Public administration

Week 3

BUDGET OF THE
PUBLIC SECTOR
PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPA
O
DIARY
• Fundamental aspects of the Public Sector
Budget
• Identify and describe the phases of the Budget
Process

CAPABILITIES AND ATTITUDES

• Assess knowledge about the Public Sector
Budget

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 PLANNING AND BUDGET
• Budget programming is a technique developed on principles of
economic and finance programming.
• It uses the nomenclature of both disciplines, as well as has developed
certain of its own procedures.
• The budget technique uses and defines, for example, concepts
such as: function and program .
• The presentation of the objectives and goals of each program must
be executed, in accordance with certain requirements in order to
achieve its correct application in budgetary terms.
• Additionally, the concepts of: final goals and intermediate goals
must be defined.
• The programmatic budget has a degree of complexity that is a
product of the diversity of technical elements that go into its
preparation.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

• This complexity requires copious information, used to
various purposes at all levels of administration.

• Broadly speaking, three major purposes have been identified for

that the programmatic budget serves:

• It is an instrument of economic policy.

• It is a programming instrument.
• It is administrative system and operation mechanism.

Budget.
“It constitutes the State management instrument that allows
entities to achieve their objectives and goals contained in
their Institutional Operational Plan (POI). Likewise, it is

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 the quantified, joint and systematic expression of the
expenses to be met during the fiscal year, by each of the
Entities that are part of the Public Sector and reflects the
income that finances said expenses.”

Law No. 28411.- General Law of the National Budget System, Art. 8°, 8.1.

Budget.
“The budget constitutes the State management instrument for
achieving results in favor of the population, through the
provision of services and achievement of coverage goals with
effectiveness and efficiency by the Entities.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 Likewise, it is the quantified, joint and systematic expression
of the expenses to be met during the fiscal year, by each of the
Entities that are part of the Public Sector and reflects the
income that finances said expenses.
Law No. 29626, Public Sector Budget Law for Fiscal Year 2011, which modifies Article 8, 8.1 of Law
No. 28411.- General Law of the National Budget System.

The Budget Regimes in the

Peru:
• In 1848, Congress approved a budget for the first time, which
was valid for the biennium 1848 – 1849.
• From 1886 to 1920, period of “Fiscal Decentralization”.
• In 1922, Law No. 4598 - Organic Budget Law was approved

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 and created the General Directorate of the Public Budget in
the Ministry of Finance.
• In 1962, through Decree Law No. 14260, the Functional
Budget or Program Budget was approved.
• In 1964, Law No. 14816, Organic Law of the Public Sector
Budget, was approved, which has subsequently been
amended.
V

The Budget Regimes in the

Peru:
• In 1982, the government implemented a new budget
methodology (Zero Base Budget).
• In 1992, by Decree Law No. 25875, the Framework Law of the
Budgetary Process was approved, modified by Law No. 26199

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 in 1993.
• In 1996, the State Budget Management Law was approved
and established the Programmatic Functional Budget.
• In 2005, Law No. 28411 - General Law of the National Budget
System (in force to date) was published.

The Budget Regulations in the

Peru
Political Constitution of the Peruvian State of 1993, Articles
74 ° , 75 ° , 77 ° , 78 ° and 80 ° .
- Law No. 28112 Framework Law of State Financial
Administration.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

- Law No. 28411 General Law of the National System of
Budget.
- Annual Public Sector Budget Laws.
- Directives for Budget Programming, Formulation, Approval,
Execution, Control and Evaluation.
- Participatory Budget Instructions
V

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 The Phases of the Budget Process
OBJECTIVES ARE ESTABLISHED INSTITUTIONAL,
PROGRAMMING PROPOSE THE GOALS, AND DETERMINES TH
INCOME OVERALL SPENDING ESTIMATE OF
DEMAND AND
THE PROGRAMMABLE FUNCTIONAL STRUCTURE, GOALS
FORMULATION
AND HARMONIZATION OF THE GLOBAL EXPENDITURE
DEMAND ARE DEFINED

APPROVAL APPROVAL BY LAW OF CONGRESS

THE FLOW OF INCOME AND EXPENSES IS

EXECUTION
CONCRETED

MONITORING OF INCOME AND EXPENSES CONTROL

CONTROL OF LEGALITY AND MANAGEMENT

ASSESSMEN DETERMINE MANAGEMENT RESULTS

T
 The Budget Classifiers.

• Income and expense classifiers.

