Public revenues are finite. Due to this, the economic and financial administration of the State is governed by a budget in which each year it is decided not only the purposes for which the expenditure will be allocated, but also those that will be postponed or sacrificed to finance the former. A decision that in economics is called opportunity cost.
Petroperú is going through a situation of financial insolvency, but, curiously, it survives thanks to the taxes of all Peruvians, which, as is known, are finite. According to the Prime Minister, Ernesto Álvarez, between 2022 and 2024 the State provided financial support measures to the oil company for a total of S/17,888 million, a figure that exceeds the annual budgets of sectors such as health and education.
In addition to the moral risk represented by having constantly rescued Petroperú, which is why it lost the incentives to operate efficiently and transparently (as Minister Miralles has warned), it is worth knowing what the government sacrificed to rescue Petroperú or, in other words, what could have been done with those S/17,888 million.
Money better spent
The main professor of the Academic Department of Economics at the Universidad del Pacífico and former Vice Minister of Economy, Carlos Casas, considered that these resources could have been used to double the citizen security budget and thus combat crime, which has become one of the main scourges that hit the country.
In terms of education, he considered that the amount that has been allocated to pay Petroperú debts could be used to build 226 high-performance schools (COAR). In this way, he pointed out that there could be 10 of these infrastructures in each department. Furthermore, he indicated that, if the construction and entry into operation of these spaces were considered, there would be 177 COARs that would be obtained thanks to these resources.
“The Talara Refinery (Piura) began operating with difficulties and, although it should already be at 100%, it has not worked as planned. It is said that losses have been reduced and there are even those who project blue results; however, Petroperú continues to be a company with poor management,” he explained.
It should be noted that the infrastructure located in Piura has also been considered an unnecessary investment by some analysts, since Peru consumes 250,000 barrels of oil a day, but only 90,000 are refined; That is, it is not capable of meeting the requirements.
For his part, the former Vice Minister of Energy, Arturo Vásquez, questioned the waste in Petroperú and assured that with that money more than 27,000 medical posts could have been built. However, he indicated that, if they wanted to build highly complex hospitals, approximately 130 would have been built with the money.
In the transportation sector, he considered that with that money 2,980 kilometers of roads could have been paved. We could even have built a new Central Highway with a magnitude similar to those in Europe.
“It will no longer be possible to recover the lost money because the outstanding debts must be paid. What the State has done is pay suppliers, salaries, bonuses, that is, current expenses, but the long-term debts have not been paid,” he added.
Zero impact
Another no less important factor that has not been taken into account is the type of expense that has been prioritized. The rescue of Petroperú fundamentally represents current spending; That is, money destined to sustain loss-making operations, pay accumulated debts and cover administrative inefficiencies. This type of spending has a radically different economic impact than productive investment.
An indicator of the benefit derived from the expenses made by the Government is the GDP multiplier, which measures how much the total economy ends up growing as a consequence of that initial expense. According to the Central Reserve Bank (BCR), in periods of lower growth, an increase of one sole in public investment increases GDP by S/1.42 in the long term, while an equivalent increase in current spending generates only S/0.92.
Regardless of the magnitude of the impact, each sun invested circulates multiple times in the economy, generating employment and economic dynamism. However, when money is allocated to cover operating losses of an inefficient company, the multiplier is close to zero or even negative. The losses fall on all citizens through taxes that the State fails to allocate to essential services, such as education, health and security.
Impact on fiscal stability
Finally, another factor to analyze is the cost that support for Petroperú generates in fiscal stability. In 2024, Fitch had maintained that there are fiscal risks in our country “due to the possibility of greater support for Petroperú.”
In the same sense, research by economist Vito Tanzi, former Director of Fiscal Affairs of the International Monetary Fund (IMF), concludes that, when the State undertakes activities that go beyond the provision of basic public goods (for example, industrial interventions or support for loss-making companies), it can generate “failed government” or inefficiencies that compete with the provision of social services and the optimal use of scarce resources.
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