Peru: Congress approves 2011 budget
November 29, 2010
On 29 November, Congress approved the 2011 budget as presented by the Garcia administration. The government increased next year's budget by PEN 5.0 billion (USD 1.7 billion) to PEN 88.5 billion (USD 31.4 billion), anticipating an increase of 8.0% in total expenditures. In addition, the government stated that the increase in spending does not translate into higher wages for civil servants, but will boost public investment in order to improve the country's competitiveness. In addition, the government projects total revenues to increase 4.6% (USD 1.1 billion). Despite the buoyant economic growth and the ensuing strong increase in revenues, the government seeks to carefully manage its fiscal position by restraining spending and boosting savings in order to maintain investment-grade credit ratings and to have a cushion in case European debt woes affect the global economy. Moreover, the government projects the fiscal deficit to reach 1.5% of GDP this year, narrowing to a deficit of 1.0% of GDP projected next year.
Author: Ricardo Aceves, Senior Economist