperation SDC under the Swiss-Bulgarian Cooperation Programme, the five-day workshop brought together 23 participants including investigators, prosecutors and judges as well as representatives from state anti-corruption, public procurement and auditing agencies. Half of the participants were women. Red flags and recovered assets The training workshop centred on a simulated investigation into the fictitious Deputy Director of the Road Infrastructure Agency. The participants worked in task force groups to identify red flags and unravel the complex schemes used by the favoured contractor to manipulate public tenders. They revealed the clever methods that the Deputy Director used to secure bribes and kickbacks and collected evidence to prove the corruption and money laundering offences in court. The recovery of stolen assets laundered domestically in Bulgaria as well as in the European Union and globally was a significant focus. Participants commented on the professionalism of the trainers, Phyllis Atkinson and Tom Walugembe, with one highlighting the value of “learning directly from individuals who have been involved in major cases in the past”. They also emphasised the balance between theory and practice and the “engagement of the participants with a specific case”, followed by presentations by each group on different aspects of the investigation and asset recovery process covered during the week. Enhancing enforcement capacity The workshop took place at the National Institute of Justice, whose mission is to develop knowledge, skills and competencies in Bulgaria's judicial system and thus promote the rule of law. Opening the workshop, Emil Dechev, Deputy Minister of Justice, pointed out that the training was a natural continuation of earlier training under a partnership between the Basel Institute and the Bulgarian Government. He emphasised the importance of enhancing capacity to investigate corruption and money laundering in this area, as the biggest losses for the Bulgarian national budget lay in public procurement. If Bulgaria could stem the outflow of money, he said, it would be able build roads and other critical infrastructure and allow Bulgarians to live more comfortably. The workshop was closed by Thomas Stauffer, Head of the Swiss Contribution Office in Bulgaria, who emphasised the importance of the training for the success of the country’s national agenda. He stated that procurement was one of the most important and visible fields in which corruption was experienced, where private interests were served at the expense of all.

Building integrity from the ground up in Mozambique: training programme

Mozambique faces critical infrastructure challenges – and opportunities – across all areas of its economy. Yet the type of high-value procurement and infrastructure projects needed to boost development in the country are well known to be vulnerable to corruption. Risk factors include the high complexity, large transactions and multi-party negotiations that require close cooperation between the public and private sectors. To ensure procurement projects are not hijacked by corrupt interests, law enforcement officials need specific training to identify and investigate corruption and, if necessary, to recover stolen funds. Gaining specialised knowledge From 6-9 November 2023, 23 anti-corruption practitioners took part in ICAR's specialised training programme on "Corruption in Infrastructure Projects and Procurement" at the Prosecutor General's Office in Maputo, Mozambique. ICAR experts Phyllis Atkinson, Tom Walugembe and Emmanuel Mringo explored the most common fraudulent practices in procurement and infrastructure projects together with participants. In Mozambique as elsewhere, these include non-compliance with contract specifications, inflated invoices, product substitution, false claims and over-invoicing. The sessions led into interactive workshops and a simulated corruption case which participants investigated in teams. Learning through investigation ICAR courses allow participants to test out new knowledge and receive real-time feedback on their evolving skills by investigating a simulated case of public procurement corruption. In this course, a simulated case in a road construction project tested participants' ability to identify the "red flags" that can reveal a corruption scheme such as bid rigging, collusive bidding, fraud, conflict of interest, bribery and kickbacks. Participants found the learning structure helpful, with one stating: The methodology used for the course was excellent. The explanations in the presentations were directly relevant to the practical exercise. I will apply these new skills when investigating cases of corruption and the embezzlement of state funds. ICAR’s "learning by doing” approach means that participants are able to quickly apply new skills and easily transfer them to their daily work. As another participant noted: The training was excellent. It connects with very pertinent aspects of my day-to-day work. That means I was able to acquire more skills and investigative methodologies in the various legal types of crime that were covered here. This will enable me to achieve better results. Constructing the local context The participants' presentations at the end of the training demonstrated a thorough knowledge of the various offences common to public procurement corruption cases, such as abuse of office, passive corruption, embezzlement and money laundering. Importantly, their new knowledge was tailored to the local context, taking into account Mozambican law and procedures. Identifying and confiscating illicit assets was also a major focus of the training, through the use of both criminal/extended forfeiture laws and in the future, we hope, new civil forfeiture mechanisms. The successful implementation of these mechanisms is crucial to preventing future corruption in infrastructure and procurement. Learn more Learn more about ICAR’s training programmes and team. The training programme was delivered in the context of a long-running partnership with the Attorney General’s Office of Mozambique that started in 2019 and is funded by the Swiss Agency for Development and Cooperation SDC . Through a local team of field experts, we provide technical assistance and ongoing capacity building to law enforcement and judicial practitioners in investigating financial crimes and recovering illicit assets. Mozambique is also at the heart of a new Knowledge Community on Asset Recovery that arose from the ICAR-organised Lisbon Conference in 2022.

Green Corruption programme launches 5-year partnership with USAID Indonesia Integrity Initiative

The Basel Institute's Green Corruption programme has recently launched a five-year partnership with the USAID Indonesia Integrity Initiative USAID INTEGRITAS project in Indonesia. The project is a new, USD 9.9 million USAID initiative implemented by a consortium of NGOs led by KEMITRAAN Partnership for Governance Reform . Other partners include Indonesia Corruption Watch ICW and Transparency International Indonesia TI-Indonesia . USAID and the Basel Institute have cooperated with the Government of Indonesia on combating corruption for over a decade. The Basel Institute's Green Corruption programme Team Leader, Juhani Grossmann, noted: It is a great pleasure to be back in Indonesia, working with a 'dream team' of partners to jointly tackle one of the most complex issues of our times: environmental corruption. KEMITRAAN Executive Director, Laode Muhammad Syarif, said: We are excited about the consortium we have put together for this work, drawing upon our own experience and the work of our outstanding partners ICW and TI-Indonesia on the domestic front, combined with the international expertise of the team at the Basel Institute. We are optimistic about the changes we can achieve over the next five years by bringing our collective expertise to bear, in cooperation with key government institutions involved in corruption prevention efforts. The project will focus on preventing corruption in the environmental field, both in the public and private sectors, through a dual-tracked approach of systems strengthening and public engagement. It seeks to improve transparency, reduce conflicts of interest and promote accountability. The Basel Institute's Collective Action, Public Governance and Green Corruption teams will support the consortium members, the Government of Indonesia and private and state-owned enterprises SOEs . The scope covers improving integrity systems in government agencies and SOEs, developing targeted anti-corruption public education strategies, and supporting private-sector and multi-stakeholder Collective Action efforts in the environmental sector.

Human resource management patterns of (anti) corruption mechanisms within informal networks