A Marathon, Not a Sprint: Peru Needs Fiscal Reforms to Quell High COVID-19 Death Rate

By Laura Adriaensens and Sergio Chaparro Hernández

Laura Adriaensens,LL.M. in International Legal Studies at New York University (NYU) School of Law, Fulbright and BAEF Fellow, M. A. Schwind Scholar. Sergio Chaparro Hernández is Program Officer at the Center for Economic and Social Rights* (www.cesr.org)

Intercultural bilingual school at Andahuaylas province, Peru. Photo courtesy Sergio Chaparro Hernández (CESR)

ANTWERP, Belgium / BOGOTA, Colombia, Sep 11 2020 (IPS) - “It’s a major paradox, no?” asks Hugo Ñopo, a researcher at the Peruvian think tank Group for the Analysis of Development (GRADE). Since the beginning of the pandemic, Peru has presented itself as an example for the region: it quickly implemented drastic prevention measures, followed scientific recommendations and prepared an economic support plan for the most vulnerable segments of the population.

Nevertheless, the country has become a hotspot for cases of Covid-19, which has led to desperate situations in many cities and regions. Peru has confirmed 28,000 deaths and more than 600,000 infections from Covid-19 by the end of August. With these numbers, the country has the largest number of registered deaths per million residents in the entire world.

Furthermore, according to other data, the official numbers might even understate the true extent of the pandemic. “Peru had an early start, but getting into the game first is no guarantee for success,” states Ñopo. “You have to run the race, and this is a marathon.”

The metaphor of a marathon is a good starting point to understand why Peru has had such difficulty addressing the current public health crisis, despite the efforts made by its government. Behind a facade of economic success, the country is still plagued by extremely high levels of inequality.

For decades, Peru has been one of the Latin American countries with the lowest investment in social policies. This has led to deep disparities in the realization of social rights, including the rights to health and education. Today, the enjoyment of these rights is characterized by structural deprivations for many in the midst of enormous privileges for a small elite.

In particular, Peru has faced a critical social fracture in relation to its many Indigenous peoples, whose enjoyment of rights and social services remains abysmally low. In 2019, poverty rates among the population with an Indigenous first language nearly doubled the poverty rate of those who speak Spanish as their first language. In rural areas, the poverty rates of Indigenous language speakers are even higher.

The measures taken by President Martín Vizcarra in response to the pandemic are not enough to remedy these structural inequalities, which have existed for decades. Rather than a short sprint, reforms in the long term are needed.

Health finances require intensive care

A 2019 study undertaken by the Center for Economic and Social Rights examines the role of tax policy in guaranteeing socioeconomic equality and human rights. The report finds that the persistence of high levels of inequality in Peru is explained, to a large extent, by the absence of fiscal policies that allow for adequate financing of programs such as health and education programs that are crucial to the guarantee of social rights.

As the economic expansion fueled by the commodities boom grinds to a halt, serious questions arise about the sustainability of the Peruvian economic model and the sufficiency of its investment in rights and services.

Peru has one of the lowest tax revenue collection rates in Latin America, and the State has taken little action in confronting tax evasion and avoidance, which has caused an estimated loss of 7.5% of GDP. This has reinforced the privileged position of wealthy people with greater contributive capacity while displacing the tax burden on to the rest of the population. In addition, the lack of transparency, participation, and accountability has eroded tax morale and citizen trust in state institutions.

The Peruvian health system was already marked by serious deficiencies long before the pandemic started. The State’s policy regarding cancer care illustrates this. Cancer has become the leading cause of death by disease in Peru, with 90 persons dying from this disease every day.

Although the cancer incidence rate in Peru remains comparatively low in the international context, the risk of dying from cancer before age 75 is higher than the global average, despite Peru being an upper-middle income country.

This shows that the health system does not effectively reduce these risks, particularly for the most disadvantaged populations. The divergent experiences of patients with cancer dramatically reflect the costs of inequality and illustrate how funding decisions have life or death consequences for some.

Teresa Rodríguez, a survivor of cervical cancer from Chimbote, calls out the lack of oncologists in her region: “Other women in the same situation should not have go through this. If my illness had been detected in time, it would not have reached this severity.”

