Poverty Reduction Poverty Reduction Strategy in IBRD Strategy in IBRD

Countries: The Case of Countries: The Case of PeruPeru

William Reuben and Annika Silva-LeanderWilliam Reuben and Annika Silva-LeanderLCSSOLCSSO

World BankWorld Bank

ContextContextPolitical and economic crisis as the country entered the post-Fujimori Political and economic crisis as the country entered the post-Fujimori

period in 2001 and embarked on a democratic transition: period in 2001 and embarked on a democratic transition:

Highly centralized State weakened by low levels of legitimacy and Highly centralized State weakened by low levels of legitimacy and credibility.credibility.

Weakened civil society after years of authoritarian regime.Weakened civil society after years of authoritarian regime.

Legacy of endemic corruption, including clientelistic use of social Legacy of endemic corruption, including clientelistic use of social programs.programs.

Weak coordination among social programs and duplication of efforts. Weak coordination among social programs and duplication of efforts.

Poor targeting of social programs. Poor targeting of social programs.

Insufficient accountability mechanisms and monitoring and evaluation Insufficient accountability mechanisms and monitoring and evaluation of social programs. of social programs.

Lack of a poverty reduction strategy with clear objectives.Lack of a poverty reduction strategy with clear objectives.

Little space for citizen participation in policy-making processes.Little space for citizen participation in policy-making processes.

Milestones Leading Up to The Milestones Leading Up to The Poverty Reduction StrategyPoverty Reduction Strategy

To help consolidate democracy, the post Fujimori To help consolidate democracy, the post Fujimori Governments put in place processes and spaces Governments put in place processes and spaces of multi-sectoral dialogue and participation: of multi-sectoral dialogue and participation:

2001: 2001: Establishment of the National Establishment of the National Roundtable for the Fight Against PovertyRoundtable for the Fight Against Poverty, a , a multi-sectoral, government-civil soiety forum to multi-sectoral, government-civil soiety forum to facilitate dialogue and participation in public facilitate dialogue and participation in public policies on poverty reduction.policies on poverty reduction.

2002: 2002: Creation of the National AgreementCreation of the National Agreement ForumForum,, to develop a long-term national to develop a long-term national development plan based on consensus-building development plan based on consensus-building among sectors and stakeholders.among sectors and stakeholders.

Poverty Roundtables (Mesas)Poverty Roundtables (Mesas)Established by Law in 2002 as an institutionalized space of dialogue Established by Law in 2002 as an institutionalized space of dialogue

between the State and civil society on issues of poverty between the State and civil society on issues of poverty reduction at the national, regional and local levels.reduction at the national, regional and local levels.

Main objectives: Main objectives:

Facilitate multi-sectoral dialogue in the formulation of social Facilitate multi-sectoral dialogue in the formulation of social policies. policies.

Help institutionalize citizen participation in the formulation and Help institutionalize citizen participation in the formulation and monitoring of social policies. monitoring of social policies.

Serve as a consultative organ in the formulation of national, Serve as a consultative organ in the formulation of national, regional and local development plans.regional and local development plans.

Serve as a coordinating space between the State and civil Serve as a coordinating space between the State and civil society to help achieve greater efficiency of poverty reduction society to help achieve greater efficiency of poverty reduction programs. programs.

Help increase transparency of poverty reduction programs.Help increase transparency of poverty reduction programs.

Structure of Poverty RoundtablesStructure of Poverty Roundtables National, regional and local presence with a total National, regional and local presence with a total

of 1.372 Mesas created between 2001 and 2006.of 1.372 Mesas created between 2001 and 2006.

Currently: Currently:

National Executive Committee (5 Government & 5 National Executive Committee (5 Government & 5 Civil Society representatives)Civil Society representatives)

26 Regional Mesas26 Regional Mesas

122 Provincial Mesas 122 Provincial Mesas

372 District-Level Mesas372 District-Level Mesas

National Agreement ForumNational Agreement Forum

A national dialogue forum composed of A national dialogue forum composed of Government representatives, Government representatives, political parties with representatives political parties with representatives in Congress (13), the National in Congress (13), the National Poverty Roundtable and civil society Poverty Roundtable and civil society organizations (10). organizations (10).

