{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with Peru",
  "publication": "IMF News, March 22, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/03/22/imf-executive-board-concludes-2021-article-iv-consultation-with-peru",
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  "summary": "The Executive Board concluded the Article IV consultation with Peru on March 19, 2021.",
  "publishDate": "2021-03-22",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Executive Board concluded the Article IV consultation with Peru on March 19, 2021.\n- Peru entered the COVID-19 pandemic with very strong economic fundamentals and institutional policy frameworks, including:\n  - Fiscal rules that helped contain government debt within the 30-percent-of-GDP ceiling until 2019.\n  - An inflation targeting framework with low and stable inflation.\n  - Declining financial dollarization and strong supervisory and macroprudential policies preserving financial stability.\n- Growth averaged 5.2 percent in the last 15 years prior to the pandemic, poverty was halved, and external vulnerabilities were reduced."
    },
    {
      "heading": "Economic impact of COVID-19 and recovery prospects",
      "content": "- The COVID-19 shock led to very strict containment measures and a sharp decline in GDP in the second quarter of 2020, described as one of the deepest in the world.\n- The recession was accompanied by large falls in employment and participation, particularly among women, and increasing informality and poverty.\n- Coordinated fiscal, monetary, and financial sector policy responses stabilized financial markets, contained insolvencies, and supported recovery in the second half of 2020.\n- Output contraction in 2020 narrowed to -11.1 percent, with core inflation within the target range.\n- Baseline 2021 projection assumes the health emergency is brought under control by end-March and restrictions are gradually eased in the second quarter; under this scenario:\n  - GDP growth would reach 8.5 percent in 2021.\n  - The outlook is highly uncertain and downside risks prevail, but policy buffers are ample."
    },
    {
      "heading": "Executive Board assessment",
      "content": "- Directors noted Peru’s very strong economic fundamentals and policy frameworks entering the pandemic and commended authorities for their decisive response to mitigate the crisis.\n- Directors encouraged continued efforts to limit scarring effects, promote a robust recovery, and implement structural reforms to achieve broader, more inclusive growth.\n- Fiscal policy guidance:\n  - Avoid premature withdrawal of fiscal support to help contain the pandemic, mitigate its impact on poverty, and support recovery.\n  - Once the crisis abates, priority should be given to addressing fiscal risks and rising spending pressures.\n  - Anchor fiscal policy to a credible medium-term framework.\n  - Revenue mobilization is key to preserving fiscal sustainability; Directors welcomed the authorities’ request for Fund Technical Advice to identify measures to increase fiscal revenues.\n  - Any recalibration of fiscal rules should preserve debt sustainability, strengthen credibility, and be clearly communicated.\n- Monetary and financial sector guidance:\n  - Monetary policy should remain accommodative while macroprudential policies should encourage banks to focus on clients' viability.\n  - Greater exchange rate flexibility would have benefits, especially as financial dollarization continues to decline.\n  - Directors noted that the banking system remains resilient and commended progress implementing the 2018 Financial Sector Assessment Program recommendations; they encouraged moving ahead with remaining recommendations, especially legislative and regulatory reforms to strengthen financial sector supervision.\n- Structural reform priorities:\n  - Boost productivity by improving education, enhancing infrastructure, facilitating labor reallocation, and improving the business climate.\n  - Enhance social protection while reducing incentives to informality from the tax-benefit system, including through investment in health care and pension reform.\n  - Strengthen governance with additional transparency in the public sector and robust anti-corruption and AML/CFT frameworks."
