Peru’s Ministry of Economy and Finance (MEF) has announced a massive purge of its public investment portfolio, stating that the country currently lacks the capacity to absorb or prioritize the vast number of pending projects. The ministry intends to remove 120,000 projects from the portfolio by June 30.
A Bloated Investment Portfolio
Eloy Durán, the viceminister, highlighted the scale of the issue by citing road infrastructure. Currently, there are 7,122 road projects in execution totaling S/ 61,000 million, yet the entire road portfolio represents S/ 221,000 million—a figure Durán described as “impossible to absorb.”
The ministry identified the core problems as an excessive portfolio, lack of focus, and poor prioritization of works. Durán noted that maintaining a national or departmental network is ineffective if This proves not supported by local roads.
Cleaning the Books: The Deactivation Process
The purge is designed to stop the drain of resources on projects that no longer function as investments. According to Durán, many of these projects are currently consuming funds for permanent expenses such as security, cleaning, consulting, and maintenance rather than actual construction.
The process involves the approval of a deactivation directive next week, followed by a directive for the closure of investment offices the following week. This move aims to “sincerar”—or bring honesty to—the figures, allowing regional governments, municipalities, and various sectors to focus on high-impact projects.
Financial Implications and Sector Impact
Luis Miguel Castilla, executive director of Videnza Instituto and former head of the MEF, noted that the 120,000 projects being removed have a total construction cost of S/ 220,000 million. He argued that liquidating these projects and paying existing debts is preferable to continuing them without any possibility of completion.
The MEF estimates that debts to providers for these nearly inactive projects amount to approximately S/ 5,000 million. Without liquidation, these debts and associated interests could continue to accumulate.
Economist Álvaro Cubas of the Private Competitiveness Council (CPC) observed that many of these inactive works are concentrated in the health, sanitation, and transport sectors, with some remaining dormant for over seven years. Videnza Instituto further noted some projects have seen zero physical progress for more than 10 years.
Efficiency and Governance
The current strategy aligns with international practices and recommendations from the Organization for Economic Cooperation and Development (OECD), according to Castilla.
Adding a layer of institutional critique, Durán questioned the distribution of public resources, noting that regional governments often complete road or sanitary works in half the time it takes the Ministry to do the same.
Future Outlook
The removal of these inactive projects may allow for better investment programming and execution. By clearing the budget framework of non-viable works, the government could potentially redirect resources toward projects with approved technical files and clear benefits for communities.
A possible next step may involve a more rigorous screening process for new entries into the investment portfolio to prevent the recurrence of such massive dispersion.
Frequently Asked Questions
How many projects are being removed from the portfolio?
The Ministry of Economy and Finance (MEF) plans to remove 120,000 projects by June 30.
Why is the MEF closing these projects?
Many projects are inactive, lacking approved technical files or physical progress for 7 to 10 years, and are consuming resources for permanent expenses (like security and cleaning) rather than investment.
What is the estimated debt associated with these inactive projects?
The MEF calculates debts to providers for these nearly inactive projects to be approximately S/ 5,000 million.
Do you believe that reducing the number of public projects is the most effective way to improve infrastructure delivery?
