Ignorance is bold. In Congress, he brought parliamentarians from the Budget Committee to say anything about the work that the Central Reserve Bank (BCR) must performwhen the Constitution establishes that its purpose is to preserve price stability and periodically report how the economy is doing. A task that is no small feat if we take into account that inflation operates like a tax on the poor.
LOOK: BCR: We need to keep the deficit under control or it will be expensive for us
Thus, the ignorance and laziness of reading the Magna Carta added to the leftist ideology left several congressmen looking ridiculous. Congressman Wilson Quispe, from the group Together for Peru – Voices of the People, was one of those highlighted: “Apart from earning S/41 thousand, Mr. Velarde, what have been the legal obligations or initiatives on the part of the BCR to seek to support employment within the population? (SIC)”. A lack of respect.
Congressman Wilson Quispe, from the group Together for Peru – Voices of the People (PHOTO: Andina).
And it was not the only thing: “(…) given the drop in mineral export prices compared to previous years, what actions will the BCR take to diversify Peruvian exports and reduce dependence on commodities such as copper and gold ( SIC)”, Quispe added, demonstrating supreme ignorance.
Congressmen from the Budget Commission suggest that the salary of the official who has contributed the most to the country’s economic institutions is high, without even being clear about the role played by the organization for which he works.
For her part, Congresswoman María Agüero, from Perú Libre, did not want to be left behind, she asked Velarde: “What concrete measures are being taken by the BCR so that price stability does not imply, let’s say, a reduction in the purchasing power of the popular sectors and the working class (SIC)”. When, in reality, price stability precisely seeks to avoid the loss of purchasing power, not the opposite. Agüero may not be an expert in economics, but it is essential that she at least know the work of the monetary authority and its impact.
Her interventions continued to show that she was lost: “What role should the BCR play to promote a policy that not only generates jobs, but also guarantees that they are decent with fair wages and full labor rights (SIC)?”
María Agüero wears a polo shirt with the face of the fugitive Vladimir Cerrón.
“What is the position of the BCR regarding the possibility of implementing a progressive tax reform that alleviates fiscal restrictions, making the richest sectors and large companies pay their fair share to finance quality public services?” said Agüero as last question.
Congressman Alfredo Pariona, from the Socialist Caucus, followed, who was also a victim of his ignorance. Thus, he asked: “the country constantly makes loans to international donors and especially at high interest rates. However, it tells us that the BCR has US$82,134 million in reserves. What does that mean? Who uses those funds? To what extent does that mean? What is it destined for? What is done? Does it really exist?
“From your experience, if we talk every time that there is growth, how do we explain in rural areas that there is no such growth? Who gets rich? Members of Confiep? Business people? Some personalities? “The owners of Peru, as they say?” He highlighted letting himself be guided by his ideology.
Congressman Alfredo Pariona, from the Socialist Caucus (PHOTO: Andina)
The ‘schools’
There were other questions that worsened the perception of the level of knowledge of the congressmen about the role of the Central Bank, which forced the president of the monetary authority, Julio Velarde, to give them a class on the subject.
Velarde maintained that the only task that the Central Bank has is to control inflation that comes from domestic factors, because if it is due to external factors, there is little that monetary policy can do. At a certain point, he asked them to differentiate the functions of the Ministry of Economy from those of the BCR.
He stated that it is obvious that to control the fiscal deficit, expenses must be adjusted or income increased. “There is no other way.”
Velarde highlighted that, if one compares Peru with other countries, for example, the OECD, the Income Tax paid by companies in Peru is higher than the OECD countries, it is even 10 percentage points higher than in the United States. “I don’t think these taxes should be lowered, but I don’t think they should be raised much either. We must remember that capital is mobile, it can go elsewhere,” he said.
He added that what is low in Peru is the personal tax. He noted that in Europe and the US the tax on individuals collects more than on companies. “Here (people) are charged very little.” Maybe there is a lot of evasion,” he said.
Regarding the fact that Peru is financed at high rates as suggested by Congressman Pariona, Velarde indicated that the interest rate at which Peru is financed is 6%, half of that at which Brazil is financed. He indicated that it is an extremely low rate and even lower than what Peruvian entities pay for a time deposit. Regarding international reserves, Velarde clarified that part of them are the public sector deposits that are in the central bank and the banks’ reserves (part of the deposits that they are obliged to deposit in the BCR).
“If we did not have those deposits from the banks in the BCR, any run in dollars could be terrible. We do not issue dollars, but soles. If the deposits in dollars are withdrawn from the banks, we have to have the dollars so that they can leave “he explained.
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