{
  "title": "IMF Executive Board Concludes 2022 Article IV Consultation with Peru",
  "publication": "IMF News, May 2, 2022",
  "sourceUrl": "https://www.imf.org/en/news/articles/2022/05/02/pr22138-imf-executive-board-concludes-2022-article-iv-consultation-with-peru",
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  "summary": "IMF Executive Board Concludes 2022 Article IV Consultation with Peru",
  "publishDate": "2022-05-02",
  "sections": [
    {
      "heading": "Economic activity and pandemic impact",
      "content": "- Real GDP rose 13.3 percent in 2021, rebounding strongly from a deep downturn in 2020.\n- Real GDP surpassed its pre-pandemic level but remains below its pre-pandemic trend.\n- Labor force participation and total employment haven’t fully recovered.\n- Poverty increased significantly in 2020 and is still above pre-pandemic levels despite some improvement in 2021.\n- Progress in the vaccination campaign allowed a gradual lifting of Covid-19 mobility restrictions.\n- Volatility in financial markets has increased amid heightened political uncertainty."
    },
    {
      "heading": "Outlook and risks",
      "content": "- Growth projection: 3.0 percent in 2022 as external conditions tighten and policy stimulus is withdrawn.\n- Balance of risks is tilted to the downside.\n- External risks identified:\n  - Ongoing geopolitical tensions.\n  - A sharp tightening of global financial conditions.\n  - Extended global supply chain disruptions.\n  - An abrupt growth slowdown in China, Peru’s main trade partner.\n- Domestic risks identified:\n  - New Covid outbreaks that could prompt reintroduction of containment measures.\n  - Political uncertainty and social unrest that could weigh on private investment.\n- Inflationary pressures could be more persistent, requiring faster tightening of monetary policy.\n- Positive scenario: More rapid progress on containing the pandemic, both globally and domestically, and reduced political uncertainty could result in positive surprises."
    },
    {
      "heading": "Policy assessment and recommendations (Executive Board)",
      "content": "- General assessment:\n  - Directors commended the Peruvian authorities for a decisive macroeconomic policy response in 2020 and strong policy frameworks and buffers.\n  - Directors noted the macroeconomic outlook remains uncertain with elevated external and domestic risks.\n  - Policy mix should balance responding to rising inflation and managing downside risks to growth, considering ongoing impacts on employment and poverty.\n  - Importance of maintaining and further strengthening policy institutional frameworks was underscored.\n- Fiscal policy:\n  - Fiscal policy should remain broadly neutral in the short term.\n  - A gradual consolidation is necessary, encompassing revenue mobilization and expenditure rationalization, including pension reforms, to address emerging spending needs while preserving fiscal sustainability.\n  - Directors welcomed steps to clarify policy intentions by aligning the fiscal rules and the medium-term budgeting framework, and commitment to strengthen the Fiscal Council with IMF technical assistance.\n- Monetary policy and exchange rate intervention:\n  - Further tightening of monetary policy is warranted to bring inflation and inflation expectations back to the target range and help adjust to tighter global financial conditions.\n  - Foreign exchange intervention is warranted to contain excess volatility, but reducing its frequency would facilitate market development and de-dollarization.\n- Financial sector policy:\n  - Directors supported the gradual unwinding of pandemic-era prudential policies in a context of limited financial system vulnerabilities.\n  - Closing remaining regulatory and supervisory gaps and further enhancing systemic risk assessment are important to strengthen financial resilience.\n  - Exploring the introduction of a central-bank digital currency will require a thorough assessment of risks and costs.\n- Structural reforms:\n  - A renewed structural reform agenda in the context of the OECD accession process is critical to mitigate scarring from the pandemic and support a green and inclusive recovery.\n  - Priorities include addressing informality in the labor market (especially among women); more effective public services and greater transparency through civil service reform and anti-corruption measures; and providing a stable and predictable legal and regulatory environment.\n  - Steps are needed to reduce risks from climate change, ease the transition to a low-emission economy, and contribute to global mitigation efforts."
