Minister of Economy | The challenges of Jose Arista, the new president of the MEF | Comment

President Tina Polwart's government has less than two years to adopt a political agenda for the 2026 election calendar. This means that it is the deadline for citizens to leave the country in two major challenges: security and economy. However, in the last reshuffle of the cabinet, Boluarte and the head of the Council of Ministers, Alberto Otárola, lost the opportunity to replace Víctor Torres, the head of the interior, whose administration has more liabilities than assets for the government.

It was in the portfolio that they made the change they were looking for Ministry of Economy and Finance (MEF), Jose Arista replaces the depleted Alex Contreras. The challenges facing any head of a very powerful ministry are always varied and complex, but in this case they are doubled by a year of economic recession.

For those who care about public finances, there is an urgent need to regulate the balance between tax revenue and fiscal expenditure. Last year, Peru failed to comply with the fiscal rule for the first time in 22 years, following announcements by Contreras in previous months that the deficit would reach a target of 2.4% of GDP. A better performance of the economy in 2024 will undoubtedly help, but Arista's efforts must rebuild public revenues – which fell 12.3% last year – while correcting excessive spending. It is noteworthy that the 2024 budget mentions one variable, public sector wages.

He MEF He will also have to deal with a Congress that is coming off a parliamentary recess full of bad ideas and other terrible ideas. More repatriation of AFP funds, additional bonus for teachers, creation of special economic zones and other such initiatives are on the priority list of the groups. Thus, the danger of macroeconomic mismanagement comes from the legislature rather than the executive, but it is the new leader MEF Who should put out that fire soon?

Most important to Arista is rekindling hope for Peru's economic future. A string of bad economic news in 2023 felt like a sad continuation of the uncertainty brought by Covid-19 and the presidency of Pedro Castillo. Three-month economic expectations, measured by the Central Reserve Bank of Peru, have been in negative territory since 2021, and the previous administration MEF It did little to restore confidence. This year, private investment is expected to grow only 1% to 2% after a sharp decline in 2023; The labor market and increasing income of Peruvian families are not very adequate statistics. At this rate, poverty is likely to continue to increase.

Finally, if Minister Arista wants to change the situation, in addition to his own ministry, he must coordinate with his colleagues in the fields of energy and mines (now with a new minister), labor and employment development, manufacturing and transportation. and communication. They don't all seem to be on the same page. The support of PCM and President Boluarte will also be essential in this interpretation; Without that support, little can be accomplished. The hand, then, will not come easily, but the current government has little chance of leaving an acceptable legacy on economic matters.