Lima, April 30, 2021.- The Ministry of Economy and Finance (MEF) kept its economic growth projection at 10% for this year, according to the latest Macroeconomic Projections Update Report 2021 - 2024, presented by the Minister of the sector, Waldo Mendoza.
It should be recalled that, in April last year, the MEF did not publish the update report corresponding to the period 2020 - 2023, because - the portfolio said at that time - the impact of the covid-19 pandemic did not allow it. However, in August 2020, the Multiannual Macroeconomic Framework 2021-2024 was published, which projected an increase in Gross Domestic Product (GDP) of 10%.
"The question arises as to why it recovers so quickly in the midst of a pandemic. In an economic crisis, credit also contracts. In normal times, credit grew at a rate of 6% a year, and in the middle of a pandemic - and so far - it has doubled or even tripled. This, in our opinion, is one of the reasons why we have recovered so quickly," says Mendoza.
The Minister of Economy recalled the programs approved such as Reactiva Perú and FAE-Mype, as well as the recent PAE-Mype. "It is often said that 10% is a statistical growth. But let's imagine that those credit programs had not existed. If the government, together with the BCR, had not granted that credit, companies would have gone massively bankrupt and therefore there would be no statistical recovery", he added.
Revenues and expenses
He also pointed out that, after registering a fiscal deficit of 8.9% of GDP in 2020, as a consequence of the pandemic, it will begin to be reduced going forward. For this year, it is estimated that the fiscal deficit will reach 5.4% of the GDP, linked to the level of expected revenues and expenditures, and only in 2024 it would reach 1.6% of the GDP.
Later, Mendoza stressed that it is necessary to maintain the country's fiscal sustainability. "How important is this? When we issue bonds, we borrow at the lowest interest rates in Latin America, it means paying less interest. Low sovereign interest rates spill over to private interest rates. That is the advantage of being fiscally responsible," he stressed.
For the 2022-2024 period, the GDP growth projection is maintained at 4.5%, sustained by domestic demand, the increase in exports due to the start of production of copper projects, the recovery of external demand, and the boost to competitiveness and productivity.
During this period, private investment would be boosted by the continuity in the execution of infrastructure projects such as Line 2 of the Metro de Lima and Callao, the Expansion of Jorge Chavez Airport, and the Chancay Port Terminal. Likewise, during this period, among other aspects, it is expected the start of construction of works prioritized under the Public-Private Partnership (PPP) scheme, mainly of the projects that are expected to be awarded in 2021, said the MEF.