LIMA (Reuters) -Peru’s economy has long withstood political upheaval but recently approved legislation could threaten its stability, still seen as a “crown jewel,” officials from an independent fiscal agency said on Tuesday.
Alonso Segura, former finance minister and head of the Fiscal Council, an autonomous body that monitors public finances, said Congress has passed 229 laws with adverse fiscal impact since 2021, more than triple the historical average since 2006.
With nine months left in its term, Congress is weighing 352 new bills, mostly tied to spending and public wages. Ten alone would cost 25 billion soles ($7.35 billion) a year, Segura said.
If approved, the measures could push Peru’s fiscal deficit to 5.5% of GDP next year, far above the government’s 2.2% target for 2025, which Segura said is already “seriously at risk.”
Last year’s deficit was 3.5%, the highest since 1992, excluding the COVID-19 pandemic.
“These are massive expenses that will not be able to be accommodated within current budgets,” he said at a press conference where the Council presented a new fiscal analysis.
“The consequence will be a sustained increase in the fiscal deficit and an upward path for public debt.”
Peru’s economy has so far held firm despite prolonged political turmoil. Earlier this month, opposition lawmakers presented a motion to oust former President Dina Boluarte, leading to the swearing-in of President Jose Jeri, who is expected to lead a government through July 2026.
The Fiscal Council also warned public debt could rise to 40% of GDP within a decade, from 32% today.
“One of Peru’s crown jewels is its economic stability – that’s now at risk,” said Council member and central bank board director Diego Macera.
Peru forecasts growth of up to 3.5% in 2025, after expanding 3.3% last year.
(Reporting by Marco Aquino, Writing by Natalia Siniawski; Editing by Nia Williams)
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