    },
    {
      "heading": "Key statistics and projections (as reported)",
      "content": "- Social Indicators\n  - Poverty rate (total) 1/: 2018: 22.3; 2019: 21.7; 2020: 27.5; 2021: ...\n  - Unemployment rate for Metropolitan Lima (period average): 2018: 6.7; 2019: 6.6; 2020: 13.6\n- Production and prices (Annual percentage change; unless otherwise indicated)\n  - Real GDP: 2018: 4.0; 2019: 2.2; 2020: -11.1; 2021: 8.5; 2022: 5.2; 2023: 4.8\n  - Real domestic demand: 2018: 4.2; 2019: 2.4; 2020: -9.8; 2021: 9.4; 2022: 5.4\n  - Consumer Prices (end of period): 2018: 1.9; 2019: 2.0; 2020: (value not listed)\n- External sector\n  - Exports: 2018: 8.0; 2019: -2.8; 2020: 3.7\n  - Imports: 2018: 8.1; 2019: -1.9; 2020: -15.6; 2021: 19.9; 2022: 5.0\n  - External current account balance (% of GDP): 2018: -1.7; 2019: -1.5; 2020: 0.5; 2021: -0.4; 2022: -0.7; 2023: -1.0\n  - Gross reserves (In billions of U.S. dollars): 2018: 60.3; 2019: 68.4; 2020: 74.9; 2021: 75.1; 2022: 75.0\n  - Percent of short-term external debt: 2018: 363.5; 2019: 432.6; 2020: 496.4; 2021: 518.7; 2022: 505.4; 2023: 494.2\n- Money and credit (Corresponds to depository corporations; Foreign currency stocks are valued at end-of-period exchange rates)\n  - Broad money: 2018: 9.6; 2019: 8.8; 2020: 13.0; 2021: 7.8\n  - Net credit to the private sector: 2018: 10.3; 2019: 6.4; 2020: 14.5; 2021: 6.2\n- Public sector (In percent of GDP; unless otherwise indicated)\n  - NFPS Revenue: 2018: 24.5; 2019: 24.8; 2020: 22.1; 2021: 22.4; 2022: 23.1\n  - NFPS Primary Expenditure: 2018: 25.5; 2019: 25.0; 2020: 29.3; 2021: 25.6; 2022: 24.7; 2023: 24.0\n  - NFPS Primary Balance: 2018: -0.2; 2019: -7.2; 2020: -3.3; 2021: -1.6; 2022: -0.9\n  - NFPS Overall Balance: 2018: -2.3; 2019: -8.8; 2020: -5.0; 2021: -3.4\n- Debt\n  - Total external debt (In percent of GDP): 2018: 34.6; 2019: 34.7; 2020: 43.1; 2021: 39.0; 2022: 36.6; 2023: 34.2\n  - NFPS Gross debt (including Rep. Certificates): 2018: 26.2; 2019: 27.1; 2020: 35.4; 2021: 36.2; 2022: 36.7\n  - External (portion of NFPS Gross debt): 2018: 8.9; 2019: 15.0; 2020: 14.1; 2021: 13.9; 2022: 13.4\n  - Domestic (portion of NFPS Gross debt): 2018: 17.3; 2019: 18.6; 2020: 20.3; 2021: 21.3; 2022: 23.2\n- Savings and investment\n  - Gross domestic investment: 2018: 21.5; 2019: 18.8; 2020: 21.1; 2021: 22.0\n  - National savings: 2018: 20.0; 2019: 19.3; 2020: 20.7\n- Memorandum items\n  - Nominal GDP (S/. billions): 2018: 740; 2019: 770; 2020: 712; 2021: 815; 2022: 872; 2023: 929\n  - GDP per capita (in US$): 2018: 7,000; 2019: 6,958; 2020: 6,084; 2021: 6,678; 2022: 7,051; 2023: 7,389\n\nSource: Press Release No. 21/76, IMF Communications Department, March 22, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Peru and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/03/22/imf-executive-board-concludes-2021-article-iv-consultation-with-peru"
    }
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    "Published: March 22, 2021",
    "The Executive Board concluded the Article IV consultation with Peru on March 19, 2021.",
    "Peru entered the COVID-19 pandemic with very strong economic fundamentals and institutional policy frameworks, including:",
    "Growth averaged 5.2 percent in the last 15 years prior to the pandemic, poverty was halved, and external vulnerabilities were reduced.",
    "The COVID-19 shock led to very strict containment measures and a sharp decline in GDP in the second quarter of 2020, described as one of the deepest in the world.",
    "The recession was accompanied by large falls in employment and participation, particularly among women, and increasing informality and poverty.",
    "Coordinated fiscal, monetary, and financial sector policy responses stabilized financial markets, contained insolvencies, and supported recovery in the second half of 2020.",
    "Output contraction in 2020 narrowed to -11.1 percent, with core inflation within the target range.",
    "Baseline 2021 projection assumes the health emergency is brought under control by end-March and restrictions are gradually eased in the second quarter; under this scenario:",
    "Directors noted Peru’s very strong economic fundamentals and policy frameworks entering the pandemic and commended authorities for their decisive response to mitigate the crisis.",
    "Directors encouraged continued efforts to limit scarring effects, promote a robust recovery, and implement structural reforms to achieve broader, more inclusive growth.",
    "Fiscal policy guidance:",
    "Monetary and financial sector guidance:",
    "Structural reform priorities:",
    "Social Indicators",
    "Production and prices (Annual percentage change; unless otherwise indicated)",
    "External sector",
    "Money and credit (Corresponds to depository corporations; Foreign currency stocks are valued at end-of-period exchange rates)",
    "Public sector (In percent of GDP; unless otherwise indicated)",
    "Debt",
    "Savings and investment",
    "Memorandum items",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Peru and the IMF](http://www.imf.org/external/country/PER/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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