{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Peru",
  "publication": "IMF News, May 21, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/05/21/pr-24172-peru-imf-executive-board-concludes-2024-art-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Peru on May 20, 2024",
  "publishDate": "2024-05-21",
  "sections": [
    {
      "heading": "Outlook and Macroeconomic Assessment",
      "content": "- The Executive Board concluded the Article IV consultation on May 20, 2024.\n- Economic recovery context:\n  - The economy is recovering from consecutive climate-related shocks and social turmoil at the beginning of 2023.\n  - Inflation has receded thanks to the central bank’s decisive monetary policy tightening.\n  - The fiscal position and the financial system remain strong.\n  - The country is in a period of relative political stability, but lingering political uncertainty is denting the appetite for pressing reforms to boost potential growth.\n- Growth and inflation projections:\n  - A rebound in growth to 2.5 percent is expected in 2024.\n  - Growth drivers: strong recovery in agriculture and fishing, continued momentum in mining, and a looser monetary policy stance.\n  - Private consumption and private investment: only a moderate recovery expected as nominal wages gradually regain purchasing power and elevated political uncertainty weighs on confidence.\n  - Inflation: as El Niño effects dissipate, inflation would rapidly decline towards the midpoint of the target band, aided by a negative output gap and normalization of supply shocks, with the Central Bank continuing a cautious monetary policy easing cycle.\n  - Current account: envisaged to return to a deficit of 1.1 percent of GDP in 2024 and to stabilize at 1.5 percent of GDP in the medium term.\n- External financing and debt rollover risks are assessed as remaining low."
    },
    {
      "heading": "Risks and Buffers",
      "content": "- Evolving risks are broadly balanced; outlook remains uncertain.\n- Key domestic risks:\n  - Intensification of political uncertainty.\n  - Social unrest.\n  - Climate-related shocks.\n- Key external risks:\n  - Weak trading-partner growth.\n  - Commodity price volatility.\n  - Sharp tightening of global financial conditions.\n- Upside scenario:\n  - A stronger recovery in confidence could support stronger private consumption and investment growth.\n- Macroeconomic buffers:\n  - Relatively low public debt.\n  - Abundant international reserves.\n  - Access to international capital markets on favorable terms."
    },
    {
      "heading": "Executive Board Assessment and Policy Recommendations",
      "content": "- Executive Directors’ overall view:\n  - Commended Peruvian authorities for sustained track record of very strong macroeconomic policies and institutional frameworks.\n  - Noted low public debt, abundant international reserves, a robust financial sector, and favorable access to international capital markets as strong buffers.\n  - Supported authorities’ decision to exit the Flexible Credit Line arrangement upon its expiry in May 2024 given broadly balanced risks and strength of buffers.\n  - Noted authorities’ commitment to maintaining sound institutions and policies to strengthen resilience against external risks.\n- Fiscal policy:\n  - Directors welcomed the strong fiscal position and the authorities’ commitment to fiscal sustainability.\n  - Given available fiscal space, a more gradual fiscal consolidation path could help support growth in the short run.\n  - Highlighted the need for ambitious revenue mobilization to support a more balanced medium‑term consolidation plan.\n  - Called for measures to further strengthen the fiscal framework, including:\n    - Reviewing the optimality of the medium‑term fiscal target, the debt ceiling, and liquidity buffers, supported by Fund TA.\n    - Bolstering the effectiveness of the Fiscal Council.\n  - Emphasized importance of pension reforms to address subpar income replacement and coverage, early withdrawals, and potential long‑term fiscal contingencies.\n- Monetary and financial policy:\n  - Commended the central bank’s early decisive monetary tightening for anchoring inflation expectations and reducing inflation towards the target band.\n  - Agreed with ongoing cautious data‑dependent monetary policy easing.\n  - Encouraged the central bank to maintain exchange rate flexibility to act as a shock absorber and support faster economic recovery.\n  - Noting financial system resilience, encouraged authorities to remain vigilant and continue to facilitate de‑dollarization and capital market deepening.\n- Structural reforms:\n  - Stressed urgent need for structural reforms to revive growth.\n  - Recommended focus on:\n    - Reforming labor and tax regulations.\n    - Building resilience to climate shocks.\n    - Embracing the digital and artificial intelligence revolution.\n  - Commended authorities’ commitment to addressing corruption and encouraged strengthening governance institutions.\n  - Noted the OECD accession process provides a clear roadmap for more ambitious reforms to boost the business climate and ensure sustainable and inclusive growth."
