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Peru: BCR reports on non-financial public sector operation in Dec 2020

15:24 | Lima, Jan. 20.

In 2020, Peru's fiscal deficit reached 8.9% of GDP —7.3 percentage points higher than in 2019— given the tax and spending measures adopted to mitigate the impact of COVID-19, as well as the effect of a lower economic activity caused by the pandemic, the Central Reserve Bank (BCR) has reported.

In December 2020, the operations of the non-financial public sector registered a deficit of S/20.15 billion (about US$5.57 billion) —a deficit S/9.70 billion (about US$2.68 billion) higher than that recorded in December 2019— as a result of higher non-financial expenditure by the general government (39%), especially current expenditure.

The 6.5% increase observed in the current income of the general government is explained by higher non-tax revenue (30.3%) given the National Fund for the Financing of State Entrepreneurial Activities' (Fonafe) transfer to the Public Treasury (S/1.5 billion = US$415 million), while tax revenue —on the other hand— showed a more moderate fall in recent months and even registered an increase of 7.0% in year-on-year revenues from the VAT.

The increase in current expenditure in all government levels (47.8%) was mainly associated with higher spending due to COVID-19, with transfers for the universal bonus (grants), hiring of health personnel, acquisition of medical supplies, as well as neighborhoods road maintenance and immediate interventions by local governments standing out among them.

There was also an increase of 21.5% in expenditure on gross capital formation at the three government levels, the projects carried out within the framework of the Reconstruction with Changes Program, Arranca Peru (Get off the Ground, Peru), and acquisition of assets within the framework of response actions to face COVID-19 –e.g. the acquisition of mobile devices for education– being worth pointing out.

Editor's note: Information provided by the Central Reserve Bank of Peru.

(END) NDP/MVB

Published: 1/20/2021
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