situation and outlook of peru´s economy and politics

Instituto de Libre Empresa (ILE)Barajas 522, San Borja,

Lima 41- PerúTel/Fax (51-1) 475-9752

[email protected]

Situation and outlook of Situation and outlook of Peru’s economy and politicsPeru’s economy and politicsNovember, 2005

2 José Luis Tapia-Rocha, Executive President

PERU’S MIGRATION2000 2001 2002 2003 2004

Entries 639,739 619,395 733,984 709,864 1’109,385

Exits 836,700 740,516 958,689 942,390 1’588,163

Balance 196,961 121,121 224,705 232,526 397,778

Daily exit average 540 332 616 634 1,089

Source: General Directorate of Migrations(www.digemin.gob.pe)

Prepared by: ILE

What is happenning?


Situation of Peruvian economy



Source: IPE


Outlook of Peruvian economy


Source: IPE



Source: IPE

Outlook of Peruvian economy


But, 1089 peruvians daily emigrate to others countries

Former president Alan García: One of first presidential candidates in surveys


Size of Informal sector in Latin america


Burocratic barriers

Facilitators for businesses initiation IndexesCountries Argentina Brazil Chile Peru Venezuela

Procedures 15 15 10 10 14

Length (# days) 68 152 28 100 119

Costs (USD) 324 331 493 510 792

Source: Ciudadanos al Día, based on Index of Doing Business from World Bank.


Opposition to privatize.

One dead and hunred of injured in Arequipa 2001

How statism works


Popularity of Peru’s Privatizations


Social conflict in Ilave, Puno April 2004.

The Major was killed by “democratic” assembly

How statism works


Nationalism headed by Humala’s brothers. They are followers of Hugo Chavez and Evo Morales.

The Peruvian “Chavez” is 11% in national polls


Humala is raising in national polls since April.

41% of peruvians are looking an outsider

28% 17% 17% 11%


2006 Presidential Elections Candidates

Humala’s nationalism is raising sustanaible.......would be next peruvian president


Since two-year Toledo is below 20% of popularity

President Toledo is one of status quo

10%Approve

86%Dissapprove

Source: Apoyo, November 2005


President Toledo is one of status quo

Source: IPE


Police operations at informal small trade center “Fronteras Unidas”

“The Other Path” people

hate police and politicians

Statism hits free market with its coops


THEOLOGY Gustavo Gutierrez (Príncipe de Asturias Award)

POLITICS Victor Raúl Haya de La Torre, Abimael Guzmán, José Carlos Mariategui, JDC, AGP

NEWSPAPERS La Tribuna, Ollanta, República, Peru 21, El Comercio,

THINK TANKS Universities.: Católica, San Marcos, Cantuta, Villarreal, y estatales.

Think tanks: Desco, IEP, IDL, Cedal,

Free market: ILE and CITEL (ILD works with foreign governments)

POLITICAL PARTIES

Apra, PPC, PP, AP, MNI, Patria Roja, Libertarian Party of Peru (incipient)

CIVIL SOCIETY CGTP, CTP, CITE, SUTEP, Manuela Ramos, Flora Tristan, CNDH

Socialists are majority


Socialism Estatism Law Economy

Ideology Polítics Means Objective

Socialism Logic


Fact 1


Fact 2: redistribution of wealth

Taxes Rates and others National Government General on Sales Revenue Tax Extraordinary of solidarity Solidarity towards abandoned infancy Unique Simplified regime (RUS) Tariffs Selective upon consumption Estate Shares Tax Municipal promotion Tax Casinos Tax Machine games Tax Coin machines Driving taxMunicipal Government Real estate tax Vehicles tax Non-sport spectacles tax Recreative vessels tax Loteries Tax Advertisements Tax

•Contribution to Senati •Contribution to public works•Municipal permit•Construction permit•Advertising permit•Street occupation permit•Rights to certificates •Rights for weight and measurements control •Cleansing tax•Park Tax•Sanitation tax•Sanitary carnet• Fumigation services•Regulation contributions•Central Reserve Bank•Osinerg•SBS•Osiptel•Indecopi•Conasev•SunassOsitran


