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Peru launched one of the most dynamic fiscal programs among emerging countries

14:26 | Lima, Aug. 1.

Peru launched one of the most dynamic fiscal programs among emerging countries in the world, in order to reverse the economic crisis caused by the COVID-19 pandemic, Investments Division Manager at privately-run pension fund administrator Prima AFP Jose Larrabure said on Saturday.

"Given its macroeconomic strength, Peru has undertaken one of the most dynamic fiscal programs among emerging countries on a global scale," Larrabure expressed.

"We (Peru) had a Fiscal Stabilization Fund that has helped a lot, but I think this is the time when we can be a little irresponsible fiscally speaking, especially since Peru has a fairly low level of indebtedness, and I think we would be capable of bearing a higher level of debt in the following years," he added.

The officer considered that the Government did what was needed at the time, because the risk of remaining with a structurally low growth is higher, as is the loss of companies and jobs, which is much more damaging in the long term.

"But we must always consider that fiscal and monetary stabilities have been the cornerstone of the Peruvian economy; thanks to this, Peru has had one of the healthiest growths in the last 20 years, and we cannot lose that," he said.

Growth and recovery

The Prima AFP executive acknowledged that Peru will register above-average growth next year (the World Bank projects that the Peruvian economy will grow 7% in 2021, after falling 12% this year).

"We expect a recovery in the economy; therefore, we believe that monetary and fiscal impulses will remain active," he said.

"We can see an important recovery, when we analyze some indicators such as electricity production and cement consumption," he emphasized.

However, Larrabure pointed out that there are some risks which could affect the recovery, such as a probable fresh outbreak of COVID-19, as well as domestic and external political uncertainty.

(END) CNA/JJN/MVB

Published: 8/1/2020

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Peru launched one of the most dynamic fiscal programs among emerging countries

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