Waldo Mendoza, former economy minister: “The inflation we have now, we didn’t have a few decades ago”

Former Economy Minister Valdo Mendoza reaffirmed that Peru’s economic performance depends on international conditions, warned of the country’s inflationary situation and highlighted the work of the current head of the Ministry of Economy and Finance (MEF), Kurt Burneo.

AT Saturday Focus, Waldo Mendoza explained that due to inflation world interest rates rose sharply, the cost of external credit rose, copper and gold prices began to fall, and the terms of trade deteriorated by 10%. “The external context has changed against us. This is a negative shock to the Peruvian economy,” he said.

“Inflation is a macroeconomic novelty for Peru. The inflation that we have now, we did not have a few decades ago. It is declining, but is at an unusually high level, and it is not clear what will happen in the future. . inflation 8.9%, which is a lot by our standards, but if you break down inflation, things get more worrisome,” he said.

Waldo Mendoza it is indicated, for example, that food inflation is at the level of 14%, and transport inflation is at the level of 40%, so there are segments of the population whose incomes are largely spent on food and fuel, “going through hard times.”

“To date, an anti-inflation potion that is not painful has not been invented. So, our Central Bank raised the reference interest rate, this interest rate at which banks lend, from 0.25% in August last year to 6.5% today, so lending interest rates in banks are growing,” he explained.

“The economy is not in recession”

Same way, Waldo Mendoza He specified that the national production so far this year due to the external context, political problems and the paralysis of mining “considering, relatively speaking, good.”

“The economy is growing at 3.5% this year, a very important sector such as non-primary production has grown by about 7%,” he said.

Nonetheless, Waldo Mendoza warned that a big problem in the current situation and in many countries is inflation high and that the decision to fight it “would hurt,” as Federal Reserve President Jerome Powell pointed out.

“In the case of Peru, we are in the same situation. The central bank raised interest rates to make credit more expensive and cool the economy. it has already been decided that the central bank is cooling the economy, and the minister of economy has said that we are going to revive the economy. That is, one reduces demand, and the other increases demand,” he said.

Covers the work of Minister Burneo

On the other hand, Waldo Mendoza He believed that for the Minister of Economy, tasks that are not strictly fiscal sometimes turn out to be more important than his position. In this sense, he argued that the Minister of Economy has a rather broad job, where he needs to convince and convince the President of the Republic and ministers “of what cannot be done.” So, he singled out the leadership of the Minister of Economy, Kurt Burneoas “it shows a change from its predecessors”.

“It seemed inappropriate to me to announce reactivation 3 by the branch minister, if you know what reactivation 3 is, and it is clear that the VAT cut was very bad, because it demonstrated that the policy of this type of tax breaks or privileges is not good. Long ago this was abandoned. Minister Burneo has such a school, and we hope that he will restore the power that, naturally, the Minister of Economy should have,” he said.

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