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IDB approves $28 million to support modernization and decentralization of the state in Peru

The Inter-American Development Bank today announced the approval of a $28 million loan to Peru to support a comprehensive modernization and decentralization program designed to improve government operations and services in a framework of accountability, transparency, and citizens access.

The program will finance the establishment of administrative and management systems and the transfer of responsibilities for proper functioning of the 25 new regional governments that will be established in 2003 under the Decentralization Framework Act. Funds will be provided to help establish laws and regulations to carry out the Framework Act.

A National System of Local Institution Strengthening will be established to support the growing administrative and management needs of municipalities that has resulted from the decentralization process.

A map of the State will be prepared to establish an inventory of existing agencies and programs in order to detect superfluous and duplicated functions and to lay a basis for reforms under the framework of the Law on State Modernization.

Overlapping and multiple payroll, information and policy regimes will be unified into one civil service system to improve administrative efficiency and services. A state Internet and Intranet system will be developed to modernize public services and procedures and increase transparency and citizens access to information and services.

The state procurement system will be modernized and strengthened, and a pilot program will modernize the management and decentralize transportation services of the Ministry of Transport, Communications, Housing and Construction.

The executing agency for the program, the Office of the President of the Council of Ministers.* will also be modernized and strengthened. Co-executing agencies include the Ministry of Economy and Finance and the National Decentralization Council.

The program reflects the IDB strategy to support the development of an efficient, modern and decentralized State in Peru.

Applying lessons learned from IDB-financed modernization of the state projects in other countries, the program in Peru will apply a comprehensive approach, combining initiatives for several government functions, both vertical and horizontal, to ensure sustainability of the reforms.

The total cost of the program is $40 million.

The IDB loan is for a 20-year term, with a five-year grace period, at the variable interest rate, now 5.39 percent. Local counterpart funds total $12 million.

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