Peru creara un fondo soberano de $44 billones (usando sus reservas)
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Latin America · Emerging Markets · Currencies
Peru to Set Up Sovereign Wealth Fund Using Record Reserves, Benavides Says
By Fabiola Moura and John Quigley - Dec 6, 2010 6:03 PM ET
Peru plans to set up a sovereign wealth fund, taking advantage of record foreign reserves and metal prices to finance investments in infrastructure and education, Finance Minister Ismael Benavides said.
The Andean country may tap its $44 billion in foreign currency reserves and tax revenue to create the fund before the President Alan Garcia’s term ends in July, Benavides said in an interview in New York today.
“We have not only reserves but extraordinary revenues from mineral exports,” the 65-year-old Benavides said, without providing details about how the fund would work. “We might come up with something in the first quarter next year.”
The fund would be modeled after a $12.8 billion fund Chile created in 2006 to hoard windfall profits from surging copper prices, Benavides said. Peru is the world’s largest producer of silver and second-largest producer of copper after Chile. Metals accounted for 62 percent of exports in the first half of 2010.
Setting aside government savings will help direct resources to areas in need of investment, said Carola Sandy, an economist at Credit Suisse Group AG in New York.
“It will just make the commitment of the government to save any surpluses stronger,” Sandy said in a phone interview from New York.
After three years of surpluses, Peru will run a second straight annual budget deficit this year. The government plans to increase spending next year 8 percent while reducing its fiscal deficit to 1 percent of gross domestic product, from 1.5 percent this year.
Regional Trend
To improve its infrastructure and boost foreign trade and tourism, South America’s sixth-biggest economy requires $37.8 billion of investment, according to a 2008 study by the Peruvian Economics Institute, a Lima-based research group.
Colombian President Juan Manuel Santos has said he plans to create a dollar-denominated sovereign wealth fund using royalties from oil and coal, dividends from state oil company Ecopetrol SA and tax revenue.
Peru will use some of the funds from a record $2.5 billion international bond sale last month for infrastructure spending, after using $1.5 billion to pre-pay debt, Benavides said.
The Nov. 10 sale of sol and dollar-denominated bonds to 70 investors has satisfied demand for Peruvian debt and will help ease pressure on the sol, which rose to a two-year high in September, Benavides said.
Currency Appreciation
The government doesn’t see the need to implement capital controls to temper gains in the sol, which will see a “very small appreciation” next year, Benavides said.
The currency may strengthen to 2.81 per U.S. dollar this month, and may appreciate to 2.76 next year “at the most,” he added. The sol gained 0.1 percent to 2.8203 per dollar at 5 p.m. New York time.
“The central bank has applied quite successful policies, buying excess dollars and issuing CDs and then sterilizing them and they have room to do some more of that,” he said.
The central bank bought almost $9 billion this year to slow gains in the sol, swelling Peru’s foreign currency reserves from $33 billion at the end of last year and $17.3 billion in 2006.
The yield on Peru’s benchmark 7.84 percent sol-denominated bond due August 2020 fell 2 basis points, or 0.02 percentage point, to 5.93 percent, according to Deutsche Bank AG’s local unit.
Growth, Trade
While the $127 billion economy is poised to grow between 8.5 percent and 9.0 percent in 2010 and “possibly 7 percent or above” in 2011, inflation is under control and will end the year at 2.2 percent, “which is quite a bit lower than the target the central bank has set up,” Benavides said.
The central bank targets inflation of 1 percent to 3 percent.
Peru’s economy will continue to expand at an annual rate of 7 percent or more until 2016, Benavides said later at an event with investors organized by the Peruvian-American Association in New York.
The Andean country will export as much as $34 billion and import up to $32 billion in goods in 2010, Benavides said.
“The trade balance is not as huge as one would think and we have a slightly negative current account balance,” he added. “These factors are not pressing on the sol.”
Public Service, Experience
Benavides, whose grandfather Oscar Benavides was president of Peru in the 1930s, was appointed finance minister Sept. 14. His predecessor, Mercedes Araoz, will be the presidential candidate for the ruling Apra party in April’s elections.
Benavides headed Banco Internacional del Peru, the country’s fourth-largest bank, for 13 years from 1994 to 2007, after previously managing state development bank Corporacion Financiera de Desarollo SA.
Before becoming Garcia’s fourth finance minister since 2006, Benavides was a senior adviser to Deerfield, Illinois- based CF Industries Holdings Inc., the world’s second-largest producer of nitrogen fertilizer.
Benavides worked as a cashier at Citigroup Inc. while studying for a master’s in business administration from the University of California at Berkeley.
His uncle, Alberto Benavides, is president of Cia. de Minas Buenaventura SA, Peru’s largest precious metals producer.
Sustainable Growth
Peru’s government tapped three years of fiscal surpluses to implement a $4.8 billion economic stimulus in 2009 after a global recession curbed demand for the Andean country’s metals, fishmeal and natural gas.
Copper and silver prices have more than doubled since 2008, gold has climbed 60 percent and zinc has jumped 51 percent.
Peru, like other commodity exporters in Latin America, needs to invest in infrastructure and education to ensure economic growth is sustainable, said Bertrand Delgado, an economist at Roubini Global Economics LLC in New York.
“The worst thing that can happen is that the currency overshoots and then remains overvalued for a prolonged period of time and productivity gains are limited,” Delgado said in a phone interview. “You run the risk of distorting the non- traditional export sector or value-added export sector, which creates jobs,” and helps sustain growth, he said.
To contact the reporters on this story: Fabiola Moura in New York at
fdemoura@bloomberg.net; John Quigley in Lima at
jquigley8@bloomberg.net