:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/YF56V3LXJZAVNAL3QK7FKBWQSI.jpg "Castilla on another AFP withdrawal: 'The money people needed has already been given' 1")
The former owner of Ministry of Economy and Finance (MEF), Luis Miguel Castillewas against the legislative proposals which propose to authorize a further withdrawal from the pension funds and detailed its various implications.
The shared views of two former ministers on the economic aspect of the 1993 Constitution
Luis Miguel Castilla, executive director of the Videnza Institute, pointed out that the principles of the current Magna Carta protect the country from the excesses of the government in power and grant greater autonomy to the RBC. However, Pedro Francke, a professor at the PUCP, believed that the neoliberal economic model has not solved discontent and social inequalities in Peru.
As we know, in the Congress A series of bills have been introduced proposing new provisions for these resources. Among them, one offers the release of up to 4 Fiscal Units (UIT), equivalent to S/19,800 of the funds managed by the AFPs.
The former official explained that, if it materializes, it would be the seventh approved withdrawal in the country and added some precedents that also observe the progress of this measure.
How do I know how much money I have in my AFP?
Knowing the balance, movements and profitability of your pension fund is very simple; however, you will need to know which of the four AFPs you are affiliated with.
“With this, it would be the seventh retirement of the pension funds. And this happens when the Minister of Economy (Alex Contreras) has already said this quite clearly (which is not positive), even the constitutional Court (TC) defined this last parameter, that when we are in a disaster, read a pandemic, these withdrawals could be justified,” commented Castilla in an interview with RPP.
Previously, Minister Contreras had called the proposals for new withdrawals “populist” and “negative” for those affiliated to the pension system. In addition, he “regretted” that with the disbursements made previously, he was “reduced to the minimum expression of the Private pension system (SPP),” leaving thousands of Peruvians exposed in their old age.
Castilla recalled that, if this withdrawal were approved, it would have an impact on the State’s borrowing capacity and, in this sense, would also affect the progress of the closure social gaps by means of the public investment.
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“(Also) it happens that, if this withdrawal were allowed, it threatens the possibility of the AFPs buying bonds from the government and it makes it much more expensive for the government to finance itself. It reduces the room for maneuver of the State, who has to spend more money to pay higher interest rates instead of financing the public works“said the former minister.
Precisely on this point Contreras spoke out last week, recalling that they are the pension funds natural buyers when the government wants to sell a bond.
“Additional withdrawals from pension funds take liquidity from the market,” commented the current director of the MEF.
Castilla also said that those who would benefit from this withdrawal would not be those with fewer resources, since this group would no longer have any balance remaining in their pension funds after all previous withdrawals. In this sense, the orientation of this proposal would be considerably distorted.
“There is a problem that has not made itself felt: all the money people need has already been given. Those who have balances remaining in their pension funds These are the people with the highest incomes. It is therefore a totally populist and demagogic policy,” Castilla stressed.
The former official added that by approving a new withdrawal, they would not only tackle the sound management of public finances, but also the financing capacity to execute Infrastructure which contributes to the closure of social gap.
“Risk rating agencies have already warned that if there is a seventh withdrawal, that the private savings (space) that funds the Infrastructure in the long term and would make state funding much more onerous and, therefore, private sector“, accurate.
At another point, Castilla indicated that currently the issue of pensions is being discussed around the world and that it is very important to promote policies that go against initiatives that propose to generate charges for taxpayers long-term.
“The question of pensions is very important because, in a way, it is about ‘bread for today and hunger for tomorrow’. And these policies (to approve new withdrawals), what they add is a much greater burden on future taxpayers and families who have to bear this payment of pensions and health care for the elderly. So it is worth being more rigorous (when discussing these proposals,” the former minister stressed.