• Financing Sources, equivalences with the new classifiers
• The Programmatic Functional Classifier

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

Generic Income Items
Generic Expense Items
 BUDGET FUNCTIONS
- Legislative - Mining
- External relationships - Industry
- Planning, Management and - Transport
Contingency Reserve - Communications
- Defense and National - Environment
Security
- Sanitation
- Public Order and Security
- Housing and Urban
- Justice
Development
- Job
- Health
- Trade
- Culture and Sports
- Tourism
- Education
- Agriculture
- Social Protection
- Fishing
- Social Security
- Energy
- Public debt
SUPREME DECREE Nº 068-2008-EF, Art. 1°

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 Financing Sources and Items
1. Ordinary Resources
00. Ordinary Resources
2. Directly Raised Resources
09. Directly Collected Resources
3. Resources for Official Credit Operations
19. Resources for Official Credit Operations
4. Donations and Transfers
13. Donations and Transfers
5. Determined Resources
04. Contributions to Funds
07. Municipal Compensation Fund (FONCOMUN)
08. Municipal Taxes
18. Canon and Overcanon, Royalties, Customs Revenues and
Holdings
 REGULATORY PRINCIPLES

Budgetary Techniques applied in the

Peru
 The budgetary techniques that have been applied in Peru are:
- Traditional Budget: Until 1962 - 63.
- Budget by Program: From 1962 – 63.
- Zero Base Budget: From 1982 to 1984.
- Programmatic Functional Budget: Since 1997.
- Budget for Results: Starting in 2007.
It is necessary to indicate that the last three (03) methodologies
have been implemented within the framework of the Program
Budget.
* Law No. 28411, General Law of the National Budget System, Article 6.

The Traditional Budget

“In the traditional budget, emphasis was placed on purchases
and acquisitions, with which the budget turned out to be a list
of income and expenses without being linked to the
achievements for which they were assigned. Each ministry had
a budget or list of global expenses in which the expenses of all
the executive offices were classified into items according to
 their purpose, which requested, from the global allocations, the
resources necessary for their operations.

CORNEJO Klaschen, Roberto: “The Government Budget by Programs”, page. 66

The Program Budget

“... It is a system in which particular attention is paid to the
things a government does rather than the things it acquires. The
things that a government acquires such as personal services,
supplies, equipment, means of transportation, etc., are, of
course, nothing more than means that it uses to carry out its
functions. The things that a government does in carrying out its
functions can be roads, schools and hospitals built, soldiers
trained, land reclaimed, cases processed and resolved, permits
issued, exhibitions held, reports prepared or any of the
innumerable things that can be defined. ..”
CORNEJO Klaschen, Roberto: “The Government Budget by Programs”, page. 66

The Zero Base Budget

ZERO BASE BUDGET (PBC): “... It is not built from a previous
one but rather the current functions, operations and activities are
subject, for their formation or elimination, to the same cost/benefit
analyzes of the innovation proposals with which the distribution
of resources competes. .. It consists of a planning and budgeting
process that requires the full and detailed justification of
expenditures from their origin (hence its name “zero base”) and
not as increases from previous budgets. In this way, it requires
each person responsible to demonstrate that all items, new or
existing, are properly explained and quantified."
PARRO NEREO, Roberto : “Zero Base Budget”, page. 4 and 16

The Budget for Results

“Article 79. Budget for Results (PpR)
79.1 Budget for Results (PbR) is a methodology that is
progressively applied to the budget process and that integrates the
programming, formulation, approval, execution, monitoring and
evaluation of the budget, in a vision of achieving products, results
and effective, efficient and transparent use of State resources in
favor of the population, providing feedback to the annual public
budget allocation processes and improving the State's
administrative management systems.”

V
SYSTEM OF
PUBLIC BUDGET AND
PHASES OF THE BUDGET
PROCESS

UNNVE RSITY PRIVATE ANTENOR OREEGO

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado

 The National Budget System.

The National Budget System is made up of:

- The National Directorate of the Public Budget;

- The Public Entity;
- The Budget Office of the Bid.
- The Head of the Entity

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 MA
NA
GE
Framework Law of Financial ME
Administration of the Public NT

Sector BU
DG
ETA
RY

General Law of the

LAW
System
Nº National Budget
28411

LAW Public Sector Budget Law for

Fiscal Year 2012
Nº
29812

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

Framework Law of Financial
Administration of the Public Sector – No.
28112
Syst. Born Budget
The component systems of
the administration Syst. Born Accounting
Public Sector Finance are:
Syst. Born Treasury

Syst. Born Indebtedness

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 General Law of the
System
National Budget

They conduct the

budget process of
all entities and
organisms of
the
Public Sector in its
different phases.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 The General Directorate of
Public budget
“The National Directorate of the Public Budget, as the highest
technical-normative authority in budgetary matters, maintains
technical-functional relations with the Budget Office or the one
that takes its place in the Public Entity and exercises its
functions and responsibilities in accordance with the Law. No.
28112…”

* Law No. 28411, General Law of the National Budget System, Article 5.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 Public entity.
“…any body with legal status included in the National,
Regional and Local Government levels, including their
respective Decentralized Public Organizations and companies
created or to be created; the Funds, whether under public or
private law when the latter receives transfers of public funds,
the companies in which the State exercises share control; and
the Constitutionally Autonomous Bodies.”*

* Law No. 28411, General Law of the National Budget System, Article 5.

