## IMF Executive Board Concludes 2021 Article IV Consultation with Peru _IMF News, March 22, 2021_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2021 Article IV Consultation with Peru](https://www.imf.org/en/news/articles/2021/03/22/imf-executive-board-concludes-2021-article-iv-consultation-with-peru) ## Other formats - [Markdown version](/en/news/articles/2021/03/22/imf-executive-board-concludes-2021-article-iv-consultation-with-peru/index.md) - [Structured JSON version](/en/news/articles/2021/03/22/imf-executive-board-concludes-2021-article-iv-consultation-with-peru/index.json) - [Bundle manifest](/en/news/articles/2021/03/22/imf-executive-board-concludes-2021-article-iv-consultation-with-peru/bundle-manifest.json) ## Bibliographic details - Published: March 22, 2021 --- ### Overview - 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: - Fiscal rules that helped contain government debt within the 30-percent-of-GDP ceiling until 2019. - An inflation targeting framework with low and stable inflation. - Declining financial dollarization and strong supervisory and macroprudential policies preserving financial stability. - Growth averaged 5.2 percent in the last 15 years prior to the pandemic, poverty was halved, and external vulnerabilities were reduced. ### Economic impact of COVID-19 and recovery prospects - 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: - GDP growth would reach 8.5 percent in 2021. - The outlook is highly uncertain and downside risks prevail, but policy buffers are ample. ### Executive Board assessment - 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: - Avoid premature withdrawal of fiscal support to help contain the pandemic, mitigate its impact on poverty, and support recovery. - Once the crisis abates, priority should be given to addressing fiscal risks and rising spending pressures. - Anchor fiscal policy to a credible medium-term framework. - Revenue mobilization is key to preserving fiscal sustainability; Directors welcomed the authorities’ request for Fund Technical Advice to identify measures to increase fiscal revenues. - Any recalibration of fiscal rules should preserve debt sustainability, strengthen credibility, and be clearly communicated. - Monetary and financial sector guidance: - Monetary policy should remain accommodative while macroprudential policies should encourage banks to focus on clients' viability. - Greater exchange rate flexibility would have benefits, especially as financial dollarization continues to decline. - 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. - Structural reform priorities: - Boost productivity by improving education, enhancing infrastructure, facilitating labor reallocation, and improving the business climate. - Enhance social protection while reducing incentives to informality from the tax-benefit system, including through investment in health care and pension reform. - Strengthen governance with additional transparency in the public sector and robust anti-corruption and AML/CFT frameworks. ### Key statistics and projections (as reported) - Social Indicators - Poverty rate (total) 1/: 2018: 22.3; 2019: 21.7; 2020: 27.5; 2021: ... - Unemployment rate for Metropolitan Lima (period average): 2018: 6.7; 2019: 6.6; 2020: 13.6 - Production and prices (Annual percentage change; unless otherwise indicated) - Real GDP: 2018: 4.0; 2019: 2.2; 2020: -11.1; 2021: 8.5; 2022: 5.2; 2023: 4.8 - Real domestic demand: 2018: 4.2; 2019: 2.4; 2020: -9.8; 2021: 9.4; 2022: 5.4 - Consumer Prices (end of period): 2018: 1.9; 2019: 2.0; 2020: (value not listed) - External sector - Exports: 2018: 8.0; 2019: -2.8; 2020: 3.7 - Imports: 2018: 8.1; 2019: -1.9; 2020: -15.6; 2021: 19.9; 2022: 5.0 - External current account balance (% of GDP): 2018: -1.7; 2019: -1.5; 2020: 0.5; 2021: -0.4; 2022: -0.7; 2023: -1.0 - Gross reserves (In billions of U.S. dollars): 2018: 60.3; 2019: 68.4; 2020: 74.9; 2021: 75.1; 2022: 75.0 - Percent of short-term external debt: 2018: 363.5; 2019: 432.6; 2020: 496.4; 2021: 518.7; 2022: 505.4; 2023: 494.2 - Money and credit (Corresponds to depository corporations; Foreign currency stocks are valued at end-of-period exchange rates) - Broad money: 2018: 9.6; 2019: 8.8; 2020: 13.0; 2021: 7.8 - Net credit to the private sector: 2018: 10.3; 2019: 6.4; 2020: 14.5; 2021: 6.2 - Public sector (In percent of GDP; unless otherwise indicated) - NFPS Revenue: 2018: 24.5; 2019: 24.8; 2020: 22.1; 2021: 22.4; 2022: 23.1 - NFPS Primary Expenditure: 2018: 25.5; 2019: 25.0; 2020: 29.3; 2021: 25.6; 2022: 24.7; 2023: 24.0 - NFPS Primary Balance: 2018: -0.2; 2019: -7.2; 2020: -3.3; 2021: -1.6; 2022: -0.9 - NFPS Overall Balance: 2018: -2.3; 2019: -8.8; 2020: -5.0; 2021: -3.4 - Debt - 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 - NFPS Gross debt (including Rep. Certificates): 2018: 26.2; 2019: 27.1; 2020: 35.4; 2021: 36.2; 2022: 36.7 - External (portion of NFPS Gross debt): 2018: 8.9; 2019: 15.0; 2020: 14.1; 2021: 13.9; 2022: 13.4 - Domestic (portion of NFPS Gross debt): 2018: 17.3; 2019: 18.6; 2020: 20.3; 2021: 21.3; 2022: 23.2 - Savings and investment - Gross domestic investment: 2018: 21.5; 2019: 18.8; 2020: 21.1; 2021: 22.0 - National savings: 2018: 20.0; 2019: 19.3; 2020: 20.7 - Memorandum items - Nominal GDP (S/. billions): 2018: 740; 2019: 770; 2020: 712; 2021: 815; 2022: 872; 2023: 929 - GDP per capita (in US$): 2018: 7,000; 2019: 6,958; 2020: 6,084; 2021: 6,678; 2022: 7,051; 2023: 7,389 *Source: Press Release No. 21/76, IMF Communications Department, March 22, 2021.* --- ## References - [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) _Source: https://www.imf.org/en/news/articles/2021/03/22/imf-executive-board-concludes-2021-article-iv-consultation-with-peru_