Moody's: Fiscal trajectory adjustment to speed up construction sector in Peru

12:58 | Lima, Dec. 27.

Moody's Investors Service Vice-President Jaime Reusche on Friday estimated that the Urgency Decree 032-2019 will help boost the construction sector in the following years, due to the increased fiscal space that will be available.

"The urgency decree will speed up the stricken construction sector, and if infrastructure spending is carried out in a sustained and efficient way, this will provide a stimulus to the economy," he told Andina news agency.

Reusche affirmed that this stimulus could also trigger private investment, which may have a positive impact on potential growth.

According to Urgency Decree 032-2019 published in El Peruano official gazette, the fiscal deficit for 2021 will likely be 1.8% of GDP, 1.6% for 2022, 1.3% for 2023, and 1% for 2024.

This measure will make the fiscal deficit rise in the 2021-2023 period by 1.7 percentage points of GDP (part of the 2.3 percentage points that were not used during 2018-2019).

In this regard, he affirmed that Peruvian authorities maintain confidence in the markets despite the postponement of fiscal goals.

"Changing the fiscal trajectory is always a concern since we always face the temptation of not taking deficit-reduction measures, but Peruvian fiscal authorities always deserve the benefit of the doubt because of the credibility they have earned over more than 20 years," the Moody's senior credit officer stated.


Published: 12/27/2019
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