Peru implements the most ambitious economic plan in the region to face the pandemic | Economy

Two soldiers detain a woman at a checkpoint in Lima during the country's state of emergency.
Two soldiers detain a woman at a checkpoint in Lima during the country’s state of emergency.MARTÍN MEJÍA / AP

The economic plan that the Peruvian Government began to apply to face the gale produced by the quarantine and the curfew decreed by the Covid-19 supposes 26,000 million dollars -90,000 million soles- to attend the sanitary emergency, inject liquidity to the small and micro-enterprises, and provide subsidies to 2.8 million families from the vulnerable layers, as well as to some 800,000 already self-employed informal workers, among other measures. The stimulus to deal with the pandemic is, for the moment, the most ambitious in the region.

In Peru, 65% of workers are informal, live daily, and given the restrictions and confinement decreed from March 16 to April 12, millions have been left without a means of survival. The vulnerable of February have fallen into poverty in March, hence the urgency of the Government to pay a bond baptized as Stay in your house, $ 110 to families in need. The president, Martín Vizcarra, announced that once the first subsidy has been paid to the vulnerable, they will make a second disbursement.

The head of state reported this Friday that 1.4 million people in poverty have already received the subsidy to face the quarantine, and next week 1.3 million more people will receive it. The National Institute of Statistics and Informatics (INEI) reported that in 2017 the number of people in poverty rose for the first time in the decade, and it was 21.7% of the population, almost seven million people. In 2018, the percentage dropped to 20.5%. The amount allocated to the plan carried out by the Minister of Economy, María Antonieta Alva, is equivalent to 12% of GDP, taking into account that nominal indicator in 2019, which amounted to 217,000 million dollars, explained a source from the ministry to EL PAÍS.

Alva said this week that the largest stimulus plan against Covid-19 in Latin America is due to the fact that “decades of fiscal discipline in Peru” have allowed us to have “enough savings.” The Peruvian economy grew by 2.2% in 2019, the worst performance since 2009, and 4% in 2018. The first block of the economic plan, of 7,000 million has been allocated to purchases and contracts to strengthen the health system against the pandemic, cleaning supplies for schools, subsidies for poor people, and a subsidy to the payroll of micro and small businesses that pay salaries of less than $ 430.

The Peruvian Government also approved that people who have a “compensation for time of service” fund can withdraw up to $ 695 and that those who have not contributed their funds in the private pension administrators in the last six months can also withdraw up to $ 579. The official from the Ministry of Economy and Finance also explained that they have postponed tax obligations that mean the injection of some 3,000 million dollars into the economy.

In addition, this Friday, President Vizcarra announced that the Central Reserve Bank will place 8,000 million dollars to finance private bank loans guaranteed by the Government. The beneficiaries of these loans, said the president, will be some 350,000 micro and small companies.

A second phase of the economic reactivation plan, for 30,000 million dollars, which consists of public investment in projects and current expenditure on maintenance of schools and highways will be implemented when the quarantine is concluded, that is, if there are no extensions from mid April. In addition, the Government has transferred resources to 1,574 municipalities to buy food baskets and distribute them to the neediest.

Despite this package of measures, thousands of people who cannot work during the quarantine, such as waste pickers, street vendors, canillitas (newspaper vendors), are struggling to be included in the lists to receive the subsidies and daily ask in the media Peruvians what can they do. And the system of the Ministry of Inclusion and Social Development does not respond: its lines are saturated and they have not added even more people. The workers in the cultural sector have also complained to the President, through letters, that none of the measures to alleviate this crisis have considered them. “We cannot leave anyone behind,” Vizcarra responded to that request.

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