David Tuesta: “This government starts with all the winds in its favor”

This government starts with all the winds in its favor. If we recall the last government beginnings, Ollanta Humala in 2011, PPK in 2016, or when Pedro Castillo started, the indicators presented at this start of government with Fuerza Popular are superior in every sense. First, the issue of business expectations. If you compare investment expectations from June 2026 with June 2016 or 2011, the current ones are higher than all. That is interesting because there are investment commitments for more than a year that show what investors are willing to do with this government.

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—How is this situation explained when we have gone through 10 years of political instability?

Because we have done our homework in the previous decades with Mr. Fujimori. Then, for better or worse, with all its problems during the Toledo period until Alan García, and that has allowed consolidating the competitiveness foundations that the country must have. A stable monetary policy, with a Central Bank that during the last 20 years, with Julio Velarde, has kept inflation under control. We have accumulated international reserves above US$100 billion. The fiscal part has resisted, despite all the attacks from Congress. These two elements, monetary and fiscal, have provided certainty that is hardly found in the Latin American neighborhood. All this has helped maintain a reasonable growth level. The only thing we have to regret in this period of high international prices is not having taken advantage of them.

—On Wednesday, Julio Velarde told Keiko Fujimori that although the outlook is good, El Niño will hit us. According to him, “maybe the figures we will see in the coming months will not be so good and derive from a natural phenomenon that we are already seeing.” One can do prevention and mitigation works, but how is prevention done economically?

The El Niño phenomenon (FEN) causes problems in two phases. The first is when it directly affects extractive activities that depend on the climate, such as fishing and agriculture. That is the first blow the economy experiences, and today we are already experiencing the negative effects. We have a drop in the fishing sector of almost 80% because there has not been the first fishing season, very likely there will not be a second either. With that, you will have an effect of almost 1% drop in GDP that you will have to subtract from the current growth level. Then, you have agriculture. This month’s growth has been quite meager. There are already alerts from some exporters that avocado and blueberry harvests could be affected.

—And Peru is the star of those two products…

The second stage of the blow to the economy comes from disasters, which generate cross-cutting effects. Because infrastructures stop, logistics stops, and problems with agricultural products begin. Inflation can be hit. Just review what the historical effects of El Niños have been in the past. In 1983, the blow to the economy was four points of GDP. Currently, despite the fishing sector being hit, the rest of the sectors are fine. The non-primary manufacturing sector is growing more than 5%, construction around 4%. Domestic demand is doing very well. With a good confidence effect, we could have, despite El Niño, an important scenario. Also, politically, when we review the popularity of presidents, El Niños, in most cases, have been an opportunity for the government to show it is present. With Fujimori, presidential approval rose by seven points because he was present; with PPK, it rose by almost 12 points.

—Having the lowest inflation in Latin America sounds easy. Is it?

It is work that has cost us blood, sweat, and tears. That cost is in the Peruvian DNA, and that has prevented, for example, Perú Libre in 2021 from causing more disasters than it probably would have wanted to, with its ideology behind it.

—And the expectations of Peruvians are on the incoming government.

That is why, in the good expectations at the start of the new government, there is an important risk. I will put it in global terms: you have a stadium full, euphoric, waiting for the team to score many goals, but if the goals do not come, there can be much disappointment.

—Add to that the Constitutional Court ruling that regulates the Congress spending initiative but does not completely close the door…

The Constitutional Court ruling must be read in two phases. First, it will allow you to go against all the laws approved so far because none have met the assumptions the Constitutional Court is now proposing, which are to have a regulatory framework and to explain how to carry out the coordination and substantiation process before the Ministry of Economy and Finance regarding fiscal sustainability. These two elements do not exist in any of the approved norms. So, it is understood that the Constitutional Court would be saying: “Come and file your claim; you have everything to win.” And there is a moral duty for Fuerza Popular to file those claims.

—However, there is still an open window, as laws that generate spending in case of social emergency can be approved. Who determines what a social emergency is?

That is the risk; that is the window still to be resolved. Or see what happens from now on. But let’s try, because there are norms like the teachers’ pension law that can be reconsidered before the Constitutional Court. They amount to 8 billion soles. The teachers’ “cédula viva” gives them a minimum pension of 3,500 soles, which costs you 8 billion annually, and you have the military “cédula viva,” the university law, the CAS law. So, stopping that, this government could have some fiscal relief.

—How is that reconsidered without risking social unrest?

That is an important issue, but I also think it is important to raise. One can understand that there are social demands, historical debts, but a historical social debt cannot be singled out to one sector to the detriment of the entire population because it is inequitable. Who in Peru has a minimum pension of S/3,500? That is absolute inequality and inequity.

