Peru: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Peru

PERU IMFCountryReportNo.24/133 May2024 2024ARTICLEIVCONSULTATION—PRESSRELEASE;STAFFREPORT;ANDSTATEMENTBYTHEEXECUTIVEDIRECTORFORPERU UnderArticleIVoftheIMF’sArticlesofAgreement,theIMFholdsbilateraldiscussionswithmembers,usuallyeveryyear.Inthecontextofthe2024ArticleIVconsultationwithPeru,thefollowingdocumentshavebeenreleasedandareincludedinthispackage: APressReleasesummarizingtheviewsoftheExecutiveBoardasexpressedduringitsMay20,2024considerationofthestaffreportthatconcludedtheArticleIVconsultationwithPeru. TheStaffReportpreparedbyastaffteamoftheIMFfortheExecutiveBoard’sconsiderationonMay20,2024,followingdiscussionsthatendedonMarch7,2024,withtheofficialsofPeruoneconomicdevelopmentsandpolicies.Basedoninformationavailableatthetimeofthesediscussions,thestaffreportwascompletedonMay2,2024. AnInformationalAnnexpreparedbytheIMFstaff. ASupplementaryInformationupdatinginformationonrecentdevelopments. AStatementbytheExecutiveDirectorforPeru. Thedocumentslistedbelowhavebeenorwillbeseparatelyreleased.SelectedIssues TheIMF’stransparencypolicyallowsforthedeletionofmarket-sensitiveinformationandprematuredisclosureoftheauthorities’policyintentionsinpublishedstaffreportsandotherdocuments. Copiesofthisreportareavailabletothepublicfrom InternationalMonetaryFundPublicationServicesPOBox92780Washington,D.C.20090Telephone:(202)623-7430Fax:(202)623-7201 E-mail:publications@imf.orgWeb:http://www.imf.org InternationalMonetaryFundWashington,D.C. ©2024InternationalMonetaryFund PR24/172 IMFExecutiveBoardConcludes2024ArticleIVConsultationwithPeru FORIMMEDIATERELEASE Washington,DC–May21,2024:TheExecutiveBoardoftheInternationalMonetaryFund(IMF)concludedtheArticleIVconsultation1withPeruonMay20,2024. Theeconomyisrecoveringfromconsecutiveclimate-relatedshocksandsocialturmoilatthebeginningof2023.Inflationhasrecededthankstothecentralbank’sdecisivemonetarypolicytightening,whilethefiscalpositionandthefinancialsystemremainstrong.Thecountryisinaperiodofrelativepoliticalstability,butlingeringpoliticaluncertaintyisdentingtheappetiteforpressingreformstoboostpotentialgrowth. Areboundingrowthto2.5percentisexpectedin2024,supportedbyastrongrecoveryinagricultureandfishing,continuedmomentuminmining,andaloosermonetarypolicystance.However,onlyamoderaterecoveryisexpectedforprivateconsumptionandprivateinvestment,asnominalwagesgraduallyregaintheirpurchasingpowerandelevatedpoliticaluncertaintyweighsonconsumerandbusinessconfidence.AstheeffectsfromElNiñodissipate,inflationwouldrapidlydeclinetowardsthemidpointofthetargetband,aidedbyanegativeoutputgapandthenormalizationofsupplyshocks,astheCentralBankcontinueswithitscautiousmonetarypolicyeasingcycle.Thecurrentaccountisenvisagedtoreturntoadeficitof1.1percentofGDPin2024asgrowthnormalizesandtostabilizeat1.5percentofGDPinthemediumterm,withexternalfinancinganddebtrolloverrisksremaininglow. Evolvingrisksarebroadlybalanced,andPeruhasamplebufferstocopewithadverseshocks,althoughtheoutlookremainsuncertain.Intheshortterm,keydomesticrisksincludeanintensificationofpoliticaluncertainty,socialunrest,andclimate-relatedshocks.Keyexternalriskscompriseweaktrading-partnergrowth,commoditypricevolatility,andasharptighteningofglobalfinancialconditions.Ontheupside,astrongerrecoveryinconfidencecouldsupportstrongerprivateconsumptionandinvestmentgrowth.Peru’sprovenmacroeconomicresilienceisreinforcedbyverystrongbuffersincludingrelativelylowpublicdebt,abundantinternationalreserves,andaccesstointernationalcapitalmarketsonfavorableterms. ExecutiveBoardAssessment2 ExecutiveDirectorscommendedthePeruvianauthoritiesfortheirsustainedtrackrecordofverystrongmacroeconomicpoliciesandinstitutionalframeworks,thathaveeffectivelysteeredthecountrythroughsocialturmoilandsevereclimateshocksandsupportedtheongoing 1UnderArticleIVoftheIMF'sArticlesofAgreement,theIMFholdsbilateraldiscussionswithmembers,usuallyeveryyear.Astaffteamvisitsthecountry,collectseconomicandfinancialinformation,anddiscusseswithofficialsthecountry'seconomicdevelopmentsandpolicies.Onreturntoheadquarters,thestaffpreparesareport,whichformsthebasisfordiscussionbytheExecutiveBoard. 2Attheconclusionofthediscussion,theManagingDirector,asChairmanoftheBoard,summarizestheviewsofExecutiveDirectors,andthissummaryistransmittedtothecountry'sauthorities.Anexplanationofanyqualifiersusedinsummingsupcanbefoundhere:http://www.IMF.org/external/np/sec/misc/qualifiers.htm. 2 recovery.Theypositivelynotedthatlowpublicdebt,abundantinternationalreserves,arobustfinancialsector,andfavorableaccesstointernationalcapitalmarketsprovidestrongbuffersagainstadverseshocks.Againstthisbackground,theysupportedtheauthorities’decisiontoexittheFlexibleCreditLinearrangementuponitsexpiryinMay2024givenbroadlybalancedrisksandthestrengthofPeru’sbuffers.Directorsnotedtheauthorities’commitmenttomaintainingsoundinstitutionsandpoliciestofurtherstrengthenPeru’sresilienceagainstexternalrisks. Directorswelcomedthestrongfiscalpositionandtheauthorities’commitmenttofiscalsustainability.Theygenerallyagreedthat,givenavailablefiscalspace,amoregr