## IMF Executive Board Concludes 2025 Article IV Consultation with Peru

_IMF News, June 10, 2025_

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## Bibliographic details
- Published: June 10, 2025

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### Macroeconomic outlook and projections
- Growth recovered from consecutive natural disaster shocks and social turmoil; growth is expected to moderate to 2.8 percent in 2025 and thereafter remain close to potential.
- Inflation is expected to remain within the target band of 1-3 percent; inflation expectations are approaching 2 percent.
- The current account balance is envisaged to remain in a surplus of 1.7 percent of GDP in 2025, and to gradually return to a deficit in the medium term—stabilizing at about 1.5 percent of GDP.
- Headline macro buffers: very strong buffers including low public debt, abundant international reserves, and access to international capital markets on favorable terms.

### Risks and near-term vulnerabilities
- Risks are tilted to the downside given elevated external uncertainty, with dominant external risks including:
  - prolonged trade policy uncertainty,
  - financial market volatility,
  - tighter global financial conditions,
  - commodity price volatility.
- Key domestic risks include:
  - intensification of political uncertainty and pre-election tensions,
  - social unrest over security concerns,
  - weather-related shocks.
- Despite risks, Peru has ample buffers to cope with shocks.

### Monetary and exchange rate policy
- A broadly neutral monetary policy stance is appropriate given a closed output gap and anchored inflation expectations.
- Monetary policy should remain data dependent in light of heightened external uncertainty.
- Continued exchange rate flexibility should be allowed to help cushion external shocks.

### Fiscal outlook and recommendations
- The 2025 budget envisages a deficit of 2.2 percent of GDP, consistent with the revised fiscal rule target.
- A tax revenue rebound and one-off factors will help reduce the deficit in 2025, but additional efforts of about 0.4 percent of GDP will be needed to secure fiscal rule compliance in 2025.
- Medium-term fiscal targets:
  - Fiscal rule deficit target of 1 percent of GDP by 2028.
  - Debt ceiling of 30 percent of GDP by 2035.
- Authorities’ medium-term consolidation plan envisages a reduction of current spending by about 0.4 percent of GDP per year between 2026 and 2028.
- Policy recommendations to achieve balanced consolidation:
  - Identify both revenue and spending measures, including streamlining tax expenditures and strengthening tax administration.
  - Control wages, discretionary transfers, and inefficient public investment.
  - Avoid legislative initiatives bearing fiscal costs, proposals that erode the tax base, and excessive reliance on private participation schemes.
  - Reform Petroperú to significantly reduce costs and enhance transparency and governance.

### Financial sector resilience and policy actions
- The financial sector is sound and profitable; banks have ample liquidity and capital buffers.
- Non-performing loans (NPLs) are elevated for small- and medium-sized firms but are expected to continue improving.
- Macroprudential priorities:
  - Continue vigilance on pockets of vulnerability, particularly corporate loans.
  - Focused macroprudential policies to reduce vulnerabilities from remaining dollarized credit.
  - Authorities’ regulation to introduce higher risk weighting in 2026 will help alleviate vulnerabilities from unhedged dollar credit.
  - Consider introducing currency-specific NSFR requirements to complement existing currency-specific LCR limits.
- Regulatory and market development priorities:
  - Maintain prohibition of future pension withdrawals to protect domestic capital market functioning.
  - Broaden investor base through retail investment products to attract funds back into the securities market.
  - Complete activation criteria improvements for the countercyclical capital buffer (CCyB), finalize revised Basel III risk-weight framework, evaluate recovery plans for domestic systemically important banks, and expand resolution planning to financial group level.

### Structural reforms and investment
- Urgent structural reforms are required to lift potential growth, including:
  - Updating the fiscal decentralization framework and redesigning natural resource revenue-sharing formulas to boost public spending efficiency and channel mining dividends into development.
  - Curbing rising insecurity, reforming labor and tax regulations that impose excessive costs for formalizing or growing a business, enhancing independence and integrity of judicial bodies, and strengthening tools to combat corruption impunity.
  - Building resilience to natural disasters.
  - Embracing opportunities from digital technologies and artificial intelligence.
- Mining investment pipeline and constraints:
  - A US$64 billion pipeline of mining investment projects has been mostly stalled for many years due to bureaucratic complexity and social conflicts.
  - Unlocking these projects and channeling additional fiscal revenues could permanently boost potential growth.
- The OECD accession process provides a clear roadmap for critical reforms to boost the business climate, reduce informality, and reform the civil service.

### Key statistics and selected indicators
- Growth: Real GDP growth projected 2.8 percent in 2025.
- Inflation: Target band 1-3 percent; inflation expectations approaching 2 percent.
- Current account: Surplus of 1.7 percent of GDP in 2025.
- 2025 budget deficit: 2.2 percent of GDP.
- Additional fiscal effort needed in 2025: about 0.4 percent of GDP.
- Medium-term fiscal rule target: 1 percent of GDP by 2028.
- Debt ceiling: 30 percent of GDP by 2035.
- Mining investment pipeline: US$64 billion.
- Gross reserves: 79.2 (2024), projected 84.2 (2025), 88.7 (2026), 92.7 (2027), 96.4 (2028), 100.4 (2029), 104.9 (2030) (billions of U.S. dollars).
- Gross non-financial public sector debt: 32.8 (2024), projected 33.7 (2025), 34.7 (2026), 35.5 (2027), 35.9 (2028), 36 (2029) (percent of GDP).
- NFPS overall balance: -3.5 (2024), projected -2.6 (2025), -2.2 (2026), -2 (2027) (percent of GDP).
- NFPS revenue: 22.7 (2024), projected 23.6 (2025), 23.1 (2026), 23.2 (2027), 23.3 (2028), 23.4 (2029) (percent of GDP).
- Nominal GDP (S/. billion): 1,085 (2024), 1,136 (2025), 1,188 (2026), 1,242 (2027), 1,299 (2028), 1,360 (2029), 1,423 (2030).
- GDP per capita (in US$): 8,485 (2024), projected 8,814 (2025), 9,182 (2026), 9,505 (2027), 9,825 (2028), 10,168 (2029), 10,529 (2030).

*Source: IMF Executive Board Concludes 2025 Article IV Consultation with Peru (June 10, 2025).*

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## References

- [Peru and the IMF](http://www.imf.org/external/country/PER/index.htm)
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_Source: https://www.imf.org/en/news/articles/2025/06/09/pr-25186-peru-imf-concludes-2025-art-iv-consultation_