![Ministry of economy signs agreement with CAF to stimulate fiscal decentralization in the country Ministry of economy signs agreement with CAF to stimulate fiscal decentralization in the country](/media/28855/conveniomef-caf.gif)
Ministry of economy signs agreement with CAF to stimulate fiscal decentralization in the country
During the signing of the agreement, speakers emphasized the importance of achieving an efficient and equitable allocation of resources, a correct distribution of revenue and an improvement in the efficiency and sustainability of expenditure which results in better and greater use of regional and local capacities and opportunities.
The agreement will be implemented in two years with technical advice from consultants from the Andrew Young School of Policy Studies (AYSPS) of Georgia State University. The program is divided into three major components:
- Training in subnational public management
- Analysis and redesign of inter-governmental fiscal relations and their impact on territorial equity and
- Inter-municipal cooperation for provision of public services.
The second component focuses on analyzing and offering three important reform scenarios:
- The country’s inter-governmental fiscal relations, which involves examining the scope and current state of implementation of the Fiscal Decentralization Law, and estimating the expenditure needs for transfers of functions and competences from the Central Government to regional and local governments.
- The tax collection potential of municipal governments, which will result in reform proposals, including fundamental aspects such as municipal tax administration and options for treatment of tax evasion at local level; and
- Local borrowing, which will make fiscal rules more flexible.
The signing of this technical cooperation agreement will help create a new institutional framework for the decentralization process, not only fiscally sustainable but – above all - consistent with the specific characteristics of Peru. It also aims to make a sustainable improvement in the quality of life of the population by assigning responsibilities to regional and local governments in an effort to reduce inequities and imbalances.
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