Luis Miguel Castilla: “Kurt Burneo’s challenge is going to be to restore the lost trust of a fairly weak government in the private sector”

Former Minister of Economy and Finance, Luis Miguel Castilla Rubio.

Before the arrival of Kurt Burneo to the Ministry of Economy and Finance (MEF) replacing Oscar Graham, the former Minister of Economy and executive director of Videnza Consultores, Luis Miguel Castilla Rubiotalked with Infobae to give us his impressions on the challenges that lie ahead for the third minister of this important portfolio in the government of President Pedro Castillo.

The former head of the MEF mentioned that one of the challenges for the current leader of this portfolio is to maintain the country’s economic stability, as well as restore the government’s confidence in investors, which is complicated in the face of anti-labor proposals promoted by the Executive and Congress during the first year of government.

What are your expectations regarding the appointment of the third minister in the portfolio of Economy and Finance during the government of Pedro Castillo?

In the first place, I find these changes in the Cabinet surprising because at the beginning the entry of a new premier was anticipated and in the end the least expected minister was replaced in the Economy and Finance portfolio, where Óscar Graham had been doing a good job despite the drawbacks in government. Now with the entry of the economist Kurt Burneo, we have to wait for his first measures, but he is a professional who knows very well the issues related to Public Finance, but economic issues are not so much his strong point.

Kurt Burneo points out that he will prioritize building confidence so that the economy grows. | Video: RPP

What could you highlight from the profile of the new Minister of Economy and Finance, Kurt Burneo?

With Kurt Burneo we have been colleagues in the cabinet of Ollanta Humala’s government when he served as minister of the production portfolio. He has also been director of Central Reserve Bank of Peru and CEO of National bank. However, I don’t know if Burneo is necessarily the profile that the country currently requires, since we currently have a crisis of low expectations from the private sector; and in particular, it is uncertain if in his line of work he will be able to achieve greater consistency when there are other dissonant elements in the government that is more distracted in the judicial issues of President Pedro Castillo.

What challenges await Kurt Burneo in one of the most important portfolios of the Executive?

Acknowledging the credentials and experience of the now Minister of the Economy, his strongest and most important task is how to restore that lost, weak and quite deteriorated trust of the government in the private sector that has been affected by populist measures that are harmful to future investments., such as the Collective Labor Relations Law and the law that limits labor outsourcing. In that sense, the strongest short-term measure for the head of the MEF is to reverse the fall in public and private investment.

Could your experience working with previous governments such as that of Alejandro Toledo and Ollanta Humala help you build bridges?

Burneo has been around different governments linked to the left, but which later changed their ideas on economic matters. When Alejandro Toledo was running for president, he was head of his economic team and with Ollanta Humala he corrected the Great Transformation plan, although he was in his government for a short time. And last year he was on Pedro Castillo’s initial team, but then he retired and was called up many times for the Economy and Finance portfolio. What characterizes Burneo is that he is a person close to governments with a desire to return to public management, he should be given the benefit of the doubt now in his role as MEF minister. With its expertise, it can help the government on issues related more to the regulatory sphere, but in the more political sphere, no gestures of change have been seen from the current administration of Pedro Castillo, since it has a confrontational political nature..

What new changes can be seen in the short term in the Ministry of Economy and Finance?

It is still a surprise to everyone that Minister Óscar Graham has been removed from the MEF, but now it will be necessary to see what kind of changes will be made in the Vice Ministries of Finance and Economy. Several changes related to the banks had been left pending, in matters with the regulators and the appointment of the vacant position of the director of the Banco de la Nación. In addition, the presentation of the new Budget Law before Congress is pending in a few weeks. Burneo is going to have many issues in his hands and with a Parliament that is not very ready to collaborate with him.

How could the new minister give confidence to the business community that invests in the country?

On this issue, the problem goes beyond the Minister of Economy, I believe that the central problem has to do with the president and his lack of governance in the country, and the level that has been reached is quite complicated. There are quite complex situations because one can put the Nobel Prize in Economics or the most capable person, but if there is not a minimum team and clear leadership, it is difficult to grant at least a little confidence to the business community. This situation is difficult for any profile of economy minister. His task of carrying out a minimum economic plan under these conditions in a tense political environment makes the task difficult.

Does he also mention this because in the first year of the Castillo government and in Congress, controversial laws have been approved for the business community?

Let us remember that despite the profile of former Minister Óscar Graham, many anti-labor laws have been approved in Congress and the Executive, which further complicates investments. Despite the interventions that Graham made, they have not been listened to by the president himself, who has ignored the negative reports and has only limited himself to passing unconstitutional laws where political motives have prevailed. For example, spending initiative laws have been passed in Congress and the Executive, regulations have been approved that have favored the salary of teachers without having any technical evaluation, as well as a law for the withdrawal of pension funds that are coming deteriorating in value year after year.

New Minister of Economy, Kurt Burneo, speaks before the press. | Photo: Presidency of the Republic
New Minister of Economy, Kurt Burneo, speaks before the press. | Photo: Presidency of the Republic

What will be Kurt Burneo’s first litmus test at the MEF?

Now with Kurt Burneo at the head of the MEF, it will be necessary to see if he has a little more convincing power over President Pedro Castillo. It is a complicated task and a real litmus test for him. Now we have to see if he convinces the Executive to repeal these decrees that tend to make employment more precarious, such as unionization and labor outsourcing. But it is very difficult to predict that something will be done because the return of Minister Betsy Chávez in the Cabinet has already been seen, even though she is in another portfolio, which suggests that the agenda of Castillo’s plan is going to be in force in anti-labour matters. In addition, with the new Minister of Labor, you will probably see an official dedicated more to the president’s political issues than working on a real agenda to generate employment in the country.

And what did you think of the first words of the Minister of Economy and Finance in which his management is going to restore the confidence of economic agents and is going to show signs of less uncertainty?

I believe that he is capable of providing coherence with respect to this issue and it is very important that his management gives confidence to investors and gives good signals, but we have to see him in action. I believe that his experience in fiscal matters, and his experience in other matters remains to be seen, can help to stabilize the economy, but there are still problems in the country that go beyond any ministry. It not only depends on the person but also depends on the suitability of the team and the head that leads the country.

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Luis Miguel Castilla: “Kurt Burneo’s challenge is going to be to restore the lost trust of a fairly weak government in the private sector”