Presentacin de PowerPoint

1
PERU The Path for Democracy, Reform and
Governance
Center for International Private
Enterprise Washington DC, September 2002
Gabriel Ortiz de Zevallos APOYO Institute
2
SEPTEMBER SURVEY RESULTS(Lima)

• Do you approve
• President Toledo September 2002 17
• August 2001 59
• Prime Minister Solari 27
• Minister of Finance Silva Ruete 26
• The government 18
• Congress 26
• Judiciary 22
• Economic Policy 15

3
FOUR YEARS OF CRISIS
Crisis financiera Caída de términos de intercambio
Crisis política
El Niño
4
GDP PER CAPITA
5
Investment falls 30 between 1998 - 2002
6
FISCAL SITUATION IS DETERIORATING
7
SEPTEMBER SURVEY RESULTS(Lima)

• Do you believe
• The government has money 43
• The government does not have money 49
• Expectations about the economy next year
• Better 5
• The same 40
• Worse 53

8

• Instituto Cuánto Poverty has increased and
  poor people have become poorer.
• 2000 14 million Peruvians spend less than US2
  per day.

9
FROM OPTIMISM TO PESIMISM
10
GDP 2001-2005 PASIVE SCENARIO
Pasive scenario low levels of growth
11
(No Transcript)
12
SOCIAL INDICATORS
13
(No Transcript)
14
REQUISITES FOR PERUVIAN DEVELOPMENT
Economic Growth Job Opportunities Poverty
Alleviation and Reduction
Competitiveness of the Business Sector
Macro Stability
Appropriate political and legal environment
15
IT WILL BE HARD TO START GROWING AGAIN AS FAST
AS NEEDED
Boom 1994 - 1997
2001

Significant Public Surpluses.

Foreign investment in large operations of
prvatization of natural monopolies.

Terms of Trade favor invesrtment in Primary
Sectors

Significant external savings permitted to finance
investment.

Latin América in general, and Perú in particular
raised attention of foreigns investors.

Boom in the U.S.
16
RANKING OF BUSINESS COMPETITIVENESS
17
RANKING OF THE QUALITY OF THE ENVIRONMENT FOR
DOING BUSINESS
18
POLITICAL AND LEGAL FRAMEWORK
19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
(No Transcript)
23
PENDING REFORMS
STATE
PRIVATE SECTOR

• Reduce labor overcosts.
• Promote/facilitate formality.
• Invest in technology.
• Promote private investment in infrastructure.
• Promote the development of capital markets.
• Reduce tariffs.

• Promote training for workers.
• Invest in technology
• Capitalize their firms.
• Press the State to do reforms.

High Production Costs

• Define and implement decentralization process.
• Rural development strategy.
• Optimize social programs.
• Redistribute budget to education and health

• Incorporate less wealthy strata into the market.
• Focus in foreign markets
• Integrate clusters

Weak and Centralized Markets
Inadequate Institutional Environment

• Reform the Public Sector.
• Reform the Judiciary.
• Strengthen the Legislature
• Independence of Powers

• Press the State to do reforms.

24
THE CHALLENGE NOT TO SACRIFICE MEDIUM-LONG TERM
GROWTH
Frustration
Insatisfacción
7
7
Presión por
Pressure to
con el modelo
with the
reactivar
reactivate
pro mercado
market model
rápidamente
rapidly
6
6
5
5
Fiscal
Fragilidad
Debilidad
Microeconomics
fiscal
Problems
weaknesses
microeconómica
CRECIMIENTO PBI
CRECIMIENTO PBI
4
4
3
3
Poco impulso de
Low impulse
Fractioned
Congreso
la economía
of the global
2
2
fraccionado
Congress
mundial
economyl
1
1
2001
2002
2003
2004
2005
2006
2001
2002
2003
2004
2005
2006
25
Current situation

• Perception the situation is worsening
• No positive changes are expected

Bad, there is no money for other things, only
for food
The situation is bad for everybody, specially
for those of us who work independtly
Each year the situation is worse
26
Principal problems of the country
Employment
Low wages
Labor Instability
No social benefits for workers
If you find a job, how much would they pay you?
Education is bad. There are no values
You can not afford the basic things
27
Principal responsible The government

• What should the government do?
• No clear idea.
• Public works.
• Promote national industry
• Tax incentives.
• Credit programs.
• Protection against unfair competition of
• foreign products.

Give support to the ones who export
The State is the promotor, its the one that
organizes everything
Do not collect taxes to the firms that start
operating so that they can grow and later on can
be charged
28
Principal responsible The government

• With what resources?
• Better allocation of public money (salaries,
  unnecessary expenditures)
• Money from anti-corruption
• Taxes.
• Money from previous privatizations.

I believe there is money because Toledo earns
more than the President of the U.S.
Where is the money that Montesinos robbed?
Politicians have very big houses...
They should use the money they are getting back
from Montesinos
We also have the money from privatizations
From taxes and Vladimiro
29
Privatization
Privatization Selling the national wealth to
foreigners
Laredo did not wanted Peruvian workers anymore,
only Colombian workers?
The firm is sold to foreigners and then Peru is
left with nothing
Technology Better service Larger coverage
The pros
Workers fired Higher Costs Jobs for
foreigners Firms have been sold for pennies
The services has expanded. You see phones
everywhere
The cons
Demand To suspend privatizations
30
An option Concesions
Concesion Rent
Concesiones is like when you have a house and
you rent it, its still producing and its still
yours. It doesnt stop being yours.
Concesiones are like a rent, for example, the
investor manages the company for six years
Temporary Can be overviewed Dont loose property
High costs Workers fired
The cons
The pros
I prefer conceciones because property is
maintained
Condition Short horizon contracts (5 years)
31
Regional Governments
Regions Lack of knowledge and uncertainty

• NEGATIVE
• We do not know the characteristicis nor the
  functions that regional and local governments
  will have.
• Lack of knowledge of the candidates for each
  region.
• Fear of larger bureaucracies, expenses and
  corruption.
• Low expectations with respect to possible
  measures.

• POSITIVE
• More authonomy for the provinces.
• May promote small firms outside Lima.

They should be authonomous. The goviernment
should give them the resources that correspond to
them
They are going to need advisors and it is going
to mean more expenses
It is another way of taking money
I am worried that it will bring more corruption