Peru: Legislative powers aimed at improving expectations and boosting growth

Legislative powers requested by the Executive focus on two key objectives, promoting recovery of business expectations in the short term and underpinning the economy’s potential growth, Peru’s Economy and Finance Minister Alonso Segura pointed out.

 

MEF’s chief indicated that such powers on administrative, economic and financial matters are intended to improve expectations as soon as the Congress approves the granting and to underpin the economy’s growth through concrete measures in order to boost productivity and competitiveness.

 

This way, we could have better tools to close the infrastructure gap at all levels of government and have better tools to adapt public procurement procedures (red tape).

 

Legislative powers also seek to enhance the State’s regulatory capacity and the economy’s resilience in the future.

  

“We have to continue improving the tools for enhancing the competitiveness and productivity of productive factors resulting in higher incomes for the population, as well as poverty and inequality reduction,” he noted.

 

Segura emphasized it is necessary to fortify domestic demand sectors, given the lower level of dynamism in primary sectors.

 

“We have to revive domestic demand sectors, that is, household consumption and company investments, and make them re-engage in a more sustained way, but we need to adopt a series of measures first,” he said.

 

He went on to add that the private sector, people, homes and companies account for 80% of the gross domestic product (GDP) and, without its re-engagement, economic recovery will remain vulnerable.

 

The minister said such measures go beyond the public sector’s spending power, and that it is necessary to act more rapidly.

 

“We need to act in a decisive way and that is why we are here, at the Congress, in order to request such powers,” he continued.

 

Segura indicated that both objectives influence people and companies to avoid postponing consumption or investment decisions, respectively.

 

“We need concrete decisions to underpin people and companies’ ability to take decisions today,” he pointed out.

 

Granting the Executive such powers might imply an improvement of expectations at 2014’s levels, and this would cause private investment average 1.2% of GDP and create 100,000 jobs across the country.

 

Furthermore, this would mean an additional increase in private consumption of 0.8% of GDP and a 2% surge in the economic activity.