Peru is one of the few countries in the world with fiscal and monetary spaces to respond to the world crisis mainly affecting emerging countries, IMF Research Department Deputy Director Gian Maria Milesi-Ferretti affirmed.
"Peru enjoys a very stable macroeconomic framework, credible monetary policy, low inflation rate and low level of public debt, so it has margins to respond to the crisis," he stated within the framework of the WBG/IMF Boards of Governors held in Lima.
Despite the good margins, he explained, the International Monetary Fund (IMF) had to reduce its growth expectations for Peru given the public investment decline in sub-national governments, which has undermined responses to the crisis.
"The implementation of public investment local programs was part of the response to the economic stagnation due to lower terms of trade, but they have not been completed for many reasons such as political and legal matters, and this has impacted the economic activity," he stressed.
Sub-national Governments
In that sense, he said achieving such an increase in public investment at the sub-national government level is quite important to boost domestic demand within a context of low economic growth.
"Likewise, it might help reduce the infrastructure gab and raise the potential growth rate for upcoming years," he pointed out.
(END) RGP/JJN/RMB/MVB
Published: 10/6/2015