LIMA, Nov 3 (NNN-ANDINA) — Central Reserve Bank (BCR) Governor Julio Velarde affirmed that Peru has the lowest debt in the region. Thus, he said, it is really difficult to justify what Fitch Ratings did (revision of Peru’s outlook) revising to negative from stable.
On Oct 20, the agency announced that the rating outlook on Peru’s LT IDRs was revised to negative from stable.
“The fiscal part is quite good, and it is due to revenue or taxes; it has not been due to spending adjustments. The fiscal deficit or the debt itself of Peru are quite low because our debt, relative to gross domestic product (GDP), is the lowest in the entire region,” Velarde indicated.
“Previously, Chile (36%) and Paraguay (39%) had lower (debt to GDP) than us; now we have lower debt to GDP, and we expect it to drop this year compared to 2021, and next year compared to 2022. Brazil has a debt of almost 100% of GDP; Mexico, 60%; Colombia, 66%; and our level stands at 34%, which is quite low,” he added.
During the Consortium for Economic and Social Research (CIES) XXXIII Annual Seminar, the governor indicated that fiscal deficit would remain below 2% of GDP in the projection horizon due to the reduction in expenses related to the COVID-19 pandemic.
“The fiscal deficit of 8.9% of GDP in 2020 fell to 2.5% in 2021, and we are expecting it to end at 1.9% this year, which is quite a low figure. It’s a pretty controlled deficit,” he expressed.
“That is why, with these figures, it is really difficult to justify what Fitch Ratings did when measuring whether we can pay the debt or not,” he added.
On the other hand, the BCR official reiterated that inflation remains at extremely high levels globally, which is why the upward trend in monetary policy interest rates remains in force.
The economist affirmed that inflation rates in Peru are lower than those of other countries in the region. However, the BCR has continued with adjustments to the monetary policy position that began in August 2021.
“We expect inflation to return to the target range (between 1% and 3%) by the end of next year. Yet the situation is clearly uncertain. This year, we expect to end at 7.8%, although inflation has already declined from 8.5% to 8.3% last month,” he specified. — NNN-ANDINA
