Peru will increase its business productivity and competitiveness through a $50 million program funded by the Inter-American Development Bank (IDB).

The project seeks to improve the business environment and strengthen institutions, policies and tools to support business competitiveness, productive development and innovation.

According to the Global Competitiveness Index published by the World Economic Forum for 2009–2010 Peru ranked 78 out of 131 countries. While Peru’s competitiveness ranking rose by five places from the previous year, institutional problems, infrastructure weaknesses and deficiencies in the areas of innovation and business management continue to constrain competitiveness, according to the Index.

To address these challenges, Peru will use the IDB loan to advance its plans to implement and consolidate microeconomic reforms with the goal of reducing transaction costs faced by businesses in areas such as opening and operation of companies, customs clearance and access to financial instruments such as security warrants.

Furthermore, in order to help companies overcome the difficulties in trying to improve their productivity, and facilitate the use of new free trade agreements already in place or in the process of being validated (U.S., Chile, China, EU, etc.), the project will finance measures to improve the effectiveness, efficiency and coordination of supporting tools for productive development. These initiatives will include an increase in public investments in science, technology and innovation, and the development and adoption of industry standards by improving the range and effectiveness of the National Quality System.

The Ministry of Economy and Finance is the executing agency, responsible for technical coordination with ministries in each sector involved in monitoring the program. The IDB loan, with a one-year maturity, includes a grace period of five years and a variable interest rate based on the Libor.