highlighted the country's mining potential.
The official stated that Peru is experiencing one of the most favorable terms-of-trade periods in recent decades, stressing the need to restore confidence and create stable conditions to attract greater investment.
During the closing ceremony of the Symposium – 16th International Mining Meeting on Thursday, the BCR head said Peru has recorded significant periods of economic growth driven by mining investment and rising exports.
"Between 2005 and 2013, we recorded economic growth of nearly 6% per year, accompanied by a sharp poverty reduction, increased public investment, and the expansion of other economic sectors," Velarde indicated.
He noted that private investment grew at annual rates of nearly 14% during those years, while public investment maintained sustained expansion. The trend was supported by higher revenues generated from mining exports.
Velarde recalled that, in that context, the Fiscal Stabilization Fund was created to save part of the extraordinary revenues generated by the export price boom.
The goal was to ensure resources would be available to sustain public investment during slower growth periods.
However, the BCR head warned that in recent years the country has failed to fully capitalize on part of that favorable environment.
He attributed this to higher current spending and a reduced capacity to execute long-term investment.
"What we have seen is more current spending and less productive public investment. That limits the country's future growth potential," Velarde underscored.
Historic prices
The BCR governor said Peru is currently benefiting from a favorable international environment driven by high mineral prices, particularly copper.
"The terms of trade we have today are comparable to those recorded in 1950 and 1951. We are experiencing one of the most favorable periods of the past 75 years," he noted.
In that regard, Velarde said the country has a significant mining projects portfolio that could allow investment in the sector to double if adequate conditions are created for their development.
"With the copper projects we have, investment could double," he emphasized.
The economist also highlighted the positive impact that Peruvian exports growth has had over the past two decades.
He noted that Peru's total exports have increased nearly fourteen-fold over the past 25 years, while mining exports have grown almost twenty-fold during the same period.
"Last year, we exported more than Argentina and nearly 90% more than Colombia," he indicated.
Restoring confidence
The BCR head said that despite the political environment and uncertainty of recent years, private investment has continued to perform positively.
Velarde noted that private investment grew by about 10% in the first quarter of this year, while mining investment increased by 17.3%.
However, the economist said it is essential to restore confidence and improve predictability in order to boost new projects.
"The environment would be far more favorable if there were greater confidence and credibility," Velarde pointed out.
He also warned about the excessive procedures and permits required to develop investment projects in Peru.
According to Velarde, there are currently more than 200 procedures associated with investment projects. In his view, that situation makes it more difficult to carry out large-scale initiatives.
In that regard, the expert called for progress toward a more predictable and efficient system, both in administrative and judicial matters.
"A key consideration for any investor is that contracts are honored and that there is a predictable judicial system," he underscored.
Finally, Velarde said Peru retains enormous growth potential thanks to its mineral resources, export capacity, and the development of sectors such as agricultural exports.
However, he insisted that stability and clear rules are needed to fully harness that opportunity.
(END) JAM/MVB