Changes in Peru
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Peru may have recently elected a residual president, but its finance minister says foreign investors have shown interest in buying bonds so the government can consider a new issue to maximize their chances.
The Andes surprised the markets in June when they elected their best president. In the process, Pedro Castillo, a former elementary school teacher and co-ordinator of the Andean Coalition, pledged that the world would be more prosperous, re-negotiating government unity and drafting legislation.
But when he took office, Castillo dropped his message and appointed Pedro Francke, an economist who had briefly worked for the World Bank, as his finance minister. This week, the two men traveled to the US to defeat skeptical traders.
“I think the meetings [in the US] they have been instrumental in dispelling the political doubts of which some are concerned, which is their main concern, ”Francke told the Financial Times. “I think the information we provided effectively dispelled the doubts that the business community had.”
Castillo played. Wearing his hat full of hats. Travel to Peru with confidence, without any doubt or apprehension. ”
Francke said he and Castillo had a close relationship and their message to the US about the importance of business finance was so well received that even if Peru no longer needed to sell international markets this year, it could.
“It is possible that we see an opportunity that can benefit us, and then we will use it,” Francke said. “. . . . There seems to be an interest among Peruvian consumer relations, which was understandable. . . We had all the meetings ”.
Graham Stock, a new market for lending to BlueBay Asset Management, said he had taken this “with a lot of salt” because investors who wanted to increase Peru’s interest could buy it from the secondary market, which the country has not done well recently.
“Many people expect Peru to give back soon. . . and I think it will be important, ”he said. “But uncertainty in the mind could also mean that he has to pay a new fine to savers than is unusual for a high-ranking king.”
Even so, Francke’s gentle message has begun to gain momentum in another important trade in Peru, the world’s second-largest brass producer. This week Freeport-McMoRan chief Richard Adkerson said he was “encouraged” by a recent meeting with Castillo and a BHP official and praised the government’s approach, “Bloomberg said.
Advertisers living in Peru who see the political crisis in Lima with ministers who are threatened or quit working with Maoist terrorists are skeptical. “It is difficult to believe that anyone would sell money in Peru while this is happening. . . .continued, “one trader said.
Peru’s economy suffered a setback due to a long-term slowdown in 2020 that sent GDP to 11.1% but failed to stop the coronavirus. The IMF predicts that growth this year will increase by 8.5% and Francke’s view at congress shows a budget decline from 8% last year to about 4.7% this year.
“Money management should not be left or right,” Francke said. “It’s a wise thing to manage the economy, such as keeping prices low.”
As Castillo’s government seeks to secede, he added, increasing government spending on infrastructure by raising the lowest taxes in Peru.
“We want to change taxes, reduce tax evasion, raise money and in this way we can focus on education, health, construction in rural areas, the Andes and forests, where there is discrimination, high levels of poverty and extreme poverty,” Francke said. “.
Financial taxes are not on the list and tax changes are more about raising money than raising money, he added. In the mining sector, agreements can no longer be negotiated but there will be a mechanism to levy taxes sometimes at higher rates around the world.
A Peruvian banking expert who specializes in finance said investors prefer what they have heard from Francke but their main concern with the finance minister is that “he is not the one who is shooting”. “She is OK. . . but can they stop the wrong ideas that are coming out of this government? “