Mandate:Mandate: to develop - through cross- to develop - through cross-sectoral dialogue and consensus-sectoral dialogue and consensus-building - a long-term (20 years) building - a long-term (20 years) vision for the development of Peru. vision for the development of Peru.

Precursors to the Poverty Precursors to the Poverty Reduction StrategyReduction Strategy

2001: 2001: Social LetterSocial Letter (elaborated by Poverty (elaborated by Poverty Roundtables) delineating the broad Roundtables) delineating the broad orientations of a poverty reduction strategy.orientations of a poverty reduction strategy.

2001: 2001: Letter of Social PolicyLetter of Social Policy elaborated by elaborated by the Toledo Government (social policy the Toledo Government (social policy objectives of the Government for 2001-2006).objectives of the Government for 2001-2006).

2002: 2002: Signature of the National Signature of the National AgreementAgreement, a national development plan of , a national development plan of which 7 of the 31 national policies are related which 7 of the 31 national policies are related to poverty reduction.to poverty reduction.

Main Content of National Agreement: Main Content of National Agreement:

31 national policies and 268 sub-policies on (examples)31 national policies and 268 sub-policies on (examples) Democracy and State of Democracy and State of

Law: Law: - Strengthening of political party Strengthening of political party

systemsystem- Institutionalization of dialogue Institutionalization of dialogue

and participation mechanismsand participation mechanisms- Strategic planningStrategic planning- DecentralizationDecentralization- National securityNational security

Equity & Social Justice Equity & Social Justice - Poverty reductionPoverty reduction- Equality of opportunitiesEquality of opportunities- Universal access to Universal access to

educationeducation- Universal access to health Universal access to health

servicesservices- EmploymentEmployment- Food securityFood security

Competitiveness Competitiveness - Social market economySocial market economy- Sustainable developmentSustainable development- Science and technologyScience and technology- Rural developmentRural development

An Efficient, An Efficient, Transparent and Transparent and Decentralized StateDecentralized State

- Role of Armed ForcesRole of Armed Forces- Access to information and Access to information and

freedom of expressionfreedom of expression- Human rightsHuman rights- Drug erradicationDrug erradication

Peru’s National Poverty Reduction PlanPeru’s National Poverty Reduction Plan Based on the orientations of the Equity and Social Justice pillar Based on the orientations of the Equity and Social Justice pillar

of the National Agreementof the National Agreement, mixed Government-civil society , mixed Government-civil society commissions - with active participation of Mesas - elaborated the commissions - with active participation of Mesas - elaborated the strategy, which was approved in August 2004. strategy, which was approved in August 2004.

Main focus: Main focus: Development of human capabilities, with a focus on children Development of human capabilities, with a focus on children

below 2 years. below 2 years.

Promotion of economic and productive opportunities and Promotion of economic and productive opportunities and capacities.capacities.

The establishment of a social protection safety net for vulnerable The establishment of a social protection safety net for vulnerable groups.groups.

Budget protection of 6 priority social programs.Budget protection of 6 priority social programs.

Emphasis on civil society participation in design, implementation Emphasis on civil society participation in design, implementation and monitoring of poverty reduction programs. and monitoring of poverty reduction programs.

Some Defining Characteristics (and Challenges) of Some Defining Characteristics (and Challenges) of Peru’s Poverty Reduction StrategyPeru’s Poverty Reduction Strategy

A more closed, technical process than in many PRSP countries.A more closed, technical process than in many PRSP countries.

Short-term focus (2004-2006 period). Short-term focus (2004-2006 period).

Not the main organizing framework (National Agreement was). Not the main organizing framework (National Agreement was).

As opposed to National Agreement, no clear institutional framework was As opposed to National Agreement, no clear institutional framework was defined (which meant less resources and capacities to ensure its defined (which meant less resources and capacities to ensure its implementation and monitoring). implementation and monitoring).

