Kurt Burneo argues that the economy must grow by at least 5%: “Public investment is functional for private.”

New Minister of Economy, Kurt Burneo, He said he accepted this position given that in the context of the political crisis, there may be better prospects for economic policy. in conversation with saturday focus, The minister said the Peruvian economy needs to grow at least 5% a year to absorb the young people who enter the labor market each year.

“If we do not improve the rate of economic growth, there will be difficulties in finding employment and opportunities for young people. For achievement economy that it can have great dynamics, this happens because government spending is carried out, especially investments, because I am convinced that public investment is functional for private investment. If anyone is able to improve the growth standards of public investment, if we add to that the clear signs of where we are heading in terms of the economy. These two factors will boost private investment,” he said.

burning He stated that the current economic context was influenced by the political side. He recalled that we are no longer in a situation where “economics and politics were on different strings.”

“Unfortunately, these separate threads are starting to intertwine. It turns out that now instability is beginning to spread detrimentally to the economy. I feel that there is a possibility that things can be better handled by the economic plan, gradually distancing itself from the political part. This means a clear understanding of what is needed, for example, to ensure growth rates above the current forecast of 2.2%,” he said.

burning He also recalled that according to official data, they predict that there will be no growth in private investment this year. “Calculation Central bank, the latest inflation report states that the growth rate is 0%. This means that the fixed capital needed to produce more output will not grow. So, we have to reverse this,” he said.

Burneo explained that when he refers to the fact that public investment is functional for private investment, it is because of their multiplier effect on the economy. “If you have a group of farmers in a certain area who are not connected, and a government investment project, a highway, connects the farmers to the markets. Public investment accounts for a quarter of total investment, but more than the distribution of numbers, it is a multiplier effect for infrastructure construction so that private investment is increasing,” he said.

Harmonize fiscal and monetary policy

According to the minister burningthe economy is slowing as the Central Reserve Bank raises its benchmark interest rate, a move taken to curb inflation.

“It makes credit more expensive, slowing down credit and investment. I am convinced that we need to harmonize monetary and fiscal policies. Rising interest rates are slowing down this reactivation,” he said.

Per burning, we are talking about negotiations with the board of directors of the Central Reserve Bank to harmonize monetary policy and fiscal policy. “With such a tightening of monetary policy that leads to an increase in interest rates from the point where there is not enough demand to justify an increase in costs, then BCR estimates that next year, in the second half of the year, the inflation rate will return to the set range, between 1% and 3%, but my question is, what at this time? I say that we need to get together with the Central Bank to harmonize the fiscal policy responsible for FEMand monetary policy, responsible for BCR”, he decided.

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