Peru's fiscal deficit likely to shrink starting 2018

11:15 | Lima, Aug. 17.

Peru's fiscal deficit may start to decline in 2018, as it will end up below the level achieved last year (3.2%), Deputy Economy Minister Hugo Perea projected.

"The fiscal consolidation process announced by the Government was expected to start in 2019 but it could begin this year and this should be noted (…). Everything suggests this year's deficit will be lower than last year's," he said in his speech at Peru CFO Summit 2018.

This explains the fact that credit rating agencies have reaffirmed Peru's investment-grade ratings with a stable outlook, unlike other deteriorated economies in the region.

"All major credit rating agencies have maintained Peru's credit rating, and that is partly due to the credibility of Government actions taken to preserve fiscal sustainability," he pointed out.

The deputy minister noted that a major recovery in State revenues —with double-digit growth rates in real terms— has been underway for several months.

According to the official, the recovery in economic activity and improved prices of commodities —exported by the country— contribute to this scenario.

"There is a very strong correlation between the evolution of commodity prices and revenues," Perea expressed.

"Plus, the tax postponement practice adopted in the second quarter —due to the Coastal El Niño phenomenon— is becoming unusual," he added.


Published: 8/17/2018