Peru launches a new economic reactivation plan for 1.6 billion dollars

The government of Peru announced a new economic recovery plan for almost 6,000 million soles (1,573 million dollars) to soften the impact of the political and social upheaval that besieged the mining nation at the beginning of this month.

The Minister of Economy, Álex Contreras, said at a press conference that the program seeks a rapid recovery of activity with a view to scoring 3% growth in the first quarter of 2023.

The political crisis unleashed after the removal of former President Pedro Castillo, who is detained for “rebellion” after illegally trying to dissolve Congress, sparked a series of protests, clashes and infrastructure blockades that left at least 22 dead in the South American nation.

The Peruvian government estimates that the losses for economic activity due to the violent riots in recent weeks amount to about 1,000 million soles (260 million dollars), around 1% of GDP advance in December, not counting damage to critical infrastructure, such as public buildings, road works and airports.

“We intend to deal with an emergency situation,” said Contreras, recently appointed to the post by President Dina Boluarte. “It is a plan focused on the regions most affected by the conflict,” he said.

The reactivation plan, which aims to support the impoverished southern regions hit by the fighting, will be financed with additional resources from tax collection and unexecuted budget balances this year, Minister Contreras said.

The initiative, however, does not entail an adjustment to the official projections for growth in 2023, which remain in a range between 3.1% and 3.9%, while they will try to stick to the current objective of the fiscal deficit for next year of 2.4 % of GDP.

The Economy Minister had already said in an interview in mid-December that modifying the fiscal deficit target, at this time, “is not negotiable.”

Peru, the world’s second largest copper producer, has already been facing a series of social conflicts that have impacted key mining projects, especially in the southern regions, where local residents are demanding greater benefits from the exploitation of resources.