CONTENTS -- Cover -- Title -- Abstract -- Acknowledgments -- Abbreviations and Acronyms -- I. Executive Summary -- II. Peru's Fiscal Challenges and Vulnerabilities -- III. Reorienting the Budget Toward Pro-Poor Expenditure -- IV. Improving the Efficiency of Public Expenditure -- V. Addressing the Promises and Risks of Decentralization -- VI. Upgrading the Civil Service -- VII. Improving Governance and Reducing Corruption -- VIII. Fine-Tuning Fiscal and Environmental Mining Policies -- Annex A. A Public Debt Sustainability Analysis for Peru -- Annex B. The Fiscal Effort Required for a Sustained Structural Deficit -- Annex C. Questionnaire on Public Financial Management -- Annex D. A Public Expenditure Tracking Survey: Methodological Issues -- Annex E. Public Enterprise Reform in Peru: Introducing Management Contracts at FONAFE -- Annex F. A Methodology for Functional Reviews and for Analyzing Functional Prospects -- Annex G. List of Background Papers -- Statistical Appendix -- Bibliography -- Map of Peru -- LIST OF TABLES -- LIST OF FIGURES -- LIST OF BOXES.