Fitch Ratings highlighted incoming Government’s recognition of private sector as engine of growth and its commitment to continue reducing poverty by preserving strengths of fiscal and external accounts.
Erich Arispe, Director in Fitch's Sovereign Group, predicts Peru will remain in line with credit strengths that stood out over the past years and the credibility of the macroeconomic framework committed to fiscal sustainability.
“The announced policies are in line with preserving the strengths both in terms of the external accounts and the country’s fiscal accounts,” he told El Peruano official newspaper.
The Peruvian economy, as well as emerging markets, has faced a number of challenges in the past two years concerning changes in commodity prices and financial volatility, due to the differences in monetary policies among advanced economies.
Peru showed flexibility, strength and space to confront such external turmoil and maintain its current credit rating.
“So far, there is no reason to think a change in the country’s debt rating or forecast is about to happen,” he said.
Significant fiscal strength
According to Arispe, Peru’s fiscal strength is substantial if compared with commodity-exporting countries with investment grade.
This vision is based on the low debt rating of Peru, compared to other countries, and the Government’s financial asset accumulation, as is the case of the Fiscal Stabilization Fund, which gives it flexibility to deal with the external turmoil.
“Moreover, it relies on a fiscal rule of structural nature,” he noted.
“Peru’s strength has been maintained over this period of external volatility, in which countercyclical measures were implemented. Nevertheless, its effect was not translated into the economy in a direct way, due to the bottlenecks in the disbursement of funds and projects' implementation by regional and local governments,” he continued.
(END) DOP/SDD/JJN/RMB/MVB
Published: 7/22/2016