The $25 million loan will help promote innovation and business efficiency
The Inter-American Development Bank (IDB) has approved a third policy-based loan of $25 million designed to boost the competitiveness of Peruvian businesses. These resources will help consolidate reforms aimed at improving the business climate, lowering entry and market-access barriers and encouraging innovation.
Logistics costs account for 32 percent of the value of products produced by Peruvian companies, compared to an average 9 percent for the countries of the OECD. What’s more, transaction costs that Peruvian companies face just to operate remain high.
Besides dealing with transport costs, this project seeks to reduce the time and cost of red tape involved in opening companies. Other goals are to streamline customs and foreign trade procedures and to improve access to financing through real estate guarantees.
To support productive development, the program will help consolidate the work of the National Competitiveness Council and implement the Competitiveness Agenda. It will also strengthen the institutional framework for innovation, including the implementation of the new model for the Centers for Technological Innovation and new tools to support innovation and productive development.
“To achieve growth sustainability over the medium and long term, Peru must seek to continue increasing productivity through reforms that have been implemented to improve the business climate and developing policies that help companies overcome limitations that hinder their productivity,” said Claudia Suaznábar, head of the IDB project team.
The progress of reforms aimed at improving Peru’s competitiveness is reflected in the gradual improvement in the Global Competiveness Index (GCI) of the World Economic Forum (WEF). When the first loan was approved in 2010 the country ranked 78th out of a total of 131 countries. In the period 2013-2014, the GCI placed it 61st out of 148.
The first two loans, approved in 2010 and 2012, focused on the approval of reforms of the legal framework and the carrying out of diagnostic studies to strengthen Peru’s institutions. This latest operation is designed to advance and deepen the implementation of reforms and tools.
This operation is the third of three that are linked technically but financed in an independent way under the modality of a programmatic policy-based loan. The resources come from the bank’s ordinary capital. The executing agency is the Peruvian Economy and Finance Ministry.