How are things going with public investment until August?

In June, Council of Ministers Chairman Anibal Torres assured that government bodies that do not fulfill at least 70% of the budget should provide their posts.

On this assumption, all members of the Cabinet were to resign shortly, since, according to transparency portal Ministry of Economy, no sector exceeds 60% of public investment. But first, what does public investment mean?

” public investment represents government spending on projects that create new infrastructure or improve existing infrastructure. When we talk about infrastructure, we mean all the facilities, services that are necessary for the development of a particular activity, in this sense, public investment seeks to close these existing gaps,” explains Silvana Huanki, Professor of Public Administration at the University. del Pacifico.

Huanki argues that in the long run, this should lead to more supply, lower costs, and improved living standards.

“In order to understand why the execution of the state budget is important, it is necessary to understand a little the specific effects of public investment. These effects usually show up in the short term, while others show up in the medium or long term. The main short-term effects are more related to demand, which is associated with construction or the creation of infrastructure itself, which tend to stimulate industries such as construction or transport, and ultimately create a cycle of higher income and higher consumption. The other effect is long-term. a term derived from the improvement in the production capacity that the population can have, which will lead to an increase in supply, lower costs and an increase in the standard of living of the population,” he told RPP.

For his part, economist Marcel Ramirez points out that this government spending It should be aimed at expanding the productive potential of the country, which will improve the service to citizens.

“Public investment is necessary because it also facilitates private investment by allowing them to bear the lower costs of developing their productive activities,” he added.

Low public investment

It is reported that until the penultimate week of August, only five ministries exceeded 40% of project investment, while the remaining 14 sectors spent between 0% and 39.6% of resources.

There are only large expenditures for work in the Ministry of Energy and Mining, the Office of the Presidium of the Council of Ministers (PCM), as well as the portfolios of external relations, transport and production, but they also do not reach 80% of the expected performance and in general national government he invested only 36.4%.

With this in mind, ComexPerú economic research analyst Lety Gomez notes that at this pace, the final investment in 2022 could be less than last year.

“If this trend of low execution continues in 2022, sols 19.4 billion will remain unfulfilled by the end of the year. In 2021, for example, 16.5 billion salts were not spent on investment projects, this amount is equivalent to guaranteed education for more than 161 thousand children, laying 2,900 kilometers of roads, and building 18 hospitals of medium and high complexity in the country,” he comments. .

Why is there little government investment?

This year, the ministry with the largest budget allocated to projects Transport and communicationss, with over 8 billion salts, but to date only 40.5% have been used in the works.

A total of four ministers have passed through the sector in the past eight months, all with questions or ongoing investigations. According to former Economy Minister David Tuesta, this is due to the reported low resource development.

“There is a serious problem with the execution of the national government, in particular, this backlog is due to two factors, firstly, high staff turnover. officials, principally in the first positions, from ministers to general directors who are in charge of planning. And the second place is also associated with the involvement of low-skilled personnel, as evidenced,” he says.

“You can also find a third important factor that is related to the tasks pursued by the main executive bodies of the national government, namely the Ministry of Transport, the Ministry of Housing and Construction, the Ministry of Education, which they were devoted to political issues, and not focused on the implementation of projects,” he added.

In order to make investments more efficient, the former minister points out that the government could allow a specialized body like the Reconstruction Administration with Changes to carry out games regionally with resources from the unexecuted canon.

“Mining areas barely do half, there are extremely wealthy areas such as San Marcos in Ancash that only produce 30%. A specialized organization could help promote this type of work,” he says.

Tuesta elaborates that, according to the private competitiveness council, the government Peter’s castle the staff turnover rate has tripled compared to the average for the previous five years, which makes it difficult to plan further work.

Just this Wednesday, the president replaced the heads of ministries for defense, the environment, and women, sectors in which investment in government projects is less than 18%, despite the hidden issues of insecurity, pollution, and violence against women.