Budget Process and Execution: A Case Study on the Underperformance of the Peruvian Health System, 2000-2021

Health system financing for emerging economies with aging populations and changing epidemiological profiles is an increasing challenge. Peru, as one of the countries with the highest economic growth in this century, provides a good example for analyzing the impact of the budgeting process and the budget execution on the performance of a health system. This article aims to answer how policies and processes are the root causes of the performance gap of the Peruvian health system.

We used a case study methodology composed of 17 semistructured interviews with senior national and regional actors conducted between the end of 2021 and the beginning of 2022. Participants were selected with a combination of purposive, convenience, and snowball sampling until reaching saturation at 14 interviews. Participants' answers were grouped according to the topics explored, enabling comparisons and identification of themes.

The responses revealed that 4 interconnected influences affect the Peruvian health system. Political instability affects the sustainable development of health policies. The fiscal cycle limits the public health expenditure to a low 3% of the gross domestic product. The budget cycle is based on the low motivation of the Ministry of Health (MOH) to establish a proper budgeting process. The execution cycle represents the results of chronic underinvestment with a lack of professionals, equipment, and data affecting the access to care expressed by a high out-of-pocket share in health expenditure.

To escape these cycles, the MOH needs to be able to argue in economic terms for the prioritization of health, showing the economic rationale for investment in health. Taxes need to finance the additional investment within the available fiscal space. The rigidity of the budget law needs to be adapted, and a technical budget that is oriented to the current and future health priorities needs to be elaborated.