The growth of public investment in 2023 contrasts with the usual decline during the first years of management of the new subnational governments, which is commendable. However, the recovery of public investment towards 2024 faces a series of risks largely associated with reduced fiscal space. In this context, it is the task of the authorities to safeguard the country’s macroeconomic strengths without subtracting resources from investments that ensure economic reactivation and the well-being of citizens.

X-ray of 2023

Public investment registered real growth of 3.1% in 2023, presenting two clear trends throughout the year, according to data from the Ministry of Economy and Finance (MEF). In the first half, it increased 7.1%, driven by the growth of investment by the national government (+29.7%) and regional governments (+5.1%), and despite the decline in local governments ( -13.7%). During the second half of the year, public investment accumulated five consecutive months of decline, registering a contraction of 7.9% between July and November. In said period, the initial dynamism of national government investment moderated to an expansion of 5.7%, while subnational governments accumulated a drop of 15.6%. This poor performance is partly explained by the underexecution of additional investment resources intended for economic reactivation and addressing climate phenomena; Subnational governments recorded an advance of less than 50% of these funds. In December, public investment rebounded to an increase of 25%, due to greater investment by regional governments and the national government. This result was key to raising the performance of public investment in 2023.

Thus, the national government’s public investment in 2023 grew 19.6%, in contrast to the 5.1% drop the previous year, in real terms. The growth in national government investment corresponds mainly to the increase in defense, public order and education functions. The defense function contributed almost half (9.7 percentage points) of the national government’s investment growth, with an executed amount of S/2,175 million, mainly destined to strengthen the operational capabilities of the Navy. In contrast, health and transportation presented a decrease of 3.6% and 16.4%.

Subnational support

The growth of public investment in 2023 contrasts with the downward trend during the first years of management of the new subnational governments. Previously, the learning and adaptation process of the incoming authorities was reflected in falls in public investment of between 2.7% and 9.1%. However, in 2023 regional governments achieved growth of 13.5%, unlike the average drop of 7.5% in previous similar periods. Although local governments experienced a 15.3% reduction, they also showed an improvement compared to the average decline of 21% for similar periods. Along these lines, although local governments present negative growth rates in 22 of the 25 regions of the country, the performance in Amazonas (18%) and Cusco (13%) and, to a lesser extent, Moquegua (3%) stands out.

Thus, the better performance of public investment compared to other first years of subnational management would be associated with the measures adopted by the MEF since the beginning of 2023 to facilitate the transition and boost the investments of the new authorities, ensuring continuity in the execution of investments. According to information from the SIAF, the Investment Bank and the State Electronic Contracting System, the Executive’s interventions provided, among other aspects, specialized support and monitoring of more than 2,000 investment projects with operational, contractual and management risks. , between moderate and high, which facilitated the execution of around S/4,658 million, concentrated mainly in regional governments.


By 2024, public investment is expected to recover due to the execution of projects by subnational governments, which will enter their second year of management in a more consolidated stage of their learning curve. This dynamic has been recurring over the last two decades, in which the IPE calculates that in every second year of administration, investment spending by regional and local governments grows on average around 15%. However, because 2023 was not such a negative year, in 2024 the rebound would be more moderate.

Additionally, the recovery of public investment faces a series of risks largely associated with reduced fiscal space. Indeed, public revenues have accumulated in 2023 one of their largest falls in the last 30 years, without considering the pandemic. With the exception of what occurred between 2009 and 2010, the drop in collection in previous episodes has brought with it lower levels of public investment as a percentage of GDP. A similar situation could occur in 2024 without measures to ensure the sustainability of tax revenues during the year.

In this context of fiscal consolidation, it is a priority that the country’s macroeconomic strengths are preserved by the Executive and Legislative, without subtracting resources towards investments that ensure economic reactivation and that are essential to close the gaps in basic services that millions of people still suffer. Peruvians.

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