National Planning Department www.dnp.gov.co

Colombian General Royalties System Opportunities and Challenges Behind the Reform

Javier Antonio Villarreal

Paris. June 3rd, 2014

School- Tumaco

Colombia is the 3rd economy in Latin America

Decentralized country

32 departments, 1.102

municipalities, 13 Metropolitan

areas

Between 2009 and 2013 GDP

average growth was 4,1%

Nevertheless regional GDP

disparities need policies to

reduce inequity.

While Bogota’s participation in

national GDP is 24%, Vichada’s

participation is 1%.

Source: SGR and DNP, 2013

Increasing gaps

17 % of population had

80% of resources

Funds were focused on 8

departments

Earmarked use: health,

education, water and

sanitation

Before 2011 After 2011

100% of population allocated

with resources

Savings and investment funds

Serves all departments

10% of Royalties go to Science,

Technology and Innovation Fund

(U$ 484 million per year)

Non earmarked use of funds

Colombia’s Royalties System

A Territorial Inclusive Policy for Development

SGR is System that democratizes the use of

royalties

Equity

• Wealth that arises from natural resources belongs to all Colombians

Regional impact

• The system created regions, aiming to provide incentives for regional impact project design and implementation, in order to promote development and competitiveness in the country

Transparency and more efficient use of resources

• More coordination between national and local governments, and within regions

• Improve public investment planning and resource execution

Savings

• For periods when royalties income is lower

• To make public expenditure sustainable

• To honor obligations on pensions at the regional level

1

2

3

4

Funds Within the SGR

SGR

1,3% SGR Operation 0,7% Monitoring, control and evaluation system of royalties 0,5% Special condition’s municipalities

2% Oil fields oversight and mapping

10%

20%

10%

34,5%

6,6%

9,9%

16,5% 9% 60%

10 %

20%

10%

6,6 %

MUNICIPAL

OCAD

TS

Defines the project to be funded by SGR

Assess, evaluates, prioritises and approves

investment projects submitted by

governments (depending on whether it´s

National, Departmental, Municipal or ST&I)

Decides the execution of the projects

If a project is rejected by the OCAD the

Entity (National, Municipal, Departmental,

ST&I) does not lose the royalty funds, but is

able to design a new one.

DEPARTMENTAL REGIONAL SCIENCE TECHNOLOGY &

INNOVATION

Multilevel Governance Within SGR:

OCAD

*TS: Technical Secretariat - *OCAD: Spanish acronyms for a Collegiate Board for Administration and Decision

Ongoing Projects

2640

Completed Projects

774

Capacity-building resources 2013

($US thousands)

$ 106

$ 66

$ 66

$ 26

$ 23

$ 21

$ 18

$ 15

$ 12

$ - $ 50 $ 100 $ 150

ST OCAD regionalesDepartamentos

Corporaciones autónomasMunicipios cat. 6Municipios cat. 5Municipios cat. 4Municipios cat. 3Municipios cat. 2Municipios cat. 1

More than $353K US have been allocated to sub-national

governments’ capacity building strategy

% projects approved in

OCAD

Direct. Tranf [PORCENTA

JE]

Esp. RCF

40%

RCF [PORCENTA

JE]

RDF [PORCENT

AJE]

ST&I [PORCENT

AJE]

Municipalities Cat.1

Municipalities Cat. 2

Municipalities Cat. 3

Municipalities Cat. 4

Municipalities Cat. 5

Municipalities Cat.6

CAR

Departments

Regions

Municipalities and departments have

strengthened their planning capacity

Transport

$1.8 US Billion

1.594 projects

The SGR invests in different sectors

Science, Technology

and Innovation $0.8 US Billion

204 projects

Education

$0.8 US Billion

568 projects

Environment

$0.2 US Billion

180 projects

Housing

$0.7 US Billion

716 projects

Health

$0.2 US Billion

206 projects

Agriculture

$0.4 US Billion

638 projects

Data report and follow up

online SUIFP

Monitoring system

GESPROY

Citizen’s follow up

tools MapaRegalías

www.maparegalias.sgr.gov.co

www.sgr.gov.co

Reports for

national,

departmental

and municipal

scale

$ 2

9 U

S

milli

on

Transparency tools are the core of the System

Challenges

1. Closing territorial gaps

2. Institutional strengthening

3. Multilevel governance through OCAD

4. ST&I for competitiveness

5. From a project based system to a

programme-based system

6. Transparency as a cross cutting

strategy to the system

All departments have access to

royalties funds

Specialized teams working hand in

hand with departments and

municipalities to develop projects:

capacity building

ST&I fund counting on the

participation of academia and private

sector

5 multiregional projects

Surveillance, follow up and

accountability systems

How is Colombia facing these

challenges?

The SGR is addressing key challenges

in Colombia

javillarreal@dnp.gov.co

Tel. (+57 1) 3815000

Cra 10 N°10 – 55 Piso 19

Bogotá - Colombia

Javier Villarreal Villaquirán

www.dnp.gov.co

Thank you