Peruvian Public-Private Partnerships and Foreign Investment

Before the Minister spoke, Mercedes Aráoz, the CEO of inPERU, introduced the Minister. inPERU, based in London, is an association of enterprises from Peru whose goal is to increase foreign trade and investment into Peru.

Following this introduction, the Minister used the event to reflect upon the sound macroeconomic performance and recent investment in Peru. He stressed that Peru is a country of opportunity who believes in partnerships with the private sector.

Economically, Peru tends to perform above similar Latin American nations. The Minister explained that Peru’s macroeconomic fundamentals were the roots of this success. In particular, he pointed to the success of the 1993 Constitution in creating more independent monetary policy and an autonomous central bank. This approach, combined with the privatisation of several state-owned companies, allowed the private sector to be the driving force in the reduction of the national deficit and the reining in of inflation. From this solid basis, the Minister argued, Peru’s modern economy grew, and continues to grow.

Moving to a more contemporary analysis, the speaker celebrated the public-private partnerships delivering projects across Peru. Billions of dollars have been spent on sanitation, transport, industry, electricity, and railway projects that have provided for the citizens of Peru. The Minister highlighted the reform of ProInversión, the state entity responsible for managing public-private partnerships, as a crucial factor in the continued growth of the country’s economy.

Likewise, the Minister referenced the new law that aims to decrease the amount of time and bureaucracy required to satisfy biological and archaeological authorities when commissioning new projects. This is particularly pertinent to new mining projects such as those in Cajamarca and Arequipa.

While discussing his policies, the Finance Minister spoke in the medium to long-term, of the lasting impacts that these projects promise for the population of Peru. A general election will take place in 2026; therefore, the government is ensuring that their successors will be handed an economically responsible state and the components for long-term success.

As the discussion opened to the table, it turned to the highly anticipated railway connecting Southern Brazil to the Peruvian Pacific coast. The Bioceanic Corridor is still only a proposal, and the Minister recognised its potential in linking the soy and pork growing regions of Brazil to the Pacific, and therefore to the Chinese markets where demand is high. However, the Minister stressed that on Peru’s side, the majority of the railway is already built, but this is not the case in Brazil. Furthermore, the project has had deep Chinese involvement on the Brazilian end, but the Minister asserted that Peru did not need Chinese investment to finish its portion of the line. More broadly, the Minister highlighted that Peru, compared to the rest of Latin America, has a very low debt to China.

Continuing the theme of foreign trade and investment, those representing British businesses were keen to hear more about the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Peru and the UK are members. The Minister appreciated the importance of free trade agreements to the Peruvian economy, which is fundamentally outward-facing and non-protectionist. He celebrated the CPTPP as part of a wider effort by the Peruvian government to deepen its international trade links worldwide.

Turning to regional and local government, the Minister acknowledged the provision in the proposed 2026 government budget for increased decentralised spending. He explained that, if the proposal is approved, a greater percentage of government spending will be undertaken by regional and local authorities. This policy will allow a higher quality of local projects to be financed and will give local powers a greater scope to prioritise those projects that will have maximum impact. He hoped that such powers would help to depoliticise local spending, instead focusing on those projects which have the greatest effect on the citizens.

Canning House extends its thanks to all those who attended and joined the Minister of Finance in such an enriching roundtable. The Minister emphasised Peru’s attitude as an economy open for partnerships.