Cuba: It is not possible to reactivate the economy at the point of bonds, investor confidence is required
The economist Elmer Cuba considered that President Pedro Castillo’s announcement about the incorporation of LPG in the Fuel Price Stabilization Fund “comes a bit late” because the price has already risen in the country.
The economist Elmer Cuba analyzed the announcements on economic matters made tonight by President Pedro Castillo during his first message to the Nation, more than a month after assuming the leadership of the State.
The head of state said that on September 13 the Yanapay bonus of 350 soles will begin to be distributed to 13 million Peruvians, with which 5 billion soles will be injected directly into the national economy.
In this regard, Cuba considered in La Rotativa del aire Night Edition of RPP that this is a correct initiative. “If it is injected in the month of September, this goes directly to spending because they are families that do not have much saving capacity, they are going to spend it very quickly. Hopefully it will be spent on national goods so that its multiplier effect is much greater ( …) That is going to multiply in expenses and surely the economy is not going to suffer much in the last quarter of the year “.
However, he stressed that “it is not possible at the point of bonds to reactivate the economy, it is necessary sooner or later to regain confidence in the markets and investors, so that investment can overcome these impulses that are shocks. These shocks work as long as there are credibility. If there is no credibility, they are transitory shocks that dissolve very quickly. “
LPG announcement “is a little late”
Another of the head of state’s announcements was the incorporation of petroleum liquefied gas (LPG) in the Fuel Price Stabilization Fund .
On this, Elmer Cuba pointed out that “such a fund works when the price is stable, and allows that when the price rises abroad, in Peru it rises less quickly, and when it falls abroad, in Peru it falls less quickly.”
“When you put a fund when the price is very high, it doesn’t really prevent it from going up because it has already risen, it is very unlikely that LPG and oil will continue to rise outside. For the same reason, the US and other countries repeatedly raised the issue of ban on the use of as a medicinal preparation. So, this fund is a little late. It is going to avoid, yes there are new upward impulses, that it goes up, but if it goes down very fast abroad, it will not go down very fast in Peru, “he explained.
As prices have already risen both internationally and nationally, he commented that “it is very complicated” that this average “can have immediate effects.”
