Peru will be one of the countries most affected by the El Niño phenomenon

The inevitable arrival of the El Niño phenomenon presents a new challenge for the Government of Dina Boluarte, since the budget items to minimize their damage.

Alex Contrerashead of the Ministry of Economy and Finance (MEF), assured that Peru will be one of the countries hardest hit globally by the emergency in this part of the Pacific Ocean.

In economic terms, historical damage oscillates between 0.2% and 3% of GDP, with an average of 2%, he recalled, and to date, considering previous disasters, the cost of reconstruction with changes in infrastructure is S/50,000. millions.

“There is a group of specific tasks where we are preparing a package, and it should come out these days (…). There is an additional budget that we estimate between 2,000 and 3,000 million soles more that we are going to assign to strengthen the response capacity, ”he told TV Peru.

The official specified that the response capacity plan targets sectors such as agriculture, housing, transportation and defense.

Are we capable of facing El Niño?

Miranda Contreras He recalled that only for Cyclone Yaku and El Niño Costero were injected S/1,500 million. In addition, at the beginning of the month he recognized that Peru has sufficient fiscal space for El Niño Global.

It is worth noting that Congress, in mid-April, approved that the Executive has an additional S/8,232 million to reactivate the economy and nurture the contingency reserves, which, according to data from the MEF, began 2023 with only S/547 million —its lowest level in 14 years—.

In this context, the Boluarte management determined a budget of S/4,000 million to mitigate the ravages of natural disasters.

Luis Miguel Castileformer Minister of Economy and Finance, points out that, indeed, there is no back for additional expenses in the face of El Niño Global because not even half of the S/4,000 million of Con Punche Emergencia has been executed.

Castilla points out that the State also has US$2.5 billion in the Fiscal Stabilization Fund (FES), which can be used for major emergencies, and, finally, multilateral contingent financing lines —for example, with the IDB or IBRD—with which budgetary needs can be met.

“There is room to face any extraordinary demand because financing has already been provided with supplementary credit in with punch, which should be executed. The level of debt is more relevant than the fiscal deficit and in Peru it is low. Proof of this is that recently the management of liabilities for 2,500 million dollars was successful”, he commented to La República.

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Alex Contreras, Minister of Economy

“The privileged position that Peru has reachedthat fiscal strength also allows us that in an emergency we can have these resources to attend to health, buy more machinery ”.

Luis Miguel Castilla, Former Head of the MEF

“The Government has enough back to face any additional expenses that it requires. They have S/4,000 million With Emergency Punchwhich at the end of May, did not execute even half.