Peru’s fiscal deficit ratio increase from 2.7% to 3% of gross domestic product (GDP) will not hinder its credit rating in international financial markets, Economy and Finance Minister Fernando Zavala affirmed.
"This
fiscal deficit rise is financed by the Fiscal Stabilization Fund (FEF) and has a highly specific target: re-establishing assets affected by a natural disaster," the government official explained.
"Thus, we do not expect it to have an impact on debt, nor on the long-term fiscal deficit trajectory," he added.
Moody's Investor Service is currently reviewing the Andean nation's A3 credit rating and stable outlook considering the fiscal space for post-disaster reconstruction and public finance scenario.
The credit rating agency is to complete said review by the end of the month.
Deputy Finance Minister Rossana Polastri also ruled out negative opinions regarding Peru's deficit financing, as the budget deficit rise will not have a considerable impact on sustainability indicators.
"This has been widely discussed even with rating agencies, including Moody's," she pointed out.
No cuts
On the other hand, Minister Zavala ruled out any cuts or adjustments in terms of current spending and public investment.
"Rather, we are analyzing how to mobilize more resources to increase public expenditure," he indicated.
"We are projecting a significant upturn in public spending next year —with this expansionary policy— and we'd like to see some sectors with greater efficiency in current spending," the Finance head added.
(END) MDV/DHT/RMB/MVB
Published: 8/15/2017