—In an interview, Luis Carranza told us that in a Fuerza Popular government, these norms would not be repealed immediately, as they wanted to avoid social conflict, and that there could be resources to cover those expectations.

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You have to be convinced that a law like this is fiscally unsustainable because the teachers’ salary can continue to be updated—and that is not unconstitutional—but it automatically raises the minimum pension. Let’s not just talk about numbers; no one in Peru has a “cédula viva.” So, if you want to raise some kind of rights or social debts for some sector, including teachers, what you cannot incorporate is a “cédula viva” regime because, in the end, you are granting the same right to the rest of the country. Without a doubt, there is a political element that must be managed and moderated.

—Given this outlook that there is money, could the next Executive have a populist temptation?

It all depends on whether you achieve fiscal space. If this government manages to contain or mitigate the effect of those unconstitutional norms approved in Congress through constitutional claims, then resources and capital from that saved money could be used to try to address certain social debts of truly marginalized sectors. There are regions in the country with poverty levels around 40%. If capital had to be used to expand the Juntos program, those would be well-invested resources; expanding its coverage, increasing its bimonthly resource level, could even be doubled without problem. If you manage to contain these pensions for the military and teachers and use and invest in social capital for these segments, it would be an excellent measure and should be done. Because we do not count on the next election. If you look at the statistics, districts with the highest poverty levels have voted for Juntos por el Perú, and districts with lower poverty rates vote for Fuerza Popular. If you double the Juntos Program and include not only extreme poverty, I think the poverty rate could be lowered on average from 25% to the pre-pandemic level of 20% in a year and a half. But it is important to try to achieve savings; otherwise, it would indeed be populist.

—How to understand that the supplementary credit only has 4% for the El Niño phenomenon and much current spending?

There are 300 million soles for El Niño. You have a supplementary credit of more than 9 billion soles, of which about 3 billion are for current spending. It is a supplementary credit that turns its back on the priorities the country requires.

—And it is the Ministry of Economy and Finance that proposes it…

A cornered, threatened Ministry of Economy and Finance. That situation is somewhat embarrassing for a Ministry of Economy and Finance that should be the defender of fiscal coffers. About 6 billion soles have been allocated to works that are not priorities, that had no initiative in the previous budget. How does something that did not exist as a project suddenly appear overnight for you to put a little money into it?

—Political management?

Upcoming elections, mayor running as lieutenant mayor, those from the same party that now another enters and wants the work to continue, debts, favors to pay, because none of these works receiving money will change the life of any inhabitant of the country. If the priority were really the population, they should worry about finishing works, not starting works, leaving them half done. A hospital that is not completed, as 95% are, is useless. The hospital is useful when it is 100% complete. It is very striking that around 500 million soles are allocated just days before a new government takes office.

—Keiko Fujimori has said she will install a new way of managing, with goals for ministries. Is this viable, and how can citizens be kept informed?

Citizens do not have the capacity to know or monitor what the State is doing. The State also does not have the capacity to ensure, no matter how good the intention, that all that communication reaches the citizen. I believe there is a space where we should try to take advantage of technology, networks, to concretely show what those goals are that will change the citizen’s life. Regarding works, the State is a terrible executor. The Private Competitiveness Council has been monitoring works for the last 15 years, and we can see that more than half of those works are abandoned, and 15% of works are about to be paralyzed. Only 20% are completed. So, money has been wasted. 60% of public investment is carried out through municipalities and regional governments. So, it would be relatively easy to try to find the connection between regional government works and citizens. But serious work is required on how to monitor and ensure that those municipalities really are accountable to citizens. When you ask citizens why the work is not finished, they end up blaming the central government, and the main executor goes unnoticed.

—Citizens from anywhere in the country will always look to the Central Government.

The mining sector allocates a large part of resources to districts that paradoxically have the highest poverty levels, and that goes against the work and effort of the private mining sector; they pay a lot, but the one who has to do the work does not do it.

—What do you think should be the main axes of the July 28 message?

First, predictability. I understand that Fuerza Popular knows the importance of private investment to generate growth, employment, and well-being. You have to create conditions for investment to come strongly. For example, in the mining sector, there is an investment portfolio of more than US$60 billion. So, the bottlenecks limiting those investments should be analyzed. A quick scheme must be sought to allow those investments to materialize in the productive apparatus. And all this is suffered by Peruvians at all levels, at the municipal scale, with sometimes unfair and surreal supervisions. Serious simplification work must be done to awaken private investment. The second axis is security, which is one of the main concerns of Peruvians, and the other element is the El Niño phenomenon. And a signal must also be given to that half of the country that did not vote for them and that is the population with the greatest poverty.

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