Lawmakers Approve Economic Measures, Raise Concerns on Environment

Peru’s Congress gave the green light at the end of last week to a package of measures sent by the Executive to promote economic growth. The measures, however, have stirred up concerns about their impact on environmental regulators.

The package of reforms is aimed at facilitating investments and include legislation related to taxes, as well as simplifying environmental permits and reducing the time for their approval.

Both mining and oil companies operating in Peru say that red tape is a major challenge to advancing any project, in addition to opposition from rural communities. These obstacles, on top of lower mineral prices, have slowed down investment over the past year.   At the same time, lower mineral prices have hurt export income.

Many economists say that the measures, which have been promoted by Finance Minister Luis Miguel Castilla, will help increase confidence in the business sector and address long-term structural challenges.

However, a number of analysts also say that they probably won’t have an immediate impact on the economy,  that the government should have instead promoted fiscal or monetary stimulus packages to increase demand in the economy.

Meanwhile, the measures have also raised concerns that they will weaken the Environment Ministry and the oversight of environmental regulator OEFA.

Former deputy minister of Environmental Management, Jose de Echave, believes the easing-up of measures governing environmental impact studies and permits could come up against the stringent rules in the Free Trade Act signed with the United States. And Alejandra Alayza, former executive coordinator of the Peruvian Network for Globalization with Equity (RedGe), believes the would also be a risk in the FTA signed with the European Union.

“I wouldn’t be surprised  if we began to receive messages from U.S. commerce authorities on what this package means and that there is a blatant contradiction, because the argument of removing obstacles weakens the OEFA, which is something the Public Ombudsman has also warned about,” De Echave told La Republica daily.

The Environmental Investigation Agency in Washington, D.C. has reportedly also warned that environmental backtracking in Peru could threaten the FTA commitments.

“The government of Peru is proposing a package of economic measures and reversals in regulations that will cause significant damage to the environment and will drastically diminish the government’s capacity to sanction and fine corporations that violate environmental standards,” the EIA said.

However, President Ollanta Humala and other high-ranking government officials have denied that they will reduce environmental oversight in the Andean nation. This week, the government announced that as of 2015, all environmental impact studies will come under full control of the Environment Ministry and not seen by the different ministries involved in each industry or sector, as it is done at the present time.

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