Economy | GDP | Debated Budget Law | Comment

In Peru, we pay so much attention to issues that have a relatively small impact on the well-being of citizens, and on the contrary, other discussions of real relevance go almost unnoticed.

This occurs, for example, with Budget ActIt defines what, how much and who will spend the resources of the public treasury next year.

This week, the Ministry of Economy and Finance (MEF) The draft has already been sent to the Republican Congress Budget Act The public sector and published the Multiannual Macroeconomic Framework (MMM) until 2024, a set of economic projections for Peru and the world, based on one of the few decisions over which the MEF has total authority: what the total budget amount for next year will be. The rest of the decisions are more or less recommendations as they may be modified by the Parliamentary Budget Committee and may also be subject to plenary debate.

What happened in this case is paradoxical. On the one hand, the MEF Becomes more pessimistic about the results economy Tax revenues that remain in Peruvian and, therefore, public coffers this and next year.

On the other hand, it will become more generous in the budget, with the total resources spent in 2024 increasing by 12.1% to exceed S/240,806 million, a much larger increase than the already generous increase of 9%. The predecessor, Curt Burneau, was slated for the 2023 budget.

It is very pessimistic about growth because, this year, the MEF He now expects GDP to grow by just 1.1%—far from the 2.5% he still predicted in April, but still above the consensus of advisers and analysts—and, by 2024, he no longer expects growth of 3, 4%, but 3%.

Even with this adjustment, the Finance Council has expressed its concern over the risks that next year’s growth will not reach the 1.1% projected by the MMM. Similarly, like last year, it warns that it is not good MEF Setting a fiscal deficit target for 2024 – the difference between government revenue and expenditure of GDP – of 2%, a limit set by the fiscal rule, increases the risk of breaching this ceiling, as it did this year. .

Debate on the budget in Congress will begin in the next few days, and we must be very vigilant, because a sharp increase in total resources already poses financial risks and Congress usually does not moderate these risks, but instead raises them anew. And dangerous situation..