Peru has experienced extraordinary progress in the past two decades. The introduction of macroeconomic reforms and more effective social programmes in the 1990s and 2000s have led to significant improvements in economic growth, well-being and poverty reduction. To continue on this path, Peru has made regulatory policy a critical element of its development strategy and asked the OECD for support in enhancing its current policies and adopting best international practices on regulatory quality.

Peru’s macroeconomic performance over the last decade has been outstanding. Significant improvements in economic growth, well-being and poverty reduction have been observed since the introduction of reforms in the 1990s. However, to continue on this path, Peru needs a clear regulatory policy.

The central Peruvian government has several institutions in place, as well as several public policies, which aim at improving the quality of regulations. For instance, the PCM is in charge of the policy on national modernisation which includes administrative simplification, with several ongoing strategies, such as the establishment of the TUPAs for ministries and agencies of all levels of government. Also, the INDECOPI, via the Commission for the Elimination of Bureaucratic Barriers reviews formalities. The Ministry of Justice has issued a manual of legislative technique which provides ministries and agencies with guidance on how to draft a piece of regulation from a legal quality point of view. Similarly, there is the legal obligation for all ministries and agencies of the central government to perform a cost-benefit analysis for almost all new draft regulation, although no mechanism exist to enforce this obligation. More examples have been found of policies and practices directed at promoting and enhancing the quality of regulation.

Peru suffered from hyperinflation and a deep economic crisis during the 1980s. A first wave of structural reforms took place in the early 1990s. Private investment, including foreign investment, was promoted. New measures to open the country to foreign trade were introduced. And measures to ensure fair market competition were enacted. However, by the second half of the nineties, reform actions decelerated sharply. Notwithstanding, Peru’s macroeconomic performance over the last decade has been the best in over a century. This performance is in part the result of a very favourable external environment, but is also a consequence of a successful combination of sound fiscal policy based on a fiscal responsibility law and monetary credibility. Significant improvements in economic growth, well-being and poverty reduction have been observed since the introduction of reforms in the 1990s, but more reforms are needed to achieve a more inclusive and sustainable path.

Peru has a centralised system of government which comprises the executive, legislative and judiciary powers. Peru does not have a legal or policy statement for the application of a whole-of-government regulatory policy. Instead, it has specific elements that purse regulatory quality embedded in numerous legal documents. Mirroring the scattered elements of regulatory quality included across legal and policy instruments, the institutional landscape of Peru also offers a view in which legal attributions, practices, and efforts on regulatory policy are dispersed across several agencies, without articulated efforts for co-ordination, with some specific exceptions. Peru should consider issuing a policy statement on regulatory policy with clear objectives, and considering including this statement as part of a law or another legal document with binding capabilities. Peru should also aspire at establishing an oversight body which concentrates regulatory policy activities and tools currently spread across several ministries, agencies and offices.

This chapter describes the institutions, legal provisions, and practices of Peru for ex-ante assessment of draft regulation and for consultation with the public. It is found that although some of the building blocks have been set, Peru lacks a full-fledged system for ex ante evaluation of draft regulation, in order to assess whether they provide a net positive benefit to society, and whether they are coherent with other government policies. Peru should introduce a system of ex ante impact assessment. The system would require all regulators to prepare a RIA in order to help them in the development of new regulations. Threshold criteria could be employed to define the depth of the assessment efforts. Consultation should be systematic at the early stages when policy options are being defined and impact assessment is being developed, and once a draft regulation and a draft RIA have been produced.

This chapter describes the efforts and achievements of Peru in managing and simplifying the stock of regulations in Peru. It is found that although a strategy for administrative simplification is in place, oversight of its implementation should be enhanced. These efforts are further undermined because the Peruvian government lacks a baseline of administrative burdens emanating from formalities and information obligations for business and citizens, which can make difficult to target resources and communicate results. Peru should ensure the full implementation of the policies of administrative simplification, which should include evaluation of the impacts, and should consider establishing a programme on ex post evaluation of regulation.

This chapter discusses the approaches applied by the Government of Peru to advance regulatory enforcement and compliance. The institutional arrangements and practices across enforcement agencies vary widely, yet some commons treads are found. There is no general policy on regulatory compliance and enforcement across government agencies. Peru should include the policy of inspections and enforcement of regulations as an integral part of its regulatory policy, and should include general guidelines relating to horizontal objectives such as ethical behaviour, organisation and planning of inspections, and transparency towards the subjects of inspections.

Peru is a unitary presidential state, but despite this configuration it has three levels of subnational governments with significant regulatory powers. This setting calls for the establishment of strong governance arrangements that promote co-ordination across levels of governments in order to ensure regulatory coherence and complementarity, and balanced regulatory quality efforts. Despite having mechanism between central and subnational governments to promote the co-ordination of public policies, including fiscal incentives to local governments to encourage them to apply measures of regulatory quality, these have fallen short. As a consequence, there is ample room to seek regulatory coherence across level of government, and promote the adoption or regulatory policy tools by regional and local governments. With the exception of policies on administrative simplification, subnational governments in Peru should apply mechanisms of ex ante assessment of regulation, and of public consultation in the rule making process.

This chapter addresses the governance arrangements in force in Peru for regulatory agencies that have a degree of independency from the central government. The OECD Best Practice Principles for Regulatory Policy: The Governance of Regulators is employed as benchmark to assess elements such as role clarity, decision making and governing body structure for independent regulators, accountability and transparency, amongst others. It is found that economic regulators in Peru have a large degree of independence to exert budget and decision making, and that their practices on transparency and accountability are more advanced compared to obligations in the central government. Peru should consider strengthening the governance of economic regulators by reviewing their legal links with central government in order to enhance their decision making, upgrading current policies to make regulators more accountable to the central government, to Congress and to the general public, and introducing a system of ex ante impact assessment.