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Institutional Background

This section identifies the main institutional features that may be relevant for understanding the potential impacts of PB on water and services quality in the Peruvian case. Specifically, it tries (i) to briefly describe, legally and in practice, PB process in local governments, and (ii) to understand how the Water and Sanitation Provider Companies (WSPCs) work and their relations with sub-national governments. This section is based on a review of the legal documents and previous studies and information collected from interviews in four local governments in the first stage of our qualitative work: provincial municipality of Huancayo and district municipality of Chilca (Junin region), provincial municipalities of Arequipa (Arequipa region) and Santa (Ancash region).

The Process of PB

The objective of the Participatory Budget Law is to establish “a mechanism to assign public resources in a fair, rational, efficient, effective and transparent manner, in order to strengthen the relationship between the state and civil society.”4 It is a process “oriented to democratize public budgeting by creating formal channels of participation thus promoting the inclusion of politically and economically weak sectors of society in the budget allocation bargaining process.”5 First implemented in 2004, by 2009, a total of 27 percent of investment-related spending at the district level was decided through this mechanism.6 This is particularly important if we consider that more than half (56 percent) of investment in the country comes from the municipal level.

Four features characterize PB in Peru: (i) it is backed by a constitutional norm, (ii) it is mandatory at all sub-national government levels (regional and local), (iii) it is discretional in terms of the resources allocated through this mechanism7 (the Ministry of Finance supervises the process to ensure it is implemented but not if prioritized projects are actually implemented), and (iv) it has to be oriented to investment expenditures.

PB in Peru is accompanied by a legal framework that defines its process characteristics. The process includes four main phases: Preparation (including public awareness campaigns, registration, and training of participants), Consultation, Coordination among different sub-national levels, and Formalization (prioritized projects are included in the municipal budgets). During the Consultation phase the municipality should work together with civil society in the diagnosis, identification, and prioritization of investment projects. This phase involves workshops and formalization of agreements of the PB, processes that are conducted by the Technical Team. Later, in the Coordination phase, selected projects are presented to the mayor to be discussed with participatory agents and decide the definitive projects and amounts of investment in these projects. Finally, the Commitments and Agreements Act is elaborated. According to interviews, the Coordination phase does not take place in many cases, mainly due to lack of agreement on large-scale projects, that is, projects that involve more than one district. Unfortunately, it is also usually the case that the phase of Preparation does not include communications and awareness campaigns. Furthermore, the training workshops in this phase often do not fulfill their formal functions and focus on “convincing” the participatory agents to accept the projects developed by the local government, instead of training and guiding themPlease add reference to Hordijk here . Technical Teams8 are normally constituted but in many cases their members do not fulfill their functions mainly due to their knowledge limitations. On the other hand, the participatory agents are usually represented by neighborhood organizations that prioritize small-scale projects and generally do not have any experience in project development.

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