Participatory Decentralization Reform, Peru

  • Stephanie L. McNultyEmail author
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Regional Government Civil Society Organization Citizen Participation Constitutional Reform Legislative Council 
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In 2001, many Peruvians celebrated the potential for democracy and decentralization. A peaceful and democratic election had just taken place, bringing to power new leaders promising an end to the hyper-centralized and corrupt rule that had typified the previous era. Alberto Fujimori had resigned from his position as president of the nation in disgrace the previous year, after systematically concentrating power in the national executive branch and participating in webs of corruption that reached the highest levels of government. During this transition year, candidates for congress and the presidency promised to clean up government and devolve powers to local and regional governments.

After the congressional elections of 2001, newly elected national officials set to work reforming myriad broken political institutions. One of the most comprehensive reforms to leave congress was a decentralization reform, signed into law by the newly elected president, Alejandro Toledo, in 2002. Because the reform enhanced subnational governments’ power and resources, and also empowered citizens and civil society organizations to oversee their elected officials in unprecedented ways, it emerged as a “participatory decentralization process” (McNulty 2011). One of the important reform efforts in Peru’s recent history, decentralization contributed to widespread optimism among political analysts and officials about the country’s future.

Due to the nature of this publication, this entry cannot discuss all of the nuances inherent in this complex and evolving process, nor can it include the large literature written about the process (see, e.g., Carranza Ugarte and Tuesta Cárdenas 2004; Controlaría General de la República 2014; Estrada Pérez 2008; McNulty 2011; Prodescentralización 2011, 2015; Zas Friz Burga 2004). It does, however, highlight many of the most important aspects. This brief piece outlines the history of decentralization in Peru as well as the specific legal framework that has emerged since 2002. The final section documents how the implementation of the reform has evolved, noting that the process has hit many roadblocks. Without meaningful support from the government’s highest officials, the reform may never live up to its potential.

The History of Decentralization in Peru

Peru’s 2002 participatory decentralization reform emerged after a long history of centralized rule with power and resources concentrated in its capital Lima, punctuated by efforts to decentralize administrative structures to municipal, provincial, and regional governments. Like most Latin American countries, the Spanish colonial system centralized power, and during most of Peru’s republican history the oligarchy and the country’s economic system reinforced this system. Before the mid-twentieth century, there had been some attempts to decentralize administrative powers; however, these generally failed. Almost every Peruvian constitution has made some formal nod to the importance of a decentralized state, yet the most prominent efforts to codify this process have taken place in the latter part of the twentieth century. Since 1979, the constitution has maintained that the state should be “unitary, representative, and decentralized” and makes at least passing reference to regional and local governments. In 1979, as part of the transition to democracy, the Constitutional Assembly formally set up regional and local governments in the new constitution. However, there was very little movement toward setting up these governments until the late 1980s.

A push to move decentralization forward took place under Alan García’s first administration (1985–1990). Regional governments were set up through Law 24,650, and elections were held between 1989 and 1990. This represents the first time that both regional and municipal governments were democratically elected. The combined legal package that emerged from 1979 through the end of the García administration set up a parliamentary system with a regional assembly, a regional council, and a president. Regions held assembly elections, and then the assembly members elected the regional presidents and vice presidents. The assembly consisted of directly elected officials (not to exceed 40 % of the body), provincial mayors (who were also elected in a separate election), and representatives of civil society organizations (CSOs), primarily social and cultural institutions (not to exceed 30 % and in proportion to the rural population of each region). The foundation for the current participatory reform was laid when civil society organizations were given formal positions in the regional assemblies. Representatives from social organizations – including campesino, agricultural, university, cultural, professional, neighborhood, parent, and women’s organizations – elected the civil society representatives for the assembly.

Widely recognized as an extremely problematic reform (McNulty 2011; Zas Friz Burga 2004), this initial effort was cut short when Alberto Fujimori shut down his own government in 1992 in what is called his “self-coup” (auto-golpe). This included closing down the regional governments and replacing them with seven-member Consejos Transitorios Administrativos Regionales (CTARs), or Transitory Regional Administration Councils. The CTAR members, appointed by Fujimori, reported directly to the President’s Council of Ministers. Municipal governments also suffered under his regime, especially those led by members of opposition political parties. A new constitution, passed in 1993, institutionalized a more powerful executive, and Lima continued to be the hub of almost all political and economic activity.

