Peru's deficit was broadly in line with 2017's target, thus allowing recovering revenue to bode well for 2018's fiscal performance, Moody's has affirmed.
As is known, Peru's Non-Financial Public Sector (NFPS) deficit reached 3.2% of GDP in 2017.
This figure is slightly higher than the Government's 3% target expected because of weaker-than-expected revenue intake.
Nonetheless, tax revenue intake recovered in the fourth quarter of last year and maintained its strong rebound through February 2018.
If this pattern continues —as Moody's Investors Service believes— the Inca country might meet its 2018 deficit target without any additional revenue-enhancing measures.
Corporate sector
It must be noted the quick
power transition guaranteed policy continuity, thus reducing the risk of political uncertainty regarding the possibility of early elections.
"Although the political crisis could weigh on
business confidence and Peru's overall economic performance, dampening private investment in the corporate segment, it will not significantly disrupt commerce and industry," the credit rating agency noted.
Lastly, Moody's indicated economic and political uncertainties may also affect consumer confidence, thus slowing consumption.
Nevertheless, "product and geographic flexibility will help producers of consumer packaged goods and retailers (...) keep their credit quality and ratings largely intact."