The National Competitiveness and Productivity Plan (PNCP) will help speed up private investment in Peru in the context of trade tensions between China and the United States, which slow down the global economy, Moody's Investors Service Vice-President Jaime Reusche affirmed on Thursday.
According to him, the increase in the investment continuity fund —from S/1.946 billion (around US$573.7 million) in 2019 to S/3.5 billion (around US$1.031 billion) in 2020— should speed up the capital invested.
"We have noticed that this measure has worked well in the first half of the year because the anticipated allocation of the (mining) canon to regional and local governments prevented a greater drop in
public investment," the officer expressed.
He went on to add the 2020 investment continuity fund will play a similar role; however, increasing the availability of resources beyond this amount could be imprudent because the capacity of execution is limited and would produce perverse incentives, thus creating space for
corruption.
"Many of the barriers to investment, which are not due to a lack of resources, have to do with the excessive red tape. When we run into this limiting factor, increasing the availability of funds is counter-productive," he said.
Within this volatile international context, tax expenditure will continue to be the anchor of fiscal responsibility —which will balance the challenges related to the under-implementation of public investment for the aforementioned reasons— with a prudent stimulus to the economic activity in the second half of the year, Reusche concluded.
(END) DOP/MDV/RMB/MVB
Publicado: 5/9/2019