Moody's says Peru's fiscal deficit is unlikely to reach the projected 3.5% of GDP —envisaged under the Multiannual Macroeconomic Framework. In fact, it is projected to be lower and stand at 3% because of increased revenues.
"The deficit is under 3% of
GDP and is likely to continue expanding to again reach around 3%, but it's unlikely to be equal to 3.5% this year, despite the fact that
strong investment has been put in," Moody's Investors Service Vice-President Jaime Reusche stated.
The Economy and Finance Ministry (MEF) predicts the fiscal deficit will rise to 3.5% of
GDP this year and then gradually decline to 2.9% in 2019, 2.1% in 2020, and 1% in 2021.
Reusche informed that fiscal deficit ended 2017 at 3.1% of
GDP due to lower revenues. However, the picture is different now.
"
Domestic demand is recovering and, as a result, revenues are experiencing
strong growth again. This has resulted in a favorable small reduction in the deficit," he said in an interview with Andina news agency on Wednesday.
This strong growth in revenues is in line with the fiscal adjustment, which is quite favorable.
"I've heard
public investment spending is going down, but that's a lie. It's increasing on the gross capital formation side, while capital transfers drop," he added.
(END) MDV/JJN/RMB/MVB
Published: 7/5/2018