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The Participatory Programming of the Budget in Peru: First Lessons of an Agreement Process

Nelson Shack Yalta

After several failed attempts to achieve administrative, economic and political decentralization, Peru has begun a new process. This time, embedded with State modernization, purposes and participatory methods for public administration reform.

This feature clearly differs the new process from the old ones, which in most cases used to be imposed from top to down. In fact, the new process encompasses civil society, regional and local governments, private sector as well as international cooperation agencies. Participation is the main characteristic of this renewed attempt of Peruvian decentralization.

One of the tools that enhances participation is the Participatory Budgeting (PB), which no only means a change in budgetary methods and procedures, but also a silent reform that is removing old budgeting styles in Peru and promoting changes in organizational behaviour of public agencies. PB implies setting common goals for districts, provinces and regions, and getting compromises among actors to reach these goals. PB sets priorities to public investment, setting aside differences among actors, taking into account scarcity of resources and people preferences based on their needs. PB is enhancing democracy in Peru, because it is giving voice to people, who traditionally had been excluded from public resources allocation.

PB is increasing public budgeting legitimacy. It is also inducing changes to the legal framework of the State, increasing civil society participation. In the light of these changes, during the last three years the Peruvian Constitution has been reformed; likewise the Law of Basis of Decentralization, Law of Regional Governments and Law of Local Governments, as well as the Law of Participatory Budgeting have been approved.

PB and changes in legislation are transforming the relationship between State and civil society. They are introducing new formal institutions that bring a new way to understand and to exercise citizenship in Peru, under the umbrella of mechanisms of direct democracy that applies priorities, technical viability, social return on public investment, and decisions based on agreement criteria.

The sustainability of these policies requires not only institutional arrangements but also an improvement of human capital at the sub national level. People expectations on increasing expenditure need to be controlled. For that reason, it is important to make people to understand budgetary restrictions and to tailor planning and participatory budgeting to resource restrictions. No fiscal illusion should be allowed and scale of investment must be high enough to reach the goals.

Finally, the commitment of the authorities with the process is very important. They have to believe that participatory policies take not only to a better use of public resources but also to increase political chances of winning elections as a consequence of getting results on citizen participation.

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