## Peru: Request for Arrangement Under the Flexible Credit Line-Press Release; Staff Report; and Statement by the Executive Director for Peru

_IMF Staff Country Reports, May 29, 2020_

## Source details

**Canonical URL:** [Peru: Request for Arrangement Under the Flexible Credit Line-Press Release; Staff Report; and Statement by the Executive Director for Peru](https://www.imf.org/en/publications/cr/issues/2020/05/29/peru-request-for-arrangement-under-the-flexible-credit-line-press-release-staff-report-and-49464)

## Other formats

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## Bibliographic details
- Published: May 29, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513545820.002

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### Summary and key findings
- Peru requests an Arrangement Under the Flexible Credit Line (FCL).
- Peru qualifies for the FCL by virtue of its "very strong fundamentals and institutional policy frameworks and track record of economic performance and policy implementation."
- The coronavirus disease 2019 shock poses an extraordinary challenge, pushing the Peruvian economy into a recession.
- The authorities have responded with stringent containment measures and a large policy package to limit socio-economic fallout, enabled by Peru’s "ample fiscal space and monetary policy credibility."
- The policy package includes a broad set of measures aimed at:
  - containing the health emergency,
  - supporting vulnerable businesses and households,
  - maintaining adequate credit flows to the economy.
- Despite very strong policy buffers, Peru remains vulnerable to external tail risks.
- A prolonged Covid-19 outbreak would have significant repercussions for trade and financial flows, which could:
  - put significant pressure on Peru’s balance of payments,
  - magnify the adverse domestic impact of the coronavirus disease 2019 shock.

### Policy response and institutional strengths
- Qualification for the FCL is based on:
  - "very strong fundamentals",
  - "institutional policy frameworks",
  - a track record of "economic performance and policy implementation."
- Authorities’ response components:
  - stringent containment measures,
  - a large fiscal and policy package leveraging "ample fiscal space",
  - reliance on "monetary policy credibility" to stabilize conditions.
- Policy package objectives:
  - health emergency containment,
  - support for vulnerable businesses and households,
  - ensure adequate credit flows.

### Risks and vulnerabilities
- Main external risk: prolonged Covid-19 outbreak.
- Potential channels of contagion:
  - trade flows,
  - financial flows.
- Potential consequences:
  - significant pressure on Peru’s balance of payments,
  - magnified adverse domestic impact of the shock.

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## Content in this bundle

- **1perea2020003**
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_Source: https://www.imf.org/en/publications/cr/issues/2020/05/29/peru-request-for-arrangement-under-the-flexible-credit-line-press-release-staff-report-and-49464_