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What To Do With The Fiscal Surplus

Posted on : 19-11-2015 | By : leeDS | In : General

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I must say that I would not have conveyed these concerns to Alan Garcia (I have no way to do it), but just reducing the projected fiscal surplus reflects the Peruvian government’s decision to increase social spending and increasing public investment. In the words of finance minister Peruvian Luis Carranza: “For this year (the goal is) a surplus of 2% for the coming years, slight decreases in surpluses, together with the need to increase investment and social spending, which is one of the central elements of the government. ” With this policy, the government can strengthen the competitiveness of enterprises and improve their infrastructure through new investments, while beginning to show more action on the social front. So Peru continues to grow and the benefits of this growth is distributed among the population. Another good policy that is putting forward is that related to Peru’s foreign debt, which is being reduced and changed in composition with a higher and higher domestic currency terms. The minister of Economy, Carranza, said in this connection: “This year we are doing debt re profiling operations, basically changing dollar debt for a role of debt in soles, in the longer term and year-end must be near the goal set of about 13% of foreign debt compared to GDP. ” I understand that this is also a factor in the reduction in the fiscal surplus and to reduce financing needs of the public sector.

Peru also continues to advance its trade policy. Yesterday signed two new NAFTA with Canada and Singapore. Probably want to know: What will these FTAs can bring to Peru? These FTAs will provide an expansion of markets for Peruvian products, greater diversification of destinations for them, which reduces exposure to volatile external sector of the economies, and greater investment. I should mention that Canada is the second country with more investments in Peru, (mainly in the mining area), with an approximate figure of U.S. $ 4,000 million, while Peruvian exports to Canada amounted to U.S. $ 1,800 million.

On the fears (valid and understandable) about the possible impact of FTAs in some areas of the Peruvian economy, I understand that this depends largely on the ability of government to consider them, to prevent them from happening. In the case of the FTA with Singapore, about 87% of products imported from that country will be liberalized immediately, but other products will be liberalized in full within a maximum period of 10 years. This makes me assume the existence of a previous analysis of the Peruvian government on the impact of the FTA. FTAs may also help control the inflationary pressures that may arise in the economy of Peru. I refer mainly to the pressures of domestic origin, they can be disciplined to the existence of greater competition. In this sense, FTAs can offset the pressure on prices could generate, reducing the fiscal surplus. Peru Alan Garcia continues to advance and little by little is meeting the demands of different sectors (business, low-income areas). Peru will be adding to their fantastic growth, a more balanced distribution of benefits derived therefrom and that is good for investors because it eliminates potential sources of conflict in the Peruvian economy.