Enrique Iglesias: “The next few years will be very difficult for Latin America” | Interview | Enrico Iglesias | BID | Latin America | inflation | ECONOMY

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—Four South American presidents with leftist leanings have come to power in the past 18 months: Pedro Castillo of Peru, Gabriel Boric of Chile, Gustavo Petro of Colombia, and Luiz Inácio Lula of Brazil. What social and economic analysis do you have of this trend in the region?

Most worryingly, we are entering a field of growing insecurities regarding politics, economics and international relations. In this context, internal problems are added. Many countries have political problems, political parties have had a very strong decline. Some parts committed suicide. All this creates a new situation. In economic matters, we will have a very difficult and worrying situation due to external impacts, such as the increase in the inflation.

Despite this, I am optimistic, I believe that countries will leave. I believe that Latin America Today it appears in the world as a region of exceptional importance, because we are very concerned about the issue of the environment and if there is one region that can contribute to this, it is the Latin American region. If we talk about food, Latin America it has a lot of potential; If we talk about energy, the same. If there is a region that has been gifted by providence and with sufficient resources to run its society, it is Latin America.

—Peru fits that description perfectly, but since 2016 there have been years of political instability where we’ve had five different presidents. Since the current president came to power, there has been an opposition that has expressed itself in favor of his vacancy, even with social mobilisations. With this context, how can we expect an optimistic scenario like the one you propose?

We have been closely following the political situation in Peru. Contrary to everything you point out to me, which is a reality, the country itself has also grown economically in recent years. It is a country that has managed itself in recent years and the private sector has played an important role. If there has been political turmoil, this has not been a factor limiting Peru’s ability to grow, which speaks well for the private sector and society as a whole.

—And fiscal policy.

Fiscal policy in general and above all. There is a lot of respect for this country’s central bank. Today that we have the impacts of inflation international, the bank must continue to play an independent, serious and responsible role.

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—You mentioned international inflation. If it continues to rise or remains at current levels, how will it continue to affect the region?

The inflation has increased significantly. Then there is a new panorama. I believe that the countries of the region are taking the situation better than in other times. However, as they still depend on what is happening outside, the next few years will be very difficult for them Latin America.

—How are the effects of inflation reflected on citizens?

The inflation always punishes people with less economic power. This is reflected in unemployment, which is even worse. In general terms it will be very negative for countries. We will have to live with those impacts that will come from the outside.

—Informality in Peru is about 76%. The Ministry of Labor and Employment Promotion stressed that 11 million Peruvians work informally. What can they expect in the coming years? Other years in which it will be very difficult for them to enter the formalities?

The most important short-term thing is that active social policies are implemented by the state. The second thing is to insist that the education system is the best vehicle for young people, digital education, because the infrastructure of work has changed in recent years. This is the essential question. Education, digital specialization and financial education.

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—AFP reform has recently been proposed in Chile. The Government is proposing individual funding, a 6% social security contribution from employers and a State contribution. What impact can be expected in the region? In Peru, for example, the debate has not yet reached that point.

There are no absolute solutions. There are all very complex solutions. Private security is part of the solution, but not only. In Uruguay we had a mixed contribution system: compulsory state insurance for all citizens and an individual contribution system as a means of compensation. It is under review today. I think things will veer towards the Uruguayan model, with the presence of the state in the sense of a universal pension and, at the same time, the promotion of individual compensation.

It’s not a perfect system, that’s why they are changing it, but it left the impression that there was a need for a public system and a private system at the same time. Then it will have to be adapted to the different realities of the region.

—We talked about changes in the macroeconomic management of the economies of the region, changes in the field of work, in the pension system, among others. Are the new governments of the region prepared to face this situation?

You said there is a trend towards leftist governments. usually inside Latin America The consensus has been established that the market and the private sector play a very important role, but there is also a public sector that must be there to regulate. So we have a consensus that prioritizes social issues within a framework where the public and the private coexist. This is the great achievement of the last few years Latin America.

—Representatives from the Organization of American States (OAS) High-Level Commission this week They have come to Peru to give their conclusions on the democratic order in which we live. What expectations do you have from this visit?

I don’t know the subject in detail, but the OAS is the institution that was created for this. I think it is very important for the organization to help the country solve its problems.