Four departments concentrated 60% of the resources transferred for canon, surcharge and royalties between 2008 and 2021, a period in which the income of the regions for these concepts reached S / 89,000 million, according to information from the Ministry of Economy and Finance (MEF), recorded by the Peruvian Foreign Trade Society (ComexPeru).
This amount is equivalent to closing the infrastructure gaps in the health, education, water, and electricity sectors. Or to cover the entire infrastructure gap in the sanitation sector.
According to data from the MEF, Cusco was the department that received the largest transfers for the three concepts in that period, with 29% of the total amount. This region was followed by Áncash, with 14.7%; Arequipa, 10.2%; and Piura, 6.2%.
While, at the level of subnational governments, only 3.6% of the municipalities of the entire country (68) monopolized half of the budget transferred by canon, surcharge and royalties between 2008 and 2021. Likewise, of the total number of municipalities, 25% received less than S/ 1 million in that period, on the contrary, only three municipalities received more than S/ 1,000 million for the three concepts.
“These figures reveal that there is a clear disparity in the distribution of the resources transferred by canon, surcharge and royalties, both at the national level and in each department,” said Lety Gómez, economic studies analyst at ComexPerú, noting that this problem has its root in the resource distribution scheme, which “is inefficient, as it does not respond to the powers and needs of governments, generating a high concentration of resources.”
He detailed that this situation can cause a district municipality to receive more resources than a provincial one, without having the necessary skills or scalability to take advantage of them properly. Faced with this situation, ComexPerú proposes to change the methodology for the creation of development plans at the local and regional level.
“Accompaniment is needed for subnational authorities to guide the creation of their concerted development plans, focused on closing the socioeconomic gaps in their jurisdictions,” he considered.
2021 Outlook
In 2021 alone, the transfer of resources to the country’s municipalities by canon, on canon and royalties amounted to S/ 8,800 million, its highest level since 2012, when they added S/ 9,152 million. The figure meant an increase of almost 71% compared to the amount transferred to local governments in 2020 and 40.7% compared to the figures for 2019, before the pandemic.
However, despite the strong increase, subnational governments stopped spending S/ 4,845 million of the resources transferred last year. “This also shows that the higher the budget received, the greater the difficulties they face in executing it,” considers the union.
said amount, which is equivalent to almost 1% of the GDP, could have been used in the construction of 24 hospitals of medium to high complexity or to guarantee access to sanitation for more than 1.1 million Peruvians in rural areas.
According to the data, of the total not executed, S/ 183 million budgeted for health infrastructure were not spent; and a balance of S/ 546 million was left for education projects financed with this resource. The execution rate in this sector does not exceed 70%. Both sectors were two of the hardest hit by the pandemic.
What can be done to improve spending power?
Some of the recommendations provided were change the methodology for the creation of development plans at the local and regional level. Accompaniment is needed for subnational authorities to guide the creation of their concerted development plans, focused on closing the socioeconomic gaps in their jurisdictions.
On the other hand, it must reinforce technical assistance for the execution of public investment projects. It could start in the districts with a high concentration of canon income, but with low historical execution of these resources. This professionalization of public servants, in addition to focusing on improving the execution of works, should guide them towards closing gaps, says the ComexPerú report.
Lastly, it should evaluate the financing of the canon in activities other than public investment. Canon transfers have a structural component and a transitory one. If the aim is to guarantee the adequate functioning of the public infrastructure and the provision of the service, the permanent component of the canon transfers could finance the permanent cost of public works, such as their operation and maintenance.
Source: Larepublica
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