Public administration in Peru, already one of the weakest on the continent as of 1968, has experienced a dramatic increase in the size of state enterprises and the number of civil servants. That increase has been accompanied by a gradual decrease in available funds to run the administration, partly because of the inefficiency of several of the state-sector enterprises. The Petroleum Enterprise of Peru (Petroleras de Perú--Petroperú), for example, lost US$700 million in 1987 alone. Tax collection has been virtually nonexistent, with the government having to rely on a tax base of 7 percent of gross national product (GNP--see Glossary), a figure comparable to Bangladesh's 8.6 percent and Uganda's 8.2 percent. Public expenditures per person were US$1,100 in 1975 in 1990 they were only US$180.

These trends were exacerbated markedly during the 1985-90 APRA government of García, as party patronage practices dominated the administration of the state, and the number of state employees increased from about 282,400 in 1985 to almost 833,000 in 1990, while government resources all but disappeared because of enormous fiscal deficits and hyperinflation. State-sector workers were not even paid during the last few months of the García government.

The result was a rise in corruption and inefficiency, and Peru had one of the most inefficient state sectors in the world. Improvements in the future were likely to be guided by budgetary constraints, as the resources simply did not exist to maintain the existing number of civil servants in the public administration. The short-term costs would be a cutback in already scarce public services and a possible increase in political protest among displaced civil servants. Most Peruvians simply did without the services that even a minimal public administration would normally offer, or else they found some way of attaining them in the informal sector, usually at a much higher price.

Data as of September 1992