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APOYO Consultoría: The fiscal policy must be multiplied in the short term in order to mitigate the economic impact

Hugo Santa María - Partner and Chief Economist

23/03/2020

Article published in El Comercio.

Tomorrow will be the end of one week of obligatory social isolation decreed by the government with the objective of slowing down the spread of the virus in the country. That’s why the Executive announced several measures in order to mitigate the economic impact in Peru.

“If we want the return to normalcy – which will be hard – to be as quick as possible, we shouldn’t allow Covid-19 to bankrupt households and businesses.”

In this vein, Partner and Chief Economist of Servicio de Asesoría Empresarial (SAE) at Apoyo Consultoría, Hugo Santa María, indicated that until yesterday the fiscal measures introduced by the Executive equate less than 0.5% of the Gross Domestic Product (GDP), which is why it’s necessary for this effort to be multiplied four or five times in the short term, “through a coherent and complete package that combines temporary and targeted increases of current spending and subsidies, transfers of money or assets, rescheduling of tax payments, amongst others”.

Santa María also added that it’s necessary for the measures introduced by the Superintendencia de Banco y Seguros (SBS  – Superintendency of Banking and Insurance) consisting of facilitating debt rescheduling to be complemented by the actions of the Banco Central de Reserva del Perú (BCRP –Central Reserve Bank of Peru) focused on giving financial institutions broader access to liquidity.

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APOYO Consultoría: The fiscal policy must be multiplied in the short term in order to mitigate the economic impact

Hugo Santa María told Diario El Comercio that a "coherent and complete package that combines temporary and targeted increases in spending and subsidies should be approved."

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