Villa el Salvador, Southern Lima, is a poor district of roughly 300,000 inhabitants. It is famous for its tradition of 'self-management' by the population. This article describes the history of the district and its urban development plans and includes a speech given by the Mayor of Villa El Salvador, Martin Pumar, in 1999. In it he shares his vision of leadership, the urban development plan and the place of participatory budgeting within that. He goes on to present four key challenges that he faces: the lack of participation by all inhabitants; the shortsightedness of leaders not used their co-governing role; the lack of linkages between decision making structures and the internal issue of the municipal bureaucracy not yet being capable of dealing with change. The article goes on to look the vision and strategic objectives of the participatory budgeting process and finally at the process itself.