indicator measurement
C o n t e x t — c h a l l e n g e s a n d o p p o r t u n i t i e s
While Peru displays positive trends in terms of social indicators, the disparity of wealth remains huge between urban and rural sectors and between the major geographic regions of the country, i.e. the coast, Andes and Amazonia. In the latter two areas, the levels of rural poverty exceed 40 per cent, compared to 16 per cent at the national level. In response, the current government, in power since 2011, has put social inclusion at the centre of its political agenda, developing a set of dedicated public policies (notably the 2013 National Strategy for Social Development and Inclusion — ENDIS) and allocating significant resources to this end. Peru has focused on five features of inequality: child nutrition, maternal health, comprehensive development of children, economic inclusion, and protection for the elderly. The Ministry of Development and Social Inclusion was created in 2011 to articulate the efforts made in the var-ious sectors and optimise potential policy impacts.
Since 2007, Peru’s national budget has been elaborated and executed with a strong focus on results-based manage-ment. ENDIS provides an important window of opportunity in this regard, as it seeks to promote an integrated, multi-sectoral approach to the fight against poverty and inequality, including cross-cutting issues such as gender and culture. Furthermore, the strategy recognises the need to strengthen the overall capacity of the public sector — particularly in public financial man-agement — as well as to decentralise implementation to the regional governments and local authorities.
A c t i o n s t a k e n
EUROPAN (programming cycle 2007–2013) was launched in 2009 as a sector budget sup-port programme, co-existing with two other budget supsup-port operations. It was targeted to help the government implement its national policy on social inclusion with a focus on child malnutrition and maternal health. The main purpose was to improve social cohesion in the 54 poorest districts of three regions in the Andes. This territorial approach to addressing inequality was reflected in the localisation of measurement of performance indicators.
To underpin this, the Ministry of Economy and Finance concluded specific contractual arrangements with the three regions to include them as partners in implementation of the national policy. The central government augmented and enhanced the budget support tool T H E C A S E I N A N U T S H E L L
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ince 2009, the EUROPAN programme has provided sector budget support for the implementation of national strategies promoting social inclusion. Recognising the huge territorial inequalities in Peru and the need to work closely with the country’s regions to address them, the Ministry of Economy and Finance and the EU delegation sought to creatively integrate a territorial dimension into the budget support process, while adhering strictly to support guidelines.It was decided to regionalise the budget support and localise the measurement of indicators. This approach made it possible to adapt indicators to diverging territorial realities and to actively engage with regional authorities and other stakeholders to achieve programme objectives in a spirit of mutual accountability. EUROPAN’s positive results have led the government to take over on the budget support modality and create its own mechanisms of performance-oriented financial incentives in national budget processes.
by integrating a local dimension and triggering regional processes to take responsibility for improving services.
The regionalised budget support included complementary measures that focused on strengthening local public expenditure and financial accountability, as well as supporting the involvement of other agencies with a critical role to play in the delivery of social inclu-sion benefits. These agencies most notably included the Integrated Health Insurance (SIS), which is responsible for registering and monitoring health interventions and is therefore key to improving information flows and accountability requirements linked to the credibility of performance indicators; and the National Registry of Identification and Civil Status (RENIEC) that delivers identity cards for newborns, thus ensuring they are included in national insur-ance systems and do not become vulnerable. These institutional arrangements triggered by the budget support operation increased the number of identity cards provided to children under three months of age, with coverage rising from 17 per cent to 85 per cent in rural Peru between 2012 and 2014. This indicator has subsequently been applied across the country.
L e s s o n s l e a r n t
The positive results achieved by EUROPAN go beyond traditional development outcomes such as reduction of child malnutrition and enhancement of maternal health. Rather, the budget support operation has produced important institutional and policy outcomes as well, creating a more conducive, level playing field to address territorial inequalities in close partnership with regional and local governments. The incentive mechanism of EU budget support (with a fixed tranche and a performance-related variable tranche) was adopted by the national government to transform the way in which it works with regions to meet shared objectives in a mutually accountable way. To further mainstream and institutionalise this approach, a suc-cessor programme (EURO-ENDIS; EUR 40 million) was agreed upon (Indicative Programme Peru, 2014–2017) to support implementation of the national policy on social inclusion in a territorially sensitive way.
Four factors explain this wider impact.
■ Recognition of territorial inequalities. The Government of Peru has developed solid policies and reserved substantial resources to promote social inclusion. Yet implementa-tion was not based on spatially blind, top-down approaches. Both the Ministry of Economy and Finance and the Ministry of Development and Social Inclusion took the existence of huge territorial inequalities as a starting point in rethinking the institutional set-up and overall approach to ensure results in territories. The EU delegation was able to respond flexibly to this window of opportunity by adapting the budget support instrument for use at a regional level.
■ Localisation of performance indicators. Territorial logic was also applied at the finan-cial transfer mechanism level. Both budget support and performance measurement were
‘regionalised’ through specific conventions, aimed at respecting the specific realities and challenges of the territories involved. This approach enhanced the sense of ownership over the process, particularly among local stakeholders, while creating space to ensure mutual accountability for the results achieved.
■ Targeted capacity development efforts. The adoption of a territorial approach to implementing the national policy triggered a deeper understanding of the capacity devel-opment agenda involved in achieving impact. Both results and disbursements depended on
regional performance, not only on that of the central government. Consequently, particular attention was given to building the required institutional systems at the sub-national level, including improved local public financial management. The EU contributed to this through a smart use of complementary measures linked to its budget support.
■ Incentives. The existence of a financial incentive encouraged the various actors, each with their own agenda and priorities, to work out a coordinated approach to promoting social inclusion in a large country with huge territorial inequalities. The government was eager to pursue results-oriented management of public policies on social inclusion and to find new ways to bring the regions in on service delivery. The EU delegation sought to focus limited resources and ensure tangible results on the ground. Meanwhile, Peru’s regions and local authorities looked to respond to the specific demands of their constituencies.
The transformation of the EU budget support mechanism to fit national and regional policymaking thus provided a positive incentive for all actors, enabling them to focus on performance, to collaborate and to ensure mutual accountability — all while addressing territorial realities rather than abstract goals formulated at the central level.