MEF allocates S/5.9 billion to revitalize the economy

The Ministry of Economy and Finance (MEF) presented yesterday the Con Punche Peru plan, with which they seek to complement the actions carried out with Impulse Peru for revitalize national productive activitydiminished by the recent sociopolitical crisis.

In the words of Alex Contrerashead of the MEF, in the short term, S/5.9 billion will be injected for this initiative, which aims to catapult GDP by 1.2 percentage points during the first half of 2023, in a context in which the economy, by 2022, would close between 2.8% and 2.9% and, by 2023, at 3.1% and 3.9%.

Thus, Con Punche Perú catapults around twenty “quick implementation” measures so that the economy recover the rhythm “between zero and six months”, according to the official.

“If I wanted to summarize Con Punche Peru, I would talk about two fundamental elements: one is social protection and two, the promotion and release of investments”, Contreras noted for the press.

Said initiatives of the Executive, in the course of the next week, will be clarified to know if they are approved through a supreme or urgent decree, or through a bill sent to the Parliament.

Impact

Since the outbreak of the conflict —which cost the lives of approximately 30 compatriots— close to S/100 million have been lost daily, according to Contreras. Thus, S/1,000 million has been totaled without considering the damages presented in some infrastructures.

In addition, Contreras specified that the social noise affected the value of basic necessities, although “in a moderate way”, to the point that the rise in the price of foods such as tomatoes and potatoes is being corrected.

In this regard, he highlighted that weekly inflation during this period went from 8.1% to 8.3%. It is necessary to specify that inflation would culminate this year at a rate of 8.2%, according to the Central Reserve Bank of Peru (BCRP). “There has been an impact, but it has been moderate,” the official remarked.

Mypes are the priority

Within the Con Punche Peru plan, it is expected that the National Superintendence of Customs and Tax Administration (Sunat) release funds from taxpayer drawdown accounts to recover the economy after the losses caused by the latest outbreak of protests following Pedro Castillo’s attempted coup.

With this, it will be possible to provide liquidity to small businesses that in recent weeks suffered losses or did not achieve the level of sales expected for the recent year-end campaign.

The fiscal cost of the measure is S/960 million, approximately, and is based on accounts that are in the Banco de la Nación and that are used to pay taxes, although the MEF believes that “at this time the mypes can use these deduction accounts to meet some payroll payments or outstanding debts”.

“Unlock shock”

From the MEF they ratified that in Peru there are 2,624 paralyzed works, which materialize in S/20,000 million lost in infrastructure due to not being usedwhich is why an “unlocking shock” is urgently needed, Contreras alleged.

In the first place —he continues— it is planned to carry out a diagnosis with a situation report to find out how these works are and thus be able to give them the expected continuity.

For this reason, S/300 million will be allocated to resume stalled projects, always with an emphasis on operations such as the Toromocho Expansion, Yanacocha Sulfide, Antamina Extension, Inmaculada Optimization, Zafranal, San Gabriel, Río Seco Copper Plant, Yumpaq and the UEA Expansion. broom.

In addition, “it is proposed to reactivate the Chavimochic III and Majes Siguas II projects,” the minister said dimly.

Massification of natural gas

As part of the Con Punche Peru plan, the Government will allocate S/491 million for the massification of natural gas next year, thus fulfilling one of the guidelines of the extinct management of Pedro Castillo.

With this, 110,000 additional homes would be covered so that they have the natural gas service.

It’s enough?

According to Juan Carlos Odar, director of Phase Consultores, the S/5.9 billion plan contemplates “quite scattered” measures that are not focused and, therefore, would not generate the desired momentum.

For example, Odar points out that within the reactivator package it is proposed to unlock the paralyzed works at a cost of S/300 million; however, reviewing the situational status does not guarantee that, once done, these projects will begin to be carried out immediately. So, there it would have to be seen which of those projects could have a possibility of faster execution and which not necessarily.

For his part, the economist Eduardo Recoba states that none of the initiatives will achieve any specific objective because the MEF does not contemplate high-impact spending or “high-end” public investment, which prioritizes the completion of hospitals, highways, bridges, viaducts and bypass that until eight years ago lay incomplete.

“The plan is basically replicating the reactivation maneuvers of other administrations, administrations from 17 months ago and from 6 years ago; They are maneuvers that do not include high-impact spending and, therefore, I do not see any sense in the short term, ”he told this newspaper.

Recoba warns that short-term problems such as job creation or long-term problems such as health or educational infrastructure are not being attacked, considering that the last thing that can be perfected is the issue of employment, since the projection of generating 130,000 jobs “It is nothing for what is needed in this country, in terms of mobile quarters”, since what we require is a minimum of 500,000 or 700,000 new jobs in a mobile quarter so that we can, at least, move GDP by one percentage point .

Entrepreneurs greet reactivation plan

The Con Punche Peru initiative has been well received by the Exporters Association (ADEX), especially in terms of the extension of the term until June 30, 2023 for the acceptance of the reprogramming of the credits of Reactiva Peru, the Business Support Fund for the tourism sector (FAE-Tourism); and the Business Support Fund for the textile and clothing sector (FAE-Texco).

“2023 will be a difficult year for three reasons: the economic situation of all countries due to high inflation rates that will slow down consumption, the Russia-Ukraine war and the behavior of the Chinese economy whose authorities continue to take measures within the framework of its ‘Zero Covid’ policy, which will impact all its trading partners”, explained the president of ADEX, Julio Pérez Alván.

The most relevant aspect of the plan is that it includes short-term measures to reactivate the family economy in the regions, such as the unlocking of mining projects that represent a portfolio of billions of dollars and the reactivation of emblematic projects; and other sectoral ones (textile, clothing, agriculture, tourism), the union pointed out.

They stressed that it is important to overcome the climate of instability and social conflicts, since they harm economic activity and the image of the country as a provider.

Data

risks. The slowdown of the Chinese economy —Peru’s main partner— may dampen the growth figures, as well as the intensification of the Ukraine-Russia war.

Safeguards. Contreras recognized that it is crucial to protect the textile industry from imports. They will await Indecopi’s decision.