The international agency
, which is supported by low levels of government debt burden and its solid net external position.
This situation confirms the strength of Peruvian economy despite the high volatility within the local and international framework. Thus, S&P reaffirms Peru's investment grade.
In the opinion of S&P, a decreasing fiscal deficit is likely during the years 2022-2025, with a net general government debt averaging 1.9% of GDP. The agency also expects gross government debt to remain slightly above 30% of GDP and net debt to reach around 24% of GDP by 2025.
Peru's debt-to-GDP ratio is well below the 'BBB' median of 55.1% for 2022. S&P expects Peru's external indicators to remain solid, plus continuity in monetary policy, as well as a gradual moderation of inflation.
S&P mentioned that the government has indicated its intention to maintain continuity in macroeconomic policy, expecting moderate fiscal and monetary policies to persist, helping maintain economic stability.
Likewise, S&P expects metal prices to remain a favorable external factor for Peru, contributing to growth in the medium term. Copper prices remain above their long-term average despite the sharp downturn recently from slower global economy.
"In this regard, Peru remains the second-best credit rating in Latin America, ranking two steps above investment grade, which allows access to international markets under favorable conditions, both for the public and private sectors," the
Ministry of Economy and Finance (MEF) underscored in a
press release on Wednesday.
"On the other hand, Peru is one of the first emerging countries to determine fiscal rules for the following years after the impact of COVID-19. This is based on the country's long history of responsible public finances management. Thus, in accordance with Law No. 31541, the fiscal deficit and public debt will gradually converge to comply with their medium-term fiscal rules (1% of GDP and 30% of GDP, respectively)," it added.
Besides, S&P estimated that there could be upside in mining production after the completion of key investment projects in 2022. In this sense, the recent confirmation of mining projects will also boost mining investment in the medium term with commitments worth around US$9 billion.
Going forward, S&P pointed out that Peru can improve its credit rating if predictable policymaking and effective economic management sustain a turnaround in investor confidence and materially improve Peru's growth prospects, accompanied by a less vulnerable debt composition.
Lastly, the
MEF affirmed that the Government of Peru will continue with its commitment to prioritize macroeconomic and financial stability, fiscal discipline, as well as institutional strengthening so as to promote sustained economic growth, close the country's structural gaps, boost competitiveness and productivity, as well as improve the population's well-being.