    },
    {
      "heading": "Key statistics and projections (selected)",
      "content": "- Social indicators:\n  - Poverty rate (total): 2019 = 20.2; 2020 = 30.1; 2021 = 22.1.\n  - Unemployment rate (in percent; average): 2019 = 6.6; 2020 = 13.9; 2021 = 10.9.\n- Production and prices (annual percentage change unless otherwise indicated):\n  - Real GDP: 2019 = 2.2; 2020 = -11.0; 2021 = 13.3; 2022 = 3.0.\n  - Output gap (percent of potential GDP): 2019 = -1.6; 2020 = -7.3; 2021 = -0.4; 2022 = -0.3; 2023 = 0.0.\n  - Consumer prices (end of period): 2019 = 1.9; 2020 = 2.0; 2021 = 6.4; 2022 = 4.0; 2023 = 2.3.\n- External sector:\n  - Exports (annual percentage change): 2019 = -2.2; 2020 = -10.6; 2021 = 47.1; 2022 = 16.1; 2023 = 3.4; 2024 = 2.8.\n  - Imports (annual percentage change): 2019 = -1.8; 2020 = -15.6; 2021 = 39.3; 2022 = 17.9; 2023 = 4.7; 2024 = 4.8.\n  - External current account balance (% of GDP): 2019 = -1.0; 2020 = 0.8; 2021 = -2.8; 2022 = -1.5; 2023 = -1.4.\n  - Gross reserves (In billions of U.S. dollars): 2019 = 68.4; 2020 = 74.9; 2021 = 78.5; 2022 = 78.2; 2023 = 77.9; 2024 = 78.9.\n  - Gross reserves (Percent of short-term external debt 5/): 2019 = 428; 2020 = 487; 2021 = 586; 2022 = 561; 2023 = 537; 2024 = 565.\n- Money and credit (depository corporations):\n  - Broad money: 2019 = 8.8; 2020 = 29.0; 2021 = 2.6; 2022 = 8.4.\n  - Net credit to the private sector: 2019 = 14.0; 2020 = 6.3; 2021 = 8.7; 2022 = 7.8; 2023 = 5.6.\n- Public sector (In percent of GDP unless otherwise indicated):\n  - NFPS revenue: 2019 = 24.8; 2020 = 22.0; 2021 = 25.6; 2022 = 24.4; 2023 = 24.3.\n  - NFPS primary expenditure: 2019 = 25.0; 2020 = 29.2; 2021 = 26.6; 2022 = 25.5; 2023 = 25.1; 2024 = 24.5.\n  - NFPS primary balance: 2019 = -0.2; 2020 = -0.8.\n  - NFPS overall balance: 2019 = -8.9; 2020 = -2.6; 2021 = -2.1.\n- Debt:\n  - Total external debt 4/ (percent of GDP): 2019 = 34.7; 2020 = 43.3; 2021 = 46.1; 2022 = 43.5; 2023 = 40.0; 2024 = 37.8.\n  - NFPS gross debt 5/ (percent of GDP): 2019 = 27.1; 2020 = 35.1; 2021 = 35.9; 2022 = 34.4.\n  - External (percent of GDP): 2019 = 8.5; 2020 = 14.9; 2021 = 19.6; 2022 = 19.4; 2023 = 18.5.\n  - Domestic (percent of GDP): 2019 = 18.6; 2020 = 16.3; 2021 = 14.2; 2022 = 15.3; 2023 = 15.9.\n- Savings and investment:\n  - Gross domestic investment: 2019 = 21.0; 2020 = 19.3; 2021 = 21.3; 2022 = 24.7.\n  - National savings: 2019 = 20.0; 2020 = 23.6; 2021 = 23.3; 2022 = 23.0.\n- Memorandum items:\n  - Nominal GDP (S/. billions): 2019 = 771; 2020 = 717; 2021 = 872; 2022 = 958; 2023 = 1,018; 2024 = 1,070.\n  - GDP per capita (in US$): 2019 = 6,963; 2020 = 6,127; 2021 = 6,643; 2022 = 7,034; 2023 = 7,475; 2024 = 7,748.\n\nIMF Executive Board Concludes 2022 Article IV Consultation with Peru — Press Release No. 22/138 (May 2, 2022).\n\n---\n\n\n References\n\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/2022/05/02/pr22138-imf-executive-board-concludes-2022-article-iv-consultation-with-peru"
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    "Published: May 2, 2022",
    "Real GDP rose 13.3 percent in 2021, rebounding strongly from a deep downturn in 2020.",
    "Real GDP surpassed its pre-pandemic level but remains below its pre-pandemic trend.",
    "Labor force participation and total employment haven’t fully recovered.",
    "Poverty increased significantly in 2020 and is still above pre-pandemic levels despite some improvement in 2021.",
    "Progress in the vaccination campaign allowed a gradual lifting of Covid-19 mobility restrictions.",
    "Volatility in financial markets has increased amid heightened political uncertainty.",
    "Growth projection: 3.0 percent in 2022 as external conditions tighten and policy stimulus is withdrawn.",
    "Balance of risks is tilted to the downside.",
    "External risks identified:",
    "Domestic risks identified:",
    "Inflationary pressures could be more persistent, requiring faster tightening of monetary policy.",
    "Positive scenario: More rapid progress on containing the pandemic, both globally and domestically, and reduced political uncertainty could result in positive surprises.",
    "General assessment:",
    "Fiscal policy:",
    "Monetary policy and exchange rate intervention:",
    "Financial sector policy:",
    "Structural reforms:",
    "Social indicators:",
    "Production and prices (annual percentage change unless otherwise indicated):",
    "External sector:",
    "Money and credit (depository corporations):",
    "Public sector (In percent of GDP unless otherwise indicated):",
    "Debt:",
    "Savings and investment:",
    "Memorandum items:",
    "[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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