Peru

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Prolonged political impasse limits economic growth prospects. Peru has limited fiscal and external imbalances, a still-low debt burden, and record of credible monetary policy. --Weak political parties in a context of highly discredited political institutions continue to create uncertainty. --Debt burden is low, albeit higher than pre-pandemic and now with a more vulnerable composition. --Solid economic institutions limit downside risks to economic and financial performance. --Still-favorable terms of trade and increased copper production will continue to contribute to Peru?s external position. --Peru has a lower GDP per capita than many countries in the region and similarly rated peers, despite strong growth in recent

...Tensions between the executive and Congress have subsided during recent months of the Boluarte administration, although we believe the situation is fragile in Peru (foreign currency: ###/Negative/A-2; local currency: ###+/Negative/A-2). Weak political parties in a context of highly discredited political institutions continue to create uncertainty. While solid economic institutions limit downside risk, a weak political situation limits the government's capacity to promote growth and tackle long-standing structural issues like high informality and poor infrastructure. In turn, a lower growth environment could create adverse political developments. The country's relatively favorable external and fiscal profiles remain vulnerable to adverse political