The Budget Office of the Bid

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 “…is responsible for conducting the Entity's Budget Process,
subject to the provisions issued by the DNPP, for which
purpose, it organizes, consolidates, verifies and presents the
information generated as well as coordinates and controls the
income execution information. and expenses authorized in the
Budgets and their modifications, which constitute the limit
framework of the approved budget credits.”

* Law No. 28411, General Law of the National Budget System, Article 6.

The Head of the Entity

“…is the highest Executive Authority. In budgetary matters, it
is responsible jointly with the Regional Council or Municipal
Council, the Board of Directors or Collegiate Body that the
Entity has, as the case may be. Said authority may delegate its
functions in budgetary matters when established by the General

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 Law, the Public Sector Budget Laws or the rule of creation of
the Entity. The Owner is jointly responsible with the delegate.”

* Law No. 28411, General Law of the National Budget System, Article 6.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 LAW N° 28411
General Law of the National Budget System

It is the highest technical-regulatory authority on budgetary matters,

it maintains technical-functional relations with the Budget Office or
the one that takes its place in the Public Entity. (Art.
3rd)
DGPP
MEF

Conducts the Entity's Budget Process (Art. 6th)

OF. PPTO.
ENTITIES
PUBLIC

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

 It is the highest technical-regulatory authority in budgetary matters, it maintains technical-
functional relations with the Budget Office or the one that takes its place in the Public
Entity. (Art. 3rd)

The Head of an Entity is the highest Executive Authority. In

DNPP budgetary matters, he is jointly and severally responsible
with the Collegiate Body that the Entity has, as the case
MEF may be (Article 7.- Head of the Entity).

SHEET It constitutes the decentralized or operational level in the

entities and organizations of the public sector, with which
the governing bodies of the financial administration of the
Public Sector are linked and interact.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado UPAO

PHASES OF THE BUDGET PROCESS

V
UPAO
PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado
 PHASES OF THE BUDGET PROCESS
JANUA FEBRUAR MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
RY Y
MULTY-YEAR MACROECONOMIC FRAMEWORK (MMM)

The MMM establishes the economic assumptions that support the budget. They determine the income that finances the budget and the limits of spending as well as public debt. The MEF sends the
MMM to the Council of Minister for approval in the month of April and, exceptionally , it is reviewed in August.

The proposal for the Budget Bill is submitted for approval by the Council of

PROGRAMMING AND FORMULATION WITH PROGRAMMING AND FORMULATION APPROVAL

MULTY-YEAR PERSPECTIVE ANNUAL
- ~- x He The entities Debate of the The law of
Public Entities define their allocation priorities (programs, । Each Public Entity defines its annual budget President public Opinion of Budget
projects, activities) and the results that are expected to be 1 according to your objectives and priorities. of Council support their Project of is published
achieved. ¡ x_______________________________________________z of Ministers budget Law of the first
x_______________________________________________Z and the Minister before the Budget days of
Ministers for of Commission of full on December
submission to the
Economy and Budget congressional In the diary
Congress of the
Finance and tell of the official
Republic until
support the General of the Republic and Peruvian, and
August 30.
Project of Republic of his go into
Law of Congress. approval validity on
Budget >- - (until 30 January 1st
to Congress of of the year
EXECUTION of the The Opinion of the November) following.
\ / •_____________________. z
Republic.
( --- --- --- --- - --- --- --- -- Project of
Law of
It is in charge of the different public entities that receive resources and monitoring is carried Budget (until
out by the MEF.
November 15 )

ASSESSMENT

The results obtained are measured, constituting a source of information to improve the allocation of spending in the following years, which is the responsibility of the MEF and the Public
Entities.

ACCOUNTABILITY

They review whether the resources were used for the intended purposes; It is carried out by Congress and the Comptroller General's Office.
ANALYSIS OF
PUBLIC BUDGET FOR
FISCAL YEAR 2016

UNNVE RSITY PRIVATE ANTENOR OREEGO

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado

 2016 BUDGET RESOURCES
s Resources C (Millions S/)

2006 2007 2008 2009 2010 2011 2012 2013 7014 2015 2016
2016 BUDGET STRUCTURE
2016 BUDGET STRUCTURE
PRIORITIES IN THE 2016 BUDGET
 THE PUBLIC BUDGET IS A
POLICY AND MANAGEMENT TOOL
PUBLIC, THROUGH WHICH
RESOURCES ALLOCATE AND
DETERMINE
EXPENSES, WHICH ALLOWS THE
FULFILLMENT OF THE
FUNCTIONS OF THE STATE AND
COVERING THE
OBJECTIVES OUTLINED IN THE PLANS
OF ECONOMIC AND SOCIAL POLICY, OF
MEDIUM AND LONG TERM.

PUBLIC ADMINISTRATION / Eng. Marco Zegarra Alvarado

Ministry of Economy and Finance

V
UPAO
 UPAO
ANTENOR ORREGO PRIVATE UNIVERSITY

UPA
UNNVE RSIDAD PRIVATE ANH ÑOR OREE
CO