Public Sector Budget Legislation and Principles in Peru
Budget Legislation in Peru
The following are key pieces of legislation governing public sector financial management and budgeting in Peru:
- Law 28112: Framework Law of Public Sector Financial Management
- Legislative Decree 955: On Fiscal Decentralization
- Law 28411: General Law of the National Budget System
- Law 29465: Law on the Public Sector Budget for 2010
- Law 29467: Law on the Financial Balance of the Public Sector Budget for Fiscal Year 2010
Budgetary Process
The budget is a system by which the public production (or service) of an institution, sector, or region is made, approved, coordinated, implemented, monitored, and evaluated in terms of development policies under the government’s annual plans. The budget process is embodied in the following steps:
- Formulation: Executive Branch
- Discussion and Enactment: Legislative Branch
- Implementation: Public Sector Institutions
- Control: Comptroller General of the Republic
- Evaluation: Executive Branch
Requirements for Budgeting
The budget must be both aggregated and disaggregated. The relationships between the resources allocated and the resulting products should be clearly defined, leaving no doubt about the product sought. Resource allocation for products also requires the allocation of resources to achieve other products. The budget should state the production network, where each product is conditioned by and conditions another, with existing relationships and a certain consistency between the various budgeted productions.
Budgetary Principles
Programming
This principle derives from the nature of the budget and requires:
- Content: Establishing all the elements for the definition and adoption of priority objectives.
- Form: The budget must explain all elements of programming, outlining the objectives adopted, the necessary actions to achieve these objectives, human resources, materials, services, and monetary resources needed.
Integrity
An essential feature that must contain all budgets in its conception and implementation of events. This principle has four essential requirements:
- It should be a planning tool.
- It should reflect a single fiscal policy.
- Due process must be followed.
- It should be an instrument in which all elements must appear.
Universality
This principle underlies the need for everything that constitutes the budget to be incorporated within it.
Exclusivity
Requires that matters unrelated to the budget’s subject not be incorporated within it.
Unity
This principle refers to the requirement that the budget be drafted, adopted, implemented, and evaluated in full, subject to the budgetary policy defined and adopted by the executive branch.
Diligence
This principle implies that clear, attainable objectives should be set, with the highest complementarity and priority.
Quality
This formal principle requires that the budget be expressed in an orderly and clear manner, so that all stages of the budget process are carried out efficiently.
Specification
This principle basically refers to the financial aspect of the budget, meaning that revenue should be noted with precision regarding the originating sources, and expenditures should specify the property of the goods and services purchased.
Periodicity
Notes that the budget period should not be so broad that it prevents execution.
Continuity
Postulates that all stages of the budget year must be based on the results of previous years and take into account the expectations of future exercises.
Flexibility
This principle is based on the idea that the budget should not be rigid, as it would be impossible for it to be an effective instrument of management, governance, and planning.
Balance
Relates to the financial aspect of the budget, that is, the objectives adopted in the technique and used for the production of goods and services from the state’s policy on wages and prices, and thus the degree of economic stability.