According to Banco de Credito del Peru (BCP), one of the largest banks in Peru, the economic growth would resume at about 5% in 2015 if the measures taken by the Government managed to reverse the business confidence deterioration and maximize the public investment.
“The new stimulus package proposed by the Government, which considers tax reform measures, maintenance works, public investment and flexible working arrangements, amounts to 2.2% of the gross domestic product (GDP),” it reported.
The increase in expenses not included in the 2015 budget would amount to 0.8 of GDP and the continuity of investments and maintenance works would account for 0.6%.
In this context, the bank pointed out Peru has a strong fiscal position (a fiscal surplus in the previous years, a public debt lower than 20% of GDP and a fiscal saving totaling 15% of GDP) which lets the stimulus plan get passed without affecting its sustainability.
The major tax measures, expected to be passed by the Congress first, include corporate income tax reforms aimed at encouraging reinvestment of profits and the investment.
The bank indicates that the country’s fiscal deficit will be between 1.5% and 2% of GDP next year.
(END) JJN/AQR/RMB
Published: 11/27/2014