Lost visibility among a multitude of plans and strategies. Lost visibility among a multitude of plans and strategies.

Difficulty of articulating plan with other social and economic policies. Difficulty of articulating plan with other social and economic policies.

Difficulty of translating plan into budget allocations given restricted fiscal Difficulty of translating plan into budget allocations given restricted fiscal space. space.

Difficulty of cutting across sectoral divides of the Peruvian bureaucracy. Difficulty of cutting across sectoral divides of the Peruvian bureaucracy.

No permanent monitoring mechanism was established.No permanent monitoring mechanism was established.

Poverty Roundtables were not given an official mandate to monitor the Plan. Poverty Roundtables were not given an official mandate to monitor the Plan.

Achievements in Implementing Peru’s Poverty Achievements in Implementing Peru’s Poverty Reduction EffortsReduction Efforts

Coordination of most social assistance programs under one Coordination of most social assistance programs under one Ministry (MIMDES).Ministry (MIMDES).

Small reduction of poverty levels (2% between 2002 to 2004), Small reduction of poverty levels (2% between 2002 to 2004), although greater for extremely poverty, especially in rural areas.although greater for extremely poverty, especially in rural areas.

Average income of the poorest rose 33% between 2001 and 2004. Average income of the poorest rose 33% between 2001 and 2004.

Since 2005, implementation of a conditional cash transfer Since 2005, implementation of a conditional cash transfer program (JUNTOS) for the first time in Peru.program (JUNTOS) for the first time in Peru.

Development of a National Plan of Attention to Children and Youth Development of a National Plan of Attention to Children and Youth (Priority Actions) which has resulted in concrete budgetary (Priority Actions) which has resulted in concrete budgetary allocations (at both national and local levels) as well as the allocations (at both national and local levels) as well as the protection of budgets for such programs and in the development protection of budgets for such programs and in the development of regional-level policies tending to this group .of regional-level policies tending to this group .

Institutional Setup in Implementing Peru’s Poverty Institutional Setup in Implementing Peru’s Poverty Reduction Strategy: Increased Citizen Participation in Reduction Strategy: Increased Citizen Participation in

Policy Formulation ProcessesPolicy Formulation Processes

Establishment of spaces at the national level to Establishment of spaces at the national level to facilitate civil society engagement in social policy facilitate civil society engagement in social policy formulationformulation (multi-sectoral board of conditional cash- (multi-sectoral board of conditional cash-transfer program Juntos, in addition to existing Health and transfer program Juntos, in addition to existing Health and Education Councils and Poverty Roundtables). Education Councils and Poverty Roundtables).

Establishment of local-level spacesEstablishment of local-level spaces (Regional and Local (Regional and Local Health Councils and Education Councils, Regional and Local Health Councils and Education Councils, Regional and Local Coordination Councils, Local Management Committees of Coordination Councils, Local Management Committees of food programs, Local Conditional Cash Transfer Committees, food programs, Local Conditional Cash Transfer Committees, and Local Roundtables).and Local Roundtables).

Institutionalization of Participatory BudgetingInstitutionalization of Participatory Budgeting in all in all municipalities.municipalities.

Institutional Setup in Implementing Peru’s Poverty Institutional Setup in Implementing Peru’s Poverty Reduction StrategyReduction Strategy: Accountability Mechanisms: Accountability Mechanisms

Establishment of citizen vigilance committees to monitor municipal Establishment of citizen vigilance committees to monitor municipal expenditures (in progress). expenditures (in progress).

Establishment of a variety of accountability mechanisms to Establishment of a variety of accountability mechanisms to monitor social programs. monitor social programs.

Process of establishing a social control system of the conditional Process of establishing a social control system of the conditional cash transfer program.cash transfer program.

Establishment of the Dialogue on Childhood (with active Establishment of the Dialogue on Childhood (with active participation of Poverty Roundtables) to ensure implementation participation of Poverty Roundtables) to ensure implementation and monitoring of the National Childhood Plan.and monitoring of the National Childhood Plan.