During Fujimori’s decade-long rule, direct citizen participation, on the other hand, was allowed to expand in new ways. The Citizen Participation Law (Law 26,300), passed in 1993, stipulates that citizens are legally allowed to initiate referenda and recall officials at the local level. Several local initiatives emerged to encourage citizen participation as well. Community roundtables, called Mesas de Concertación (hereafter referred to as mesas), sprang up in several municipalities around the country. The mesas brought together representatives from the government and civil society in a formal space to discuss and come to agreement, or concertar, on community issues. Further, means of local participatory planning, such as developing strategic plans and experimenting with participatory budgeting (PB), became more prevalent. Several communities, such as Villa El Salvador and Ilo, had interesting experiences with participatory planning that were taking place completely independent of the central government. These were emerging in Peru at the same time that participatory governance methods were becoming more prominent around Latin America. Thus, while the macro-political context was stressing the concentration of power in the central government, several local experiences with citizen participation in governance were taking place around the country.

Toward the end of the Fujimori regime, therefore, it is not surprising that social movements around the country began to push for renewed decentralization and increased citizen participation. As allegations of electoral manipulation, corruption, and drug trafficking increased, calls to reform Peru’s political system grew louder. When Fujimori stepped down, politicians promised to undertake major reforms that would devolve powers to subnational governments and improve transparency and accountability.

Legal Framework

These promises were realized in the 2002 decentralization reform framework. The first step lay in reforming the 1993 Constitution to set up several levels of subnational government – while maintaining Peru’s unitary state – with new powers that would be devolved over time in four overlapping phases. The constitutional reform also sets out several participatory mechanisms, such as regional and local coordination councils, participatory development planning, and participatory budgeting.

The decentralization reform empowered several existing levels of government – departmental, provincial, and district (or municipal) – and collapses them into two administrative categories: regional (the former departments) and local (provinces and district/municipal) levels of government. As the map below, (map produced by the US Central Intelligence Agency and available at illustrates, the reform created 25 regional governments (the 24 original departments and one “special region,” the Province of Callao). With the exception of Callao, each region has a capital city and elected regional officials (a governor and a regional legislative “council”). Each region has several provinces (as of 2014, according to Law 30,186 a total of 196 in Peru), which also have elected mayors and legislative councils. Finally, the reform gave additional powers to district governments, which existed prior to the reform but were relatively weak. As of the end of 2015, there were 1,867 districts in Peru. The original intent of the reform was to create another level of government, “macro-regions,” which would consist of several regions that would decide to unite under one administrative umbrella. Reformers strongly believed that 25 first-order administrative units would be too unwieldy to govern.

At the same time, reformers knew that subnational governments would need additional finances. Previous to the constitutional reform, in 2001, Congress had passed the Canon Law (27,506), which governs mining and gas royalties by outlining how the resources should be allocated to the different levels of government (Crabtree 2014). The canon has given some regions and districts much more resources to finance infrastructure projects than others and has resulted in a pattern of unequal distribution of resources in subnational governments (Crabtree 2014).

After amending the constitution, Congress then passed a General Decentralization Law (Law 27,783). In addition to outlining the objectives of decentralization, the powers of each level of government (national, regional, and local), and a general framework of each government’s functions or powers (called competencias), it creates the National Decentralization Council (Consejo Nacional de Descentralización, or CND), accountable to the president, to implement and oversee the decentralization process. Chapters Four and Five of the law set out several mechanisms of citizen participation, such as development planning and participatory budgeting.

To specify details regarding the regional and municipal levels of government, Congress then passed the Organic Regional Government Law (Law 27,867) and Organic Municipal Government Law (Law 27,972) to clarify even more the decentralization process and the mechanisms through which citizens and civil society organizations will participate in public policy decisions and oversee their elected officials. Another important piece of the legislation is the Organic Executive Power Law (29,158) passed in 2007, which regulates the decentralization of the executive branch. Of course, since 2007, hundreds of new decrees, instructions, and laws have been passed to continue to clarify and adapt the process as it unfolds. An organization called Prodescentralización publishes annual reports on decentralization that include updates on all major legislation passed in chronological order (see

The reform was expected to unfold in four overlapping phases. The first phase set up 25 political regions based on the already existing departments in Peru. The second phase called for a referendum – held on October 30, 2005 – to set up macro-regions that combine several regions into one political entity. At the same time, the third and fourth phases consisted of the transfer of several powers to the local and regional governments. The phases stalled when no region successfully formed a macro-region, and the referendum failed. Since then, two regional groupings and more than 170 municipal groupings (called “mancomunidades”) have formally been set up to encourage integration between administrative units (Prodescentralización 2015). However, the idea of macro-regions has never been revived.

