El Comercio: Luis Carranza’s legacy for the future

Excerpted editorial from today’s El Comercio newspaper:

Amid the foreign turbulence and the internal pressure, Luis Carranza’s management of the Economy and Finance Ministry has been more than satisfactory. Not only because of his prudent management of fiscal accounts, but also because he put emphasis on increasing public investment, becoming the essential architect of Peru’s economic achievements.

However, it is true that in a country characterized by such a deficit in infrastructure and pending social tasks, what has been achieved is still insufficient and we would like more to be done. But Minister Carranza, in moments so sensitive that the slightest error in spending could pressure the inflation rate, was able to maintain the fiscal accounts and the national economy in a precise equilibrium.

A bid for public works and public investment, in spite of the exasperating slowness, is the best way to lay the foundations of the future. Now that there are resources, as Carranza has said, it is vital to encourage and consolidate competitiveness to generate infrastructure and better the quality of education and public health care.

For such a change, it has been necessary to reduce and contain, as much as possible, common spending, and this is why he has had problems and argued forcefully with his colleagues in the Cabinet, who naturally push for additional funds for their ministries.

Nevertheless, his commitment to policies within perspective has kept him impassive and in favor of readying the country to diversify the economy and not depend only on minerals, which have a fluctuating price. In this respect, he upheld the efficient macroeconomic management established in an outstanding manner by his predecessor, Pedro Pablo Kuczynski, who is one of those responsible for the blue numbers which marked the end of Toledo’s administration.

Another significant aspect of Carranza’s management was obtaining investment grade rating, which is the best sign of seriousness in the management of the economy. Also the increase in international reserves (now estimated at US$35 billion) with which the country is now better protected from international crisis whose effects cannot be underestimated in the present situation.

We are not in the best of periods. The prices of oil and food are rising, a recession is possible, and the international prices of our products could make things difficult for us. For this reason, Carranza’s successor must be as prudent and calm. He must pay attention to the increase in inflation as well as the internal and external factors that cause it. He must address the pending public investment agenda, especially in the country’s most neglected and backward regions. Today there are resources to interconnect towns with highways, to bring them electricity as well as indispensable sewage and waste management services.

The outgoing minister has shown signs of intelligence and serenity. His successor is organized and there is continuity in the economic model, which must not be affected by politicking or demagoguery. Heterodoxy and populist experiments bring instability, corruption and make the poor poorer.

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