LEYEND

BUSINESS

REDISTRIBUTION

REGULATION

ADMINISTRATION

PERU: PUBLIC BUDGET EXPENDITURES BY FUNCTIONS

FUNCFUNCTIONSTIONS MiMillionsllions US$ US$ %%

ADMINISTRATION AND PLANNING 2,697 25%

ASSISTANCE AND STATE WELFARE 2,339 21%

DEFENSE AND NATIONAL SECURITY 1,622 15%

EDUCATION AND CULTURE 1,712 16%

HEALTH AND CLAENING 886 8%

TRANSPORT 573 5%

AGRICULTURE 422 4%

JUSTICE 222 2%

EXTERNAL AFFAIRS 111 1%

ENERGY AND NATURAL RESOURCES 111 1%

LEGISLATIVE 65 1%

HOUSING AND URBAN DEVELOPMENT 52 0%

INDUSTRY, COMMERCE AND SERVICES 44 0%

FISHING 29 0%

LABOUR 13 0%

COMMUNICATIONS 16 0%

TOTALTOTAL 1010,,991122 100%100%

FACT 3FACT 3


Fact 4: BUSINESS POPULATION STRUCTURE

BBBB

MBMB

SBSB

Normal Perú

98%

BBBB

MBMB

SBSB

10%

25%

65%

1.9%

0.1%

4 MILLIONS OF UNITS


Fact 5: 59% of informal economy in the world

Peru


THE WAY OUT: To eliminate Bad LawsTHE WAY OUT: To eliminate Bad Laws

Publica Opinion

Libert. Movem.

CongressMajority

Product

Explot.

Elimi. Bad Laws

PROSPERITYPROSPERITY

Cultural change Institute change

ILE’s works here


ILE’S PROPOSAL

1.- State reform

2.- To reduce drastically taxes and regulations.

3.- To liberalizate and flexibility markets.

4.- To reform Judicial power.

5.- To equip police and army forces

6.- To give shares for privatisation to workers.

7.- To get back education, health services, and pensions to

victims of statism.


LEYEND LEYEND

BUSINESS

REDISTRIBUTION

REGULATION

ADMINISTRATION

EXPENDITURES IN A LIMITED GOVERNMENT

FUNCFUNCTTIONIONSS MillMilliions US$ons US$ %%

ADMINISTRATION & PLANNNIG 2,697 57%

ASISTENCIA Y PREVISIÓN SOCIAL 2,339 0%1%

NATIONAL DEFENSE & SECURITY 1,622 34%

EDUCACIÓN Y CULTURA 1,712 16%

SALUD Y SANEAMIENTO 886 8%

TRANSPORTE 573 5%

AGRARIA 422 4%

JUSTICE 222 5%

EXTERNAL AFFAIRS 111 2%

ENERGIA Y RECURSOS MINERALES 111 1%

LEGISLATIVE 65 1%

VIVIENDA Y DESARROLLO URBANO 52 0%

INDUSTRIA, COMERCIO Y SERVICIOS 44 0%

PESCA 29 0%

TRABAJO 13 0%

COMUNICACIONES 16 0%

TOTALTOTAL 44,,717717 100%100%

ILE’S PROPOSALILE’S PROPOSAL


STATIST GOVERNMENT LIMITED GOVERNMENTExpenditures [Millions US$] 10,912 Expenditure [Millions US$] 4,717

Expenditures [% NGP] 21% Expenditure [% NGP] 9%

Liberation of resources 66,1,19595

TAXES

5% of NGP

DONATIONS

JUSTICESECURITY

ADMINISTRATION

SOCIALSOLIDARITY

TAXES

13% of NGP

Business stateRegulator stateEstabilizator stateRedistributor statePlanner state

ILE’S PROPOSAL


Thanks.Thanks.Instituto de Libre EmpresaInstituto de Libre Empresa

Calle Barajas 522Calle Barajas 522

Lima 41Lima 41

PerúPerú

TelFax: (51-1) 475-9752TelFax: (51-1) 475-9752

Web: www.ileperu.orgWeb: www.ileperu.org

E-mail: [email protected]: [email protected]

situation and outlook of peru´s economy and politics

Business

executive president

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