SUSTAINABILITY OF PUBLIC FINANCES REQUIRES MORE THAN EVER PRIVATE INVESTMENT
January 20, 2022 - Lima.- CAF President Sergio Díaz Granados was in Lima refining the financing strategy for Peru in 2022. He spoke with Gestión about what he expects from the country.
What is CAF's vision of Peru at the moment?
-Peru is an important partner for CAF, it has been the founder of the institution and we have a relationship of 52 years. We have an active portfolio of more than US$ 1,800 million in different projects in various sectors. And we see that it has challenges, such as increasing private investment, the social debt generated by covid. We see great potential for working with Peru in the coming years.
On Tuesday (January 18) you met with President Castillo, what topics did you address?
-We identify potential areas in which CAF can contribute. Issues such as the greater presence of the Government in borders and remote populations, improving health and education services.
Any other sector of work?
-A great interest was expressed in specific sectors such as forestry or the use of sectors such as tourism to boost economic growth for women and young people. We look forward to optimism this year and next. It will not be easy, because for all of Latin America there are difficult months of recovery, of being able to raise the potential for economic growth.
What is your optimism based on?
-We have a very fluid conversation with the economic authorities of the country. We have had meetings with the Minister of Economy and the President of Cofide and we are clear about the paths of joint work.
Does CAF look at the political and social situation of a country before approving financing?
-No. We do not do this now, nor have we ever been associating the decisions of financing and development programs with the political approaches of governments. It is a sovereign decision of the citizens of each country. Our role is to solve problems and improve people's quality of life. There is no room for political ideologies there.
What is CAF's financing plan for this year in Peru?
-We aspire this year to have new operations, hopefully between US $ 600 and US $ 700 million, but it depends a lot on the need for financing from the Government. We also have financing to the private sector, for micro, small and medium enterprises, projects such as Internet for all, the port of Paracas, there are different programs underway.
How strong do you see Peru's growth for 2022?
The Peruvian economy is going to grow, but I can't give a forecast right now, but we see that the foundations are laid for growth in the region and in Peru in particular.
Where should we put the focus to underpin growth?
-We must now concentrate on the fundamentals of growth, in regions of the country that are more remote and there are conditions to create more GDP. I am optimistic with Latin America that we can grow more than we had been growing until 2019, since it was a mediocre year and very low spirits.
CAF also finances private projects and in Peru the projections of private investment are falling. Have you discussed the issue with President Castillo?
-We mention the importance of activating, in general, more private investment. We are not talking about specific sectors, but it is urgent. I would even say for all of Latin America. The current levels of debt that we have been having, the sustainability of public finances will require more private investment, more than ever, to increase productivity, generate employment and reduce informality.
Why more than ever?
-Because we have reached levels of debt that we have not had before and we are not exempt from more crises in the next eight years. On the contrary, all the forecasts show the fact that we are going to have more crises in the coming years: climatological, natural disasters, possible new pandemics. We must prepare for more crises and not for less crisis.
Can it be worse than the covid-19 pandemic?
-We cannot think that since we have already reached this level of pandemic, this is already the top of the crises. No. This can be the floor of crises. We have to always act thinking about that and the recommendation that CAF has made is that we are entering a very complex area for Latin America, with high indebtedness, where the response capacity of governments is increasingly limited.
Source: Gestion