    },
    {
      "heading": "Key Statistics from Table 1. Peru: Selected Economic Indicators (selected items)",
      "content": "- Social Indicators:\n  - Poverty rate (total) 1/: 30.1 (2020), 25.9 (2021), 27.5 (2022)\n  - Unemployment rate for Metropolitan Lima (average): 13.0 (2020), 10.7 (2021), 7.8 (2022), 6.8 (Est.), [no further breakdown in source]\n- Production and Prices (annual percentage change, unless otherwise indicated):\n  - Real GDP: -10.9 (2020), 13.4 (2021), 2.7 (2022), -0.6 (2023 Est.), 2.5 (2024 Proj.), 2.3 (2025), [output gap series below]\n  - Output gap (percent of potential GDP): -5.5 (2020), 0.9 (2021), 0.6 (2022), -1.3 (2023), -0.7 (2024), -0.2 (2025), 0.0 (2026)\n  - Consumer prices (end of period): 2.0 (2020), 6.4 (2021), 8.5 (2022), 3.2 (2023), 2.4 (2024)\n  - Consumer prices (period average): 1.8 (2020), 4.0 (2021), 7.9 (2022), 6.3 (2023)\n- Money and Credit (depository corporations; foreign currency stocks valued at end-of-period exchange rates):\n  - Broad money: 29.2 (2020), -0.3 (2021), 1.5 (2022), 3.9 (2023), 4.7 (2024), 5.3 (2025), 5.5 (2026)\n  - Net credit to the private sector: 14.0 (2020), 6.5 (2021), 3.6 (2022), 0.4 (2023), 4.8 (2024), 5.1 (2025)\n  - Credit-to-private-sector/GDP ratio (%): 52.4 (2020), 45.9 (2021), 44.4 (2022), 41.8 (2023), 41.4 (2024), 41.6 (2025), 42.0 (2026), 42.5 (2027), 43.0 (2028), [series continues in table]\n- External Sector:\n  - Exports: -10.7 (2020), 47.0 (2021), 5.2 (2022), -0.8 (2023), 3.1 (2024), 3.4 (2025), 3.5 (2026)\n  - Imports: -15.5 (2020), 38.2 (2021), 16.5 (2022), -10.8 (2023), 4.3 (2024), 3.3 (2025)\n  - External current account balance (percent of GDP): 1.1 (2020), -2.2 (2021), -4.0 (2022), -1.1 (2023), -1.4 (2024), -1.5 (2025)\n  - Gross reserves in billions of U.S. dollars: 74.9 (2020), 78.5 (2021), 72.2 (2022), 71.3 (2023), 73.8 (2024), 76.3 (2025), 78.4 (2026), 80.8 (2027), 82.7 (2028), 84.4 (2029)\n  - Percent of short-term external debt 4/: 495 (2020), 583 (2021), 530 (2022), 409 (2023), 459 (2024), 438 (2025), 430 (2026), 483 (2027), 493 (2028)\n- Public Sector (in percent of GDP unless otherwise indicated):\n  - NFPS revenue: 21.8 (2020), 25.5 (2021), 26.9 (2022), 23.9 (2023), 23.8 (2024), 23.6 (2025), 23.7 (2026)\n  - NFPS primary expenditure: 29.1 (2020), 26.5 (2021), 27.0 (2022), 25.0 (2023), 24.7 (2024), 24.1 (2025), 22.9 (2026), 23.0 (2027), 23.2 (2028)\n  - NFPS primary balance: -7.3 (2020), -1.0 (2021), -0.1 (2022), 0.2 (2023), 0.7 (2024)\n  - NFPS overall balance: -8.9 (2020), -2.5 (2021), -1.7 (2022), -2.8 (2023), -2.0 (2024)\n  - NFPS structural balance 5/: -7.0 (2020), -1.8 (2021), -1.2 (2022)\n  - NFPS structural primary balance 5/: -5.4 (2020), -0.9 (2021), -0.5 (2022), 0.5 (2023)\n- Debt:\n  - Total external debt 6/: 43.7 (2020), 46.3 (2021), 40.6 (2022), 37.0 (2023), 35.5 (2024), 33.6 (2025), 32.7 (2026), 31.8 (2027)\n  - Gross non-financial public sector debt 7/: 34.9 (2020), 36.1 (2021), 33.9 (2022), 32.1 (2023), 33.0 (2024), 33.3 (2025), 33.2 (2026), 32.6 (2027), 31.6 (2028)\n  - External vs Domestic composition (percent of GDP): External 14.8 (2020), 19.4 (2021), 17.5 (2022), 16.0 (2023), 15.3 (2024), 14.2 (2025), 13.1 (2026), 11.5 (2027), 10.9 (2028), 10.3 (2029); Domestic 20.1 (2020), 16.7 (2021), 16.4 (2022), 16.1 (2023), 17.8 (2024), 19.0 (2025), 21.1 (2026), 21.3 (2027), 21.4 (2028)\n- Savings and Investment:\n  - Gross domestic investment: 19.9 (2020), 21.7 (2021), 22.1 (2022), 19.2 (2023), 20.4 (2024), 20.8 (2025), 20.9 (2026), 21.5 (2027)\n  - Public sector (incl. repayment certificates): 5.0 (2020), 4.9 (2021)\n  - Private sector: 16.8 (2020), 20.2 (2021), 17.9 (2022), 17.7 (2023), 17.4 (2024), 17.2 (2025), 16.9 (2026), 16.6 (2027)\n  - National savings: 21.0 (2020), 19.5 (2021), 18.1 (2022), 19.8 (2023), 19.3 (2024), 19.7 (2025), 20.0 (2026)\n- Memorandum Items:\n  - Nominal GDP (S/. billion): 721 (2020), 878 (2021), 939 (2022), 1,002 (2023), 1,051 (2024), 1,102 (2025), 1,151 (2026), 1,202 (2027), 1,255 (2028), 1,309 (2029)\n  - GDP per capita (in US$): 6,320 (2020), 6,848 (2021), 7,336 (2022), 7,933 (2023), 8,291 (2024), 8,567 (2025), 8,839 (2026), 9,115 (2027), 9,397 (2028), 9,685 (2029)\n\nPress Release No. 24/172, May 21, 2024 — IMF Communications Department.\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/2024/05/21/pr-24172-peru-imf-executive-board-concludes-2024-art-iv-consultation"
    }
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    "Published: May 21, 2024",
    "The Executive Board concluded the Article IV consultation on May 20, 2024.",
    "Economic recovery context:",
    "Growth and inflation projections:",
    "External financing and debt rollover risks are assessed as remaining low.",
    "Evolving risks are broadly balanced; outlook remains uncertain.",
    "Key domestic risks:",
    "Key external risks:",
    "Upside scenario:",
    "Macroeconomic buffers:",
    "Executive Directors’ overall view:",
    "Fiscal policy:",
    "Monetary and financial policy:",
    "Structural reforms:",
    "Social Indicators:",
    "Production and Prices (annual percentage change, unless otherwise indicated):",
    "Money and Credit (depository corporations; foreign currency stocks valued at end-of-period exchange rates):",
    "External Sector:",
    "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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