Peru misses fiscal deficit target in 2023 | economy

The fiscal deficit target for Peru in 2023 is 2.4% of gross domestic product (GDP); However, according to preliminary data from the Central Reserve Bank (BCR), the fiscal deficit stood at 2.8% of GDP.

Additionally, despite various efforts by the Ministry of Economy and Finance (MEF), for the first time in 20 years, Peru has failed to comply with this provision.

It should be remembered that risk rating agencies Moody's and Fitch have already warned that Peru's fiscal deficit could reach 2.6%.

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According to BCR, a deficit of S/ 16,216 million was recorded in December last year, which was higher than the one recorded in 2022, which was S/ 15,018 million, as a result of lower current income and higher non-financial expenses. For higher servicing loan interest.

In 2023, the non-financial public sector recorded a deficit of S/ 27,606 million, which was S/ 15,959 million more than the deficit in 2022.

Current income and non-financial expenses

General government current revenue fell by 3.2% year-on-year in December last year. According to PCR, this was due to a 3.5% decrease in tax due to lower collections from the third category of income tax, General Sales Tax (IGV) on imports and Selective Consumption Tax (ISC) on fuels.

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Meanwhile, non-tax income stood at 2.4% due to lower revenue from oil and gas royalties and canons and interest on public treasury deposits.

The monetary agency also noted that general government non-fiscal expenditure increased by 0.6% in the last month of the year due to higher spending by regional governments.

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Current expenditure increased by 0.5% year-on-year and gross capital formation increased by 17.2% due to active national and regional governments.

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