Challenges in the execution of mining canon resources in Peru: Stagnation in regional development?

Over the past ten years, regional governments and municipalities in Peru have failed to execute a considerable amount of resources derived from mining royalties. According to information from the Ministry of Economy and Finance (MEF), it is estimated that approximately S/56.456 billion were not efficiently invested by local authorities, despite the significant transfers received through royalties, additional royalties, royalties, customs revenue, and revenue sharing. This fact is significant in a context where mining has been one of the fastest-growing sectors in the country, contributing significantly to the national Gross Domestic Product (GDP). According to data from the National Institute of Statistics and Informatics (INEI), in the first four months of this year, mining expanded by 5.27% nationwide, serving as an important driver to mitigate the negative effects of the recession. Jessica Luna, executive director of Comex Peru, highlights that mining not only directly contributes to the GDP but also generates impact through job creation and the development of technology and suppliers. In this sense, she emphasizes that mining contributes an additional 3 to 4 percentage points to the Peruvian GDP, with an impact of nearly 1 million jobs, and she points out the potential for further expansion in the country. On the other hand, Víctor Fuentes, manager of public policies at the Peruvian Institute of Economics, emphasizes the multiplier effect of mining on the national economy. He points out that for every job in the mining sector, around eight additional jobs are generated in other sectors, underscoring the importance of this activity for job creation and economic development in various regions of the country. The implementation of significant mining projects in the last decade has boosted production and growth in various regions of the country, such as Junín, Arequipa, and Apurímac. The participation of mining in the GDP of these regions has increased significantly, becoming a key economic driver. However, despite the benefits generated by mining, the efficient execution of resources derived from royalties has been a challenge for local authorities. Karla Gaviño, professor and affiliated consultant at the School of Public Management of the University of the Pacific, highlights the lack of specialized guidance in strategic planning of royalty spending as one of the factors contributing to the deficient budget execution by regional and local governments. She also points out that politicization in public management can lead to the implementation of projects with limited social value or lasting impact. In this regard, Gaviño suggests the need for greater coordination and training by the Executive Branch so that subnational governments acquire the necessary skills to properly execute resources derived from royalties. She emphasizes the importance of coordinating efforts among various actors of the central government, such as the Ministry of Economy and Finance, Ceplan, Servir, and other entities, in order to strengthen the management and planning capacities of local authorities. In conclusion, while mining has been an important driver for the Peruvian economy, it is essential that resources from royalties are managed efficiently and transparently to maximize their impact on regional and local development. The lack of proper planning and execution of these resources can limit the growth potential and job creation that this activity can provide to the communities where it operates.