While participatory institutions are set up in many sectors of these governments, two particular institutions are worth mention. The legal framework mandates that regional and local governments elect “coordination councils,” as outlined in Laws 27,680, 27,902, and 27,972. As a result, Local Coordination Councils, or Consejos de Coordinación Locales (CCLs), and Regional Coordination Councils, or Consejos de Coordinación Regionales (CCRs), exist in every subnational governmental body. These councils are formally part of every subnational government’s structure and operate parallel to municipal, provincial, and regional councils (the legislative councils mentioned earlier). CCLs and CCRs are tasked with coordinating between the different levels of government and providing civil society organizations a formal role in government. CCLs and CCRs are made up of mayors from the provinces or districts that make up the particular council’s area, as well as members of civil society organizations. The members of civil society organizations are chosen in a special election, organized by the particular subnational government, held every 2 years. To run for these positions, civil society organizations that are properly registered in the locality can send a representative to participate in the election and then vote. The Peruvian legislation calls for the councils to meet four times a year to discuss development and budget priorities.

Another important aspect of Peru’s reform is the Participatory Budgeting Law (Law 28,056) passed in 2003. Participatory budgets devolve decision-making authority to new actors, who debate and vote on what projects to fund. For the first time in history, Latin American national government officials mandated that participatory budgeting must take place in every subnational government on an annual basis. This law dictates that the capital investment costs of each regional, provincial, and local budget must be developed with civil society input. Following a series of steps – developed by the Ministry of Economy and Finance – subnational governments must demonstrate that they have complied with this process in order to receive their annual budgets.

Law 29298, which modifies the original Participatory Budgeting Law, outlines the four phases for the PB process, which should take place annually:
  1. 1.

    Preparation, or identifying, registering, and training participating agents.

  2. 2.

    “Concertation”: During this phase, the participating agents meet to discuss the region’s development plan and prioritize the “themes” of projects that should be funded in the new budget. A technical team then evaluates each proposed project and, based on the agreed upon priorities, recommends the projects that should be funded.

  3. 3.

    Coordination among the different levels of government, which consists of meetings between the regional president and the local mayors, to make sure that spending is coordinated, is sustainable, and has regional impact.

  4. 4.

    Formalization of investment projects. This takes place during a regional meeting where all participating agents are given a vote in the final project list. This final list is sent to two regional governmental bodies, the Regional Coordination Council and the Regional Council, for approval.


In sum, in a few short years, Peruvians finalized a legal framework for a radical and comprehensive participatory decentralization process. The laws lay out a detailed process that should have unfolded in relatively neat phases. However, in practice, the process continued to unfold in fits and starts.

The Evolution of Peru’s Decentralization Process, 2002–2015

With the bulk of the legal framework finalized, Peruvians set to work to implement the reform. In 2002, regional government elections were held, and, since then, subnational governmental elections have taken place regularly and without hitch. Regional political parties have gained strength over time, and many of them now hold national political positions.

Other aspects of the reform have not unfolded as smoothly. In 2005, the referendum to form macro-regions failed. During that same time period, the process of transferring powers to regional governments took place in a problematic and slow way, partly due to problems with accrediting the regional governments to receive their new powers. From 2004 to 2006, the national government produced annual “Transfer Plans,” which determined which functions to transfer. In accordance with the 2004 Law of the Accreditation System for Local and Regional Governments (Law 28,273), the CND would accredit a region as ready to receive the function. The process has been criticized as being formalistic and lacking follow-through, as no technical assistance or additional resources accompanied the process (Controlaría General de la República 2014). As of June 2006, only 91 of the 185 new regional powers had been transferred from the national to the regional governments (Controlaría General de la República 2014).

The reform process took on new strength when Alan García took office in 2006. He quickly moved to undertake what he called a “decentralization shock” program. The program consisted of 20 steps to push decentralization forward, most of which worked toward speeding up the transfer of powers to subnational governments. García promised to finalize the transfer of the remaining regional government functions by the end of 2007, for example. The program also made the accrediting process more flexible, and by December 2012, 92.6 % of the regional government functions had been transferred (Controlaría General de la República 2014).

