This Public Expenditure Review (PER) wasprepared at the request of Peru’s Ministry of Economy andFinance (MEF).The PER offers analysis, options for reform,and measures in selected areas and sectors to achieveefficiency gains and fiscal savings (where possible), whileimproving (at least not harming) equity. In the context ofless favorable external environment, public finance is oneof the critical issues that has come to the fore. Thegradual fiscal consolidation process initiated offers aunique opportunity to carry out important fiscal andsectoral reforms. Preserve the hard-won gains of soundfiscal policy. This report consists of two parts; Part Ifocuses on the cross-cutting issues and challenges. Themacro-fiscal chapter examines revenue and expendituretrends, provides a fiscal sustainability analysis and anassessment of contingent liabilities. It discusses relevantcrosscutting fiscal issues, expenditure rigidities, revenuechallenges, and areas to improve the multiannualmacroeconomic framework (MMF). The public procurementchapter evaluates procurement practices applied by allgovernment bodies in the budget. It uses the strategicsourcing methodology and data from Peru’s procurementplatform which for the purposes of this analysis has beenmerged with the budget accounting system (SEAF). Itidentifies significant fiscal savings and efficiency gains,many of which are relatively easy to achieve. Part IIidentifies areas for efficiency gains and potential fiscalsavings in five selected sectors. These sectors includewater and sanitation, health, education, citizen security,and transport. They account for a significant share of thebudget and represent a substantial share of public servicedelivery. These chapters provide several approaches andperspectives in looking at technical and allocativeefficiency. The PER identifies at least 1.4 percent of GDPin fiscal savings that arise from efficiency reforms andmeasures across the areas examined.
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