Peru's president elect Pedro Pablo Kuczynski, who is to take office July 28, will seek special legislative powers to accelerate US$25bn in infrastructure projects as the world's third largest copper miner looks for alternative sources of growth to commodities.
Kuczynski, whose Peruanos por el Kambio movement secured just 18 seats in Peru's 130-member congress, wants to help create 3mn jobs by cutting taxes to spur investment and 5%/y economic growth, his designated finance minister Alfredo Thorne said.
The new government also proposes greater fiscal transparency, the formalization of Peru's informal sector, the creation of unemployment insurance and a reform of state investment promotion agency ProInversión, Thorne said.
Kuczynski, who named his cabinet last week, has pledged to fast-track delayed projects including line No. 2 of the Lima metro, the southern Peruvian natural gas pipeline, the Lima and Chinchero airports and the Lima-Ica highway.
"Fast-track means the Executive is given the authority to accelerate all these permits, all these obstacles that these projects face today," Thorne told reporters in Lima. "We calculate there are about US$25bn in infrastructure projects that haven't made progress for bureaucratic reasons, permits or land expropriation."
Fuerza Popular, Peru's most powerful political force with 73 seats in the next congress, has said it will grant the request if Kuczynski's team explains the need for special powers. Other parties such as left-leaning Frente Amplio (20 seats) and centrist Apra (5 seats) have also pledged their support.
Thorne added Peru, whose commodities shipments account for 70% of its export earnings, needs to accelerate investment in other areas of the economy as the effects of US$34bn in mining investment over the past five years will only be felt through next year.
Peru is on track to boost copper output to 2.8Mt/y by next year from 1.7Mt in 2015 as companies such as Freeport-McMoran and China Minmetals ramp up production at new projects.
"We believe the economy is very vulnerable. Much of our growth is coming from mining, not consumer demand," Thorne said. "We have to ensure that the sources of growth that we're going to put in motion are going to start producing results in 2017 and 2018."
President Ollanta Humala, who is scheduled to step down at the end of this month, awarded a record US$20bn in public-private partnership infrastructure concessions since 2011, but bureaucratic obstacles have caused years of delays, according to industry groups such as SNMPE and AFIN.
Peru, whose economy is expected to expand 4.1% next year, will nevertheless need to implement structural reforms in the light of low metals prices due to weaker- than-expected Chinese growth, according to the IMF.
"The new government will inherit an economy with a solid foundation, good institutional frameworks in place, and structural reforms in train," the IMF said in a report. "However, important challenges now loom, as metal prices have entered into a slump since their 2011 peak, hurting exports, investment, and fiscal revenues."