The García government also restructured the national coordination process by replacing the CND, which had been at the same level as a national ministry, with a new coordinating technical entity, the National Decentralization Secretary, or Secretaría de Descentralización (SD). The SD reports to the General Secretary of the President’s Council of Ministers. While politicians argued that this would improve the functioning of the coordinating body, others argued that, in effect, the national coordinating office had been demoted within the national government structure.

When García left office in 2011, the new administration led by Ollanta Humala inherited a complex situation in which regional and local governments had taken on many new functions but did not have the institutional capacity, human resources, or budgets to implement them effectively (ANGR 2014; Controlaría General de la República 2014). There are also serious problems with interinstitutional coordination, as the different levels of government struggle to sort out the hundreds of functions and powers that often overlap (Muñoz 2014). Critics also charge that the SD, in its less powerful position, has not provided the leadership and oversight needed to effectively move decentralization forward. There is also widespread sentiment that the subnational governments are plagued with corruption and are not meeting the citizens’ demands in an effective way (ANGR 2014).

Overall, the citizen participation mechanisms have had mixed results. The CCRs and the CCLs never became institutionalized in the subnational government structure and do not serve an important role in subnational governance. This is partly due to the fact that they are consultative mechanisms and do not have power to make binding decisions (McNulty 2011, 2013; Prodescentralización 2015). Participatory budgeting, on the other hand, is largely institutionalized around the country, and estimates suggest that almost every region, province, and district holds annual meetings to discuss and vote on budgeting priorities with citizen groups (McNulty 2012). However, in many places, the process has taken on a formalistic nature (López Ricci 2014; Prodescentralización 2015). Critics argue that the subnational governments hold participatory budgeting meeting but do not encourage widespread, inclusive, and meaningful participation (López Ricci 2014; McNulty 2015). And, many governments do not execute the infrastructure projects for which citizen groups have voted (Montecinos 2014). Thus, although the process takes place annually in all subnational governments, it is not always high quality.


The current state of decentralization, therefore, is in flux in Peru. On the one hand, indicators show that the reform is institutionalized and reversing it would be extremely difficult. For example, public investments at the local and regional levels increased substantially during the 2007–2013 period. Municipal public investment budgets went from $2,214,000,000 to $7,179,000,000. Regional public investments also increased significantly, going from $1,500,000,000USD to $3,036,000,000USD (Guerra García 2015). On the other hand, municipalities vary greatly in their ability to execute infrastructure projects (Loayza et al. 2014). Analysts worry that there is not high-level political commitment to improve the myriad shortcomings of the process. A sign of this problem is the recent recentralization of the national budget under the current administration, during which a previous trend of increased budgets destined to subnational governments has recently been reversed (see Table 1).
Table 1

Percent of Total National Projected Budget (The Peruvian government tracks the “original” budget (called Presupuesto Institucional de Aperatura), which is the projected budget that is approved for each level of government during the previous fiscal year, and the modified budget (Presupuesto Institucional Modificado), which is the finalized version by the middle of the budget year.)

Government level




















Sources: ANGR 2014; Participa Perú 2005

Two additional problems plague subnational governments. First, over the past decade, social conflicts – mostly surrounding the extraction industry – have increased greatly around the country, many of them regional (not national) in nature (see Arce 2014; Arellano-Yanguas 2011a, b; Bland and Chirinos 2014; Jaskoski 2012; Ponce and McClintock 2014). This has put pressure on subnational governments, especially regional officials, to mediate and resolve complicated conflicts that often turn deadly. Further, as the commodities boom slows down, analysts worry that conflict might increase even more (Baca and Ávila 2015). Second, since the decentralization reform, citizens perceive that very high levels of corruption exist in subnational governments (ANGR 2014; Carrion et al. 2015). This strong perception of corruption among public officials in all levels of government ultimately serves to discredit public officials in the eyes of the citizenry, including regional and municipal officials (Carrion et al. 2015).

In closing, it is not clear how decentralization will continue to unfold in Peru. A new government has come to power, and the future of the reform depends on the commitment of that administration to tackle problems such as widespread corruption and the lack of institutional capacity, human resources, and budgets in the subnational governments. A renewed emphasis on the value of meaningful citizen participation will also be needed to revive the participatory mechanisms that were enshrined in the legal framework by Congress. Without these changes, Peru’s participatory decentralization reform will go down in history as one of the most ambitious reforms on paper, but not in practice.



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© Springer International Publishing AG 2016

Authors and Affiliations

  1. 1.Franklin and Marshall CollegeLancasterUSA