Peru fears graft scandal will hit growth

pulse

January 26, 2017 6:35 PM

President Pedro Pablo Kuczynski on Wednesday ordered Odebrecht to pull out of Peru, where it is involved in various major infrastructure projects.

Construction giant Odebrecht is implicated in corruption probes in several Latin American countries, most notably its home market Brazil

Perus government has warned that a graft scandal involving disgraced Brazilian construction giant Odebrecht will trim its economic growth this year.

Its growth outlook is much stronger than the average for the Latin America region, which the International Monetary Fund expects to grow just 1.2 percent this year.

But Peru's Economy Minister Alfredo Thorne on Wednesday warned that the government's current forecast of 4.8 percent growth would likely have to be revised down if Odebrecht is kicked out of the country for bribery.

President Pedro Pablo Kuczynski on Wednesday ordered Odebrecht to pull out of Peru, where it is involved in various major infrastructure projects.

Odebrecht is implicated in corruption probes in several Latin American countries, most notably its home market Brazil.

In Peru, it has admitted paying $29 million in bribes to secure public contracts. On Monday, the government stripped it of a $7 billion gas pipeline contract.

"It is hard to believe that we will grow 4.8 percent in 2017. We may grow a whole percentage point less than that," Thorne told a press conference.

"We have said that due to the Odebrecht effect, which includes not only the southern gas pipeline but other projects too, we were going to suffer a negative impact (on growth) of between half and one percentage point" of growth, he said.

The loss of Odebrecht's investments in the country could mean job losses but Thorne insisted Peru was fiscally sound.

"The departure of one company does not mean we do not have alternatives."

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