Carlos Oliva: “Growth is slowed down by a lack of confidence”

The end of the first quarter of the year is approaching and the situation of conflict at the national level has not closed its cycle, new strikes are announced and the population wonders how this will affect the economy. For this reason, we spoke with Carlos Oliva, former Minister of Economy and Finance.

—How do you see the growth projection of the economy for this year?

—It will be very difficult for us to exceed last year’s growth figure. I had already commented on it a few months ago, that we were not going to be able to grow at 3% and that this year was going to be even more challenging, and I maintain my opinion. I understand that the Ministry of Economy and Finance (MEF) is doing its best, but there are a number of issues that have not been resolved. The main one has to do with the lack of confidence of private investment in the economy. It is very probable that it will decrease again, as it did last year, or, in the best of cases, that it will remain at zero.

What would be the external factors?

“There is a lot of uncertainty. Growth in the US and Europe will be the same or even less. China will probably grow a little more, but in any case there will not be an outside force to help us push. Mining investment is also going to have negative figures, since Quellaveco was finished. So, when you look at all these factors, there isn’t much basis for thinking that we’re going to grow more than last year.

—The Government is promoting a series of reactivation programs. Are they not going to influence growth?

—In the short term there may be a positive effect. They have tools to support growth, but I reiterate that growth is not held back by the factors that the minister intends to unlock or improve, it is held back, mainly, by a lack of confidence. So what they’re doing in the MEF It makes sense, it can help, it can give us a few additional tenths, it can alleviate people’s situation somewhat, but it is not the underlying issue.

—There is more work, but it grows on the side of underemployment. What can be done?

—Yes, the only way to increase formal employment there is through formal private investment. There is no other recipe. There is another that is public employment, which —by the way— has also grown a lot in recent years, but that does not change the needle. The ones that would really attract more formal employment are private companies, which have to hire more people. And there we return to the topic we talked about at the beginning: if investment expectations are low, then it is most likely that more people will not be hired.

—A seventh withdrawal from the AFPs has been proposed. It is necessary?

“There’s no justification for that. In the pandemic, one could understand it, but I still think that withdrawing pension funds is unconstitutional. There is an article that talks about the intangibility of pension funds. Despite the fact that the Constitutional Court (TC) has said otherwise, I still think that it was a bad decision by the TC. Beyond that, we are harming the pension system. Your children are going to have to pay more taxes to be able to cover all this gap that is being generated.

—What do you think about the ruling of the TC that condones tax debts?

—As the Fiscal Council we are going to issue a statement on Thursday. I could tell you that the MEF is quite right in what it says. An incentive could be created to prosecute the processes, because, if it is true that there will no longer be that default interest rate in what it may take for the Judiciary to resolve, then everyone will want to bring their trial [hasta esa instancia].