Eduardo Recoba: “The opportunity to tax surpluses in mining has been lost”

How did Peru end in economic matters in 2021?

Double-digit growth for 2021, which has already been internalized, is lagging based on the real economy. We are not going to ignore growth, but it did not validate power in terms of accelerating or boosting employment. However, in the last 4 or 5 months we have found spaces where fiscal consolidation was strengthened through fiscal discipline that allows us to greet 2022 with better expectations. We closed 2021 with a global pressure on the exchange rate, it was accompanied by a pressure on inflation that is by supply, imported, and this will draw in 2022. We have monetary stability that will allow us to have better scenarios for 2022. We close a 2021, a mixed year, and we have a year 2022 whose course will be defined between the first three or first six months.

In the tax field, was the opportunity to tax mining surpluses since this year?

Yes. I think that a tax model could well have been designed that could charge over-profits. And there is a basic reason, the rents of the mining companies are brutal in a context of inequality. It is not a myth to suggest that mining companies that have achieved and can earn surpluses based on high price cycles will be affected in either efficiency or productivity. Therefore, an opportunity has been lost due to an episode that will be difficult to return in the short term.

In recent years and in 2021, a Congress was seen in continuous struggle with the Executive. What should be the behavior of the Legislative and Executive in order not to lower business expectations that should be in the positive range?

Political noise is caused from the outside, but it is also from the inside. And here stands out a Congress that demonstrated institutional and democratic austerity to generate spaces for debate, dialogue, around the economy. However, Congress does not have spending powers, but it can design effective and efficient laws that can lead to a much more solid macroeconomic management, especially in the face of such a hostile international and local context.

Do you think this can subside?

For the next six months we expect the political noise to ease. And also within the Executive the issue of technical cadres, communication issues, communicating vessels within the Executive should be modulated not only in terms of politics but also the economy, which have been very austere.

What would you say to the politicians or sectors of the business community who instigate through the vacancy chat and who persist in proposals of this type?

That they do not torpedo the democratic institutionality. That they do not backfire the political environment, because what they are doing is also backfire the economic environment. And, above all, being entrepreneurs they are backfiring their possibilities of generating more, better and larger spaces within their business models. I would tell them to stop shooting themselves in the foot and start a learning curve, because just as the Executive, the president, is asked to accelerate his learning curve, the same would also be asked of the businessmen and women who have probably been generating cultural contamination, based on a business culture that after two centuries, and we are now closing in 2021 the year of the bicentennial, has been very austere, very attached to commercialism, monopolies and oligopolistic practices. That must change.

What are the main measures to be implemented in 2022 to underpin growth and employment?

In the short term, the prolongation of vaccination will be key for the economy. We have advanced 75% in two doses, and we are in double digits in the third. It has to be extended as a platform for any economic scenario. The other, employment. The real economy has to accelerate, it has to become more dynamic. Public spending also has to be consolidated. Spending, depending on private activity, has to adhere to mechanisms that can expand these spaces of private activity by 2022, especially since it comes very slowly.

And in the long term?

For the long term, let’s talk about reforms, about taxation, which is important because we must seek fiscal justice in this primary export economy because inequality is brutal. The other thing is productive diversification and resuming the diversification tables. Also move towards a reform in the pension system and also work on higher spending on health and educational infrastructure in the long term, massify natural gas, which are also fundamental pressure points.

Do you think that President Pedro Castillo could have fallen into corruption after meetings with businessmen?

At the moment there are no clear indications based on evidence based on data, but my nose indicates that when there are meetings that are not very transparent, where it was not made official and it was held in a private house, outside the Palace, a very non-transparent maneuver would have been designed, and also with a political party linked to the Executive that does not have a very transparent record either. We cannot have private meetings with state providers. That is manual, it is basic, and not understanding it or it is from an inexperience or something very dark is hidden.

The investigation is carried out by a prosecutor who had dissenting voices with Pedro Castillo, denouncing him, defending the vote of Keiko Fujimori and encouraging the vacancy. Does that research process stain?

It has to be inhibited. Institutions must be respected. In the United States there is a saying that is to respect rank. You may like the person very badly, but rank is respected. And this senior public official who is subject to the scrutiny of the public authority, cannot vilify an Andean accent on her social networks, she cannot demonstrate political will in such an obscene and rude way. Here the inhibition fits.

What do you recommend to families about their economy for this new year?

Do not spend on sumptuous goods, only on what is necessary. Make a strategic plan for income and expenses. No short-term debt, no dollar debt. On the exchange rate, buy when it goes down, at very specific moments, refinance long-term debts. Half of savings in soles and the other half in dollars and you have to set simple and reasonable goals for 2022. ❖