Representatives from major business associations and economic analysts have identified the immediate restoration of private investment and the implementation of an efficient public security policy as the most urgent priorities for Peru’s next government. Experts emphasize that sustainable growth depends on fiscal discipline, a reduction in public bureaucracy, and the reversal of recent trends that have impacted the nation’s economic stability.
Priorities for the incoming administration
Business leaders and economists agree that the incoming government must signal stability to attract private capital. According to Jorge Zapata, president of the Confiep, the current administration has left S/75,000 million in projects paralyzed, which he argues could have been utilized for essential infrastructure like schools and sanitation. Zapata suggests that by de-bureaucratizing the state, Peru has the potential to reach growth rates of 5% to 6%.
Felipe James, president of the Sociedad Nacional de Industrias, underscores that the first 100 days of the new mandate are critical for addressing the impact of the El Niño phenomenon. James advocates for the creation of a Ministry of Planning and Infrastructure to accelerate the construction of schools and hospitals, moving these responsibilities away from the existing Education and Health ministries.
Jorge Zapata, president of the Confiep, noted that there are currently S/75,000 million in public works projects that remain paralyzed across the country, funds that could have been redirected toward social infrastructure.
Strengthening fiscal and economic governance
Economic stability remains a central concern for experts. Mercedes Aráoz, former Minister of Economy and Finance, warns that the new administration must immediately address the legislative trend of Congressional spending initiatives. Aráoz states that the executive branch should activate constitutional challenges to prevent the erosion of fiscal control, specifically regarding permanent payroll expenses and pension models.
José Espantoso, president of the CODIP, emphasizes that the next government must prioritize a “continuity of the economic model.” He argues that investor credibility is tied to the independence and management of the Banco Central de Reserva del Perú (BCRP). Espantoso also highlights that housing policy should be elevated to a central state priority, aiming to increase formal housing production from 40,000 to 200,000 units annually to address the national deficit.
The consensus among these leaders suggests a clear trade-off: while the private sector is ready to invest, they are demanding a “shock desregulatorio” and a professionalized state that can execute budgets efficiently. The underlying tension is between populist fiscal measures coming from the legislature and the need for macroeconomic predictability to sustain growth.
What may happen next
Analysts expect the next government to face significant pressure to reconcile political rhetoric with economic requirements. Hugo Perea, chief economist for Peru at BBVA Research, notes that the country experienced a 13% growth in private investment during the first quarter, a momentum that could be sustained if the government avoids confrontational messaging and maintains fiscal foundations.
A possible next step for the administration involves navigating the relationship with Congress to repeal or challenge laws that create indexation or over-indebtedness. If the government successfully lowers political tension and stabilizes the regulatory environment, Perea estimates that the current growth trajectory could improve from 3% toward 5%.
Frequently Asked Questions
What is the primary concern regarding public spending?
According to Mercedes Aráoz, the primary concern is the trend of Congress initiating permanent spending, such as payroll increases, which threatens the national deficit and fiscal sustainability.
Why is security considered an economic issue?
Hugo Perea explains that when entrepreneurs are forced to divert resources toward personal and business security, it slows down investment and hampers overall economic growth.
What role does the BCRP play in future stability?
José Espantoso emphasizes that the BCRP must maintain its current style of management to avoid populism and ensure the credibility necessary for private investment.
How do you believe the proposed structural reforms will impact the daily life of citizens in the coming years?