As with Teresa, the poorest people tend to be diagnosed in more advanced stages of illness and face greater barriers to accessing adequate and prompt treatment. This is a consequence of Peru’s fragmented system of health insurance, as well as the absence of specialized health services to diagnose and treat cancer in the more rural and remote departments of the country.

Although Peru established Plan Esperanza in 2012, a public program for the prevention and treatment of cancer with notable achievements, this effort was compromised when the total budget for cancer care was cut down by a sixth in 2019. If this trend continues, it is likely that the achievements of the program will be reversed.

However, the money necessary to finance the effort properly is within reach – as long as the government is willing to rethink its priorities. Eliminating unnecessary tax incentives, for example, would allow the State to increase by 12 times the resources which it dedicates each year to fight cancer.

The regional differences in the healthcare system throughout Peru have become even more pronounced during the pandemic. Many remote communities have been affected by the virus after contact with state officials or tourists visiting the Amazon region. Indigenous communities have asked the government for help, complaining that they have nothing to protect themselves but banana leaves as facemasks and self-imposed quarantines.

“Despite the fact that we live in a region with dengue, with malaria, with endemic diseases that also take lives, I do not remember any comparable situation to the current one,” states Jorge Carillo. He works as a journalist in Iquitos, a large city in the Peruvian Amazon region, which has been heavily affected by the virus and suffers from a lack of ICU beds, medical material, and personnel.

“Post pandemic there’s a lot to do. And if we don’t changeit may sound a little uglyit doesn’t make sense to even survive the pandemic. After all we’ve seen, staying the same or worse would be unthinkable, wouldn’t it?”

Commitment to intercultural education is proven in the allocation of resources

Notably, the pandemic also risks exacerbating disparities in access to other social services, like education. Peru has long failed to guarantee Indigenous peoples culturally appropriate education, which has reinforced racial segregation and gender inequality.

Over the past several years, policies were adopted supporting bilingual, intercultural education for Indigenous children, as a promising step to ensure their access to education. However, the money dedicated to translating these policies into reality is still far from adequate: in 2017, the budget for intercultural education took up only 0.6 per cent of the education allocation, and a mere 0.1 per cent of total public spending.

“I really would like more budget to be allocated for intercultural education. Education should be more important, because without education there is no progress,” said Maruja Pérez, a teacher from an intercultural bilingual school in the Andahuaylas province.

The COVID-19 pandemic will likely further widen the gaps across ethnicities in access to and quality of education, mainly because of the lack of internet connectivity and adequate alternatives to in-person classes in Indigenous communities. In 2018, only 15.9% of Indigenous women and 24.3% of men had internet access, compared to 56.7% of non-Indigenous women and 61.2% men.

While the Peruvian government has provided rural households with access to tablets and launched the “Learning from Home” strategy (Aprendo en Casa) aiming to reach Indigenous children through TV and radio lessons in Indigenous languages, the accessibility and quality standards of this strategy are far from those that non-Indigenous households in urban areas enjoy.

The current situation in Peru might seem grim, but there is hope for the future. The Peruvian state could take steps to more proactively mobilize resources sufficient to providing quality public services to all, as there are certainly options available to finance key social policies.

Multinational corporations and international financial institutions also have an important role to play in expanding fiscal policy space and preventing tax abuse and other practices that reduce State revenue. With eliminating unnecessary tax expenditures, for example, the State could increase by 12 times the resources it dedicates each year to fighting cancer, the primary cause of mortality in Peru.

A higher tax revenue, collected from those most able to pay, such as wealthy individuals and powerful corporations, could help to address the impact of Covid-19, achieve the Sustainable Development Goals, and reduce the territorial, racial, ethnic, and gender disparities that have afflicted Peru for decades.

*The Center for Economic and Social Rights (CESR) is an international nongovernmental organization that fights poverty and inequality by advancing human rights as guiding principles of social and economic justice. Working in collaboration with partners around the world, CESR uses international human rights law as a tool to challenge unjust economic policies that systematically undermine rights enjoyment and thereby fuel inequalities. Its international and interdisciplinary staff team is based in New York and Johannesburg comes from the human rights, development and social justice movements in different parts of the world.