Kuczynski: report on massive job cuts “not exaggerated,” Peru to face dire times ahead

A day after Peru President Alan García labeled a National Society of Industries’ report indicating recent job losses topping 60,000 as “unnecessarily alarming,” Pedro Pablo Kuczynski, former finance minister and cabinet chief under President Toledo, stood vouched for the report’s veracity and warned of difficult times ahead.

The National Society of Industries’ report is “not that exaggerated,” Kuczynski told Radio Programas radio on Friday, and Peru, while growing quickly and steadily, will be faced with some hard times.

“I believe that the agro-industrial and textile sectors will be hardly hit,” added Kuczynski. “In El Callao, there are 1,500 asparagus containers with no place to go. And orders for textiles have dropped drastically. In these two sectors, we’re experiencing problems that clearly reflect the U.S. recession,” and many additional jobs will be lost, he said.

If the government’s anti-crisis plan “is alright,” Kuczynski added, asking businessmen to reduce profits and “survive,” isn’t a sure way to ride out the global financial crisis.

“Things aren’t exactly like this: a company earns more, invests more and creates more jobs, company earns less, it will invest less and create less jobs,” said Kuczynski. “I think that this dilemma is a little simplistic and that (reality) is a little more complicated than that.”

On Thursday, in response to suggested wage and daily work hour cutbacks by Lima’s Chamber of Commerce, Peru President Alan García urged the Andean country’s top execs to opt instead for profit reduction and “survival.”

Kuczynski also criticized the Ministry of Economy’s latest initiative, a “road show” aimed to attract foreign financiers and businessmen to Peru.

“We have to understand the context,” said Kuczynski, “and the fact that these financiers are dealing with cataclysmic problems. Who is going to listen to what we have to say? Are we going to ask for money? I hope not, because if we ask for high-interest and high-margin credit at today’s rates, it would only hurt the good credit Peru has earned.”

Peru shouldn’t be selling bonds abroad, added Kuczynski, in line with Peru’s Confederation of Private Entreprises, or Confiep. Peru should be asking for the Inter-American Bank, or IDB, for a loan, he added.

“The only important Latin American country that has asked the IDB for a loan is Peru,” said Kuczynski. “All the others have done so: Chile, Mexico, Brazil, Colombia, but not Peru. This money is much cheaper than the market’s money.”

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