“State Payroll increased exaggeratedly and no investment in infrastructure”

A road can change the lives of a group of farmers without access to markets. A health center will be key to reducing anemia in schoolchildren and for them to assimilate the learning taught at the recently inaugurated school. The country needs infrastructure to improve the quality of life of its inhabitants. Today that physical structure is deficient. The deficit is notable, more than 100 billion dollars must be invested to close gaps, specifies the former Minister of Economy and Finance, Luis Carranza Ugarte. Carranza presented at the branch of the San Martin de Porres University de Arequipa, a book that he has co-authored.

– In recent years, has little been done in infrastructure?

There has been a precarious advance in the last decade. The reason, increased current spending. In it Government of the President Humala increased the public payroll disproportionately. There are cumbersome procedures and paralyzed works. For this reason, there is an important infrastructure portfolio that has not been completed.

– Transportation, health and water are deficit sectors, why is it essential to develop this infrastructure?

Infrastructure helps develop the country. In the short term, it generates employment. So people have more resources, companies sell products, cement, iron. When the highway or hydroelectric culminates, you bring a direct benefit to the population. With a route, you reduce the communication time with a market, consequently lower costs for the small farmer. In the long term, you have enormous well-being for the population, which already has access to basic services.

– Who should invest in infrastructure, the State or private?

In the book, we identify public and private works. Within the public ones, you have different execution modalities: public-private association (APP), concessions, works for taxes, etc. But the essential or critical part corresponds to the State.

– What is the critical part?

Roads. We have a problem with urban traffic in Piura, Trujillo, Lima and Arequipa.

– What type of urban transport should cities have? In Arequipa, trams, large buses, the Colombian scheme with multimodal buses are being considered.

if it comes out Majes Follows, there will be significant population growth. You have to incorporate that into urban planning and see how much traffic will increase. I don’t know if the Colombian model works in Arequipa because there are exclusive lanes for buses. Arequipa is a colonial city with very narrow streets in the center, which makes it difficult. You do need road interchanges, a ring road, improved access to the city, a metro.

– Why are the works paralyzed?

Each paralyzed work has an explanation. They are usually bad studies. When you have bad studies, you increase your budget and that’s where the discussions begin.

– With the private

The company says: I have a soil problem here, with the quality of the rock, in the tunnel that I am making and this is going to cost me 30% more. That’s where the problem starts.

– But is it also attributed to corruption issues? The addendums are incorporated, today converted into a synonym of corruption.

There are works that you never should have started, but for private interest, you carry them out (because of corruption). Bad contractors who collect advances and disappear and leave behind what little progress they have made, they disappear as a legal entity. And the cost overruns that you have due to the issue of corruption (…) The problem is not corruption itself, the problem is the aggregates: the poor selection of works, bad contractors, bad studies, etc.

– On roads, one that was offered as a panacea, especially for the south, was the Interoceanic, but it is a white elephant. Commercial traffic with Brazil is low.

A highway connects two cities. If you have an economic activity, you must identify the cost of uniting half a million inhabitants with one million. And that gives you a very simple indicator. How much does it mean in money that you have reduced the connectivity of those populations in three hours. That is essentially a study. The Interoceanic never had a studio. I was vice minister of Tax authorities at that time and it was part of my confrontation with the minister kuczynski of Economy and Finance. In the end I resigned because of that issue.

– There were also bribes involved.

We later found out about it. It was seen more as a political project than an economic one. In the south of Peru, including Arequipa, Cusco and Puno, there was a demand from the citizens to carry out the work.

– In Arequipa, there is talk of Puerto Corío, a mega-project. Is it possible? Taking into account that Brazil is not interested in leaving through the Pacific.

Brazil is interested, the problem is the costs. You can save a month of traffic with China, (which implies) go for the Atlantic, cross the channel Panama. You have to see the costs of these works. (First you have to find the charge)

– Regarding economic corridors, in the south you mentioned Apurímac.

We have 22 economic corridors identified, two are structuring. As the infrastructure and production develop, the number of corridors is expanding and the components of the existing corridor are also growing because the matter is dynamic. Arequipa plays a fundamental role, participating in six of the nine corridors in the southern zone. This is a strategic advantage of the region that is not being fully exploited.

– What works should be built, for example, thinking about these corridors?

The ones that now have, basically, La Joya, the connection with Moquegua. 50% of the departmental routes are not paved. With a long-term vision, you have Majes Siguas, it will require investments for all urban traffic. Latin America, except for sub-Saharan Africa, has the worst logistics costs. And the projections that we have for 2040 are very bad, because we do not even invest what is necessary to maintain the current quality. If you add population growth to that, then the need for investment increases.

– In the book you mention the need to develop this digital policy. We have approximately 44% connectivity in homes, how should this connectivity process be massified?

On the one hand, financing. The central networks are public investment and then the rural electrification model that has not worked very well, basically that.

– How do you see the economic projection of the country? There is a lot of uncertainty.

This year, the growth forecast for International Monetary Fund (IMF) and from the main independent economic analysis companies it is around 2.5%. The government has a slightly more optimistic projection. I am a little more pessimistic. We are going to be around 2% or below 2%.

– Don’t metal prices help?

That helps. Quellaveco enters full production capacity and this will increase average mining production. What affects you is the drop in private investment, which last year was flat, did not grow. This year it should be falling between 3% and 5%. Consumption is not going to grow as aggressively as last year. These two factors more than offset the increase in exports.