Improved targeting (now greater coverage of rural areas where Improved targeting (now greater coverage of rural areas where poverty is concentrated).poverty is concentrated).

Institutional Setup in Implementing Peru’s Poverty Reduction Institutional Setup in Implementing Peru’s Poverty Reduction StrategyStrategy: Transparency and Information on Social : Transparency and Information on Social

ProgramsPrograms Transparency PortalTransparency Portal on public expenditures “Friendly on public expenditures “Friendly

Consultation” with information on social programs, including Consultation” with information on social programs, including allocated and executed budgets by program and locality. allocated and executed budgets by program and locality. Has resulted in independent civil society monitoring Has resulted in independent civil society monitoring initiatives. Decision to decentralize the portal to local initiatives. Decision to decentralize the portal to local governments)governments)

Transparency CommissionsTransparency Commissions established in Coordinating established in Coordinating Ministry for Social Assistance Programs (MIMDES) and Ministry for Social Assistance Programs (MIMDES) and FONCODES (Social Fund) which have led to a significant FONCODES (Social Fund) which have led to a significant reduction of complaints about political use of social reduction of complaints about political use of social programs.programs.

Supervision and Transparency CommitteesSupervision and Transparency Committees for the for the conditional cash transfer program which are coordinated conditional cash transfer program which are coordinated with Poverty Roundtables. with Poverty Roundtables.

Remaining Challenges for Peru’s Poverty Reduction EffortsRemaining Challenges for Peru’s Poverty Reduction Efforts Only a small reduction of poverty levels (headcount poverty rate reduced by only 2% between Only a small reduction of poverty levels (headcount poverty rate reduced by only 2% between

2002-2004) and 2002-2004) and persistently high levels of poverty (52% of the population). persistently high levels of poverty (52% of the population).

Coverage of basic social programs has expanded, but quality remains poor. Lack of clear Coverage of basic social programs has expanded, but quality remains poor. Lack of clear quality standards limits the ability to monitor quality standards limits the ability to monitor quality in service deliveryquality in service delivery

30% reduction of 30% reduction of spending for social assistance programsspending for social assistance programs between 2000-2004 (from 1 to between 2000-2004 (from 1 to 0.7% of GDP compared to an average of 1.5% for the region). 0.7% of GDP compared to an average of 1.5% for the region).

Participatory budgets only cover capital budgetsParticipatory budgets only cover capital budgets, which represent between 6-12% of sub-, which represent between 6-12% of sub-national budgets. national budgets.

Integration and Integration and coordination of social assistance programscoordination of social assistance programs is still work in progress as is is still work in progress as is their decentralization. their decentralization.

The lack of The lack of identification documentsidentification documents remains a serious obstacle to accessing social remains a serious obstacle to accessing social programs. programs.

Insufficient poverty reduction impact of social assistance programsInsufficient poverty reduction impact of social assistance programs (consumption (consumption deficit corresponds to 6.3% of GDP, while the current programs only cover 1% of those needs). deficit corresponds to 6.3% of GDP, while the current programs only cover 1% of those needs).

Only 1% reduction of chronic malnutrition in the 0-5Only 1% reduction of chronic malnutrition in the 0-5 years population tranche in the last years population tranche in the last decade (from 25-24%). decade (from 25-24%).

Targeting mechanismsTargeting mechanisms have improved but are still not optimal, particularly for nutritional have improved but are still not optimal, particularly for nutritional programs.programs.

Despite advances in strategies and programs directed to children, Despite advances in strategies and programs directed to children, political will to political will to implementation remains slow. implementation remains slow.

Vigilance committees to monitor public expenditures at the municipal levelVigilance committees to monitor public expenditures at the municipal level are not are not yet fully functional and effective in their role. yet fully functional and effective in their role.

Provide a more long-term approach to poverty reduction programs with an emphasis Provide a more long-term approach to poverty reduction programs with an emphasis on asset creation (for situations of chronic povertyon asset creation (for situations of chronic poverty))