The director of Peruvian Institute of Economics (IPE) He affirmed that, between a poorly designed decentralization and an unfair distribution of the fee, the 2026 budget should avoid fiscal projections to the limit.
This month the budget project will be presented for 2026. However, do we continue with the problem of low execution …?
There is an obvious problem in the ability to execute public works of the State entities, but I would try not to read only the percentage of execution. You have to start changing the look towards the provision of citizen service. Perhaps a mayor or governor executed less than another in terms of his budget, but achieved better results, finished a work that was stopped years ago, closed a large gap, and so on. If we are going to congratulate mayors for hiring people to dig holes and then cover them, we are wrong.
Every year more money is requested, but, according to Capeco, in 15 years no more than US $ 60,000 million have been executed. Why?
The problems are several. A part of responsibility corresponds to a comptroller that sometimes exceeds its fueros and discourages more efficient advances. Another part is poorly made tenders, which delay years, and then fall out of challenges or are granted to bad contractors. Linked to that, you have a structural issue: poor technical files. The ridiculous delay of more than 10 years of the Santa Rosa bridge to access the New Lima Airport, only 62 meters, has its origin there. You also have failures in sanitation and acquisition of land for large works, which in judicial causes can delay a lot. Finally, remember that most of the public works correspond to regional municipalities and governments, and with about 2,000 mayors it is impossible to have quality technical teams in every small corner of the country. And, of course, corruption.
How could we do to execute the resources granted?
If I had to choose something to improve the situation and be politically viable, it would probably begin by standardizing the quality of technical files and having more efficient control over the companies they postulate. It shouldn’t be so difficult. But the mother of the lamb is poorly made decentralization.
We also have the problem of inefficiency of projects. Is there no timely control of these works?
When the project begins, gold and moro are sold at low cost. Then, one is seeing that this is impossible, that the cost is wrong, that it cannot be passed through that mountain, that the water did not have the expected quality, etc., and everything falls. But by then it’s too late. It is required to standardize and centralize size projects. The ideal would be to have few large, well done and quantified, packaged projects, via app, and that are attractive to large national and international bidders. Award, for example, not the closure of the sanitation gap in this or that town center, but throughout the department of Ayacucho and Apurímac. But, eye, you can’t do everything at once; There we need a realistic fiscal look.
We have seen that there are regions and areas that are poor, but they have resources and do not invest them. If they invested that money, would the development better?
Yes, obviously. You have areas adjacent to mining or very large hydrocarbons, and that have absurd amounts of resource per inhabitant. And yet they do not have adequate water or access to health or education. There are two pending issues. The first is to ensure that these resources are used only in the closure of more serious gaps (that is what something has been advanced); And the second is, it seems to me, that you have to rethink the distribution of canon and royalties, even partially. It is very unfair with the poorest communities, who do not have close natural resources, and in reality these should allocate the resources of the State, let’s call them canon, royalties, IGV or whatever they want. This is evident, but politically it is a hot potato that nobody wants or touch.
Budgets prior to elections usually differentiate from the other years. Should we be attentive to what is introduced?
This is a special budget because, in addition, we resume the practice – restless – of re -election of congressmen. That can generate additional pressures. Ideally, the new budget does not come, again, with projections to the limit of the fiscal rule, because most likely it will happen in recent years, which we fail to comply. The rule is not the deficit suggestion for the year, it is the maximum permissible, and we should not plan to always be there.
What percentage of the budget goes for forms? Why has it grown over the years?
If we add expense in personnel, pensions and social obligations, this year a little more than S/100,000 million would be spent. It is almost 40% of the public budget. That is not necessarily bad in itself, but we should demand to know what citizens have bought – in terms of public services – with a public budget that has risen from S/153,000 million to S/267,000 million in 10 years. Is there much better health? Education? Security? What have we spent that money? And yes, in general, the less flexible budget, such as the payroll spending, has been growing, and that is worrying because then – in times of skinny cows that will inevitably arrive – there is no how the belt adjust.
Taking into account that this year we will have breach of the fiscal rule, how should the 2026 budget be distributed?
The government still hopes to fulfill the goal of 2.2% of the GDP in deficit this year. I see it difficult, but at least they plan to fulfill, which is an improvement with respect to what they had thought about six weeks ago. The 2026 budget should have realistic income projections and not play at the expenditure limit. At the end of this month, the MEF will reveal its official projections, but it has been time for us to stop spending so much without offering anything in return.
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