April 4, 2018 / 8:30 PM / in 6 months

Peru's new finance minister eyes cuts to 'superfluous' spending

LIMA (Reuters) - Peru’s new finance minister said on Wednesday that he would work to cut “superfluous” government spending and increase investment in infrastructure to support underperforming economic growth.

FILE PHOTO: Peru's President Martin Vizcarra and new Finance Minister David Tuesta wave during the swearing-in ceremony at the government palace in Lima, Peru April 2, 2018. REUTERS/Guadalupe Pardo

David Tuesta also promised “cautious” changes to the tax system in a bid to raise collection that has slumped in recent years, but offered no details.

“We have to open up fiscal space with a rapid restructuring of state spending, cutting current spending focused on superfluous spending ... to create resources for investment,” Tuesta told a news conference. “We have a lot of luxuries that we shouldn’t have in a developing country.”

Tuesta was sworn in as part of President Martin Vizcarra’s first cabinet this week, taking the reins of an economy that has been hit by a political crisis that culminated in former President Pedro Pablo Kuczynski resigning last month.

A former BBVA economist and director for Latin America’s CAF development bank, Tuesta said public investments would have a “multiplier effect” on economic growth.

Tuesta added that he would try to keep to the previous government’s economic growth target of 4 percent for 2018 but that he hoped to raise annual growth to 5 percent in following years.

Reporting by Teresa Cespedes; Writing by Mitra Taj; Editing by Peter Cooney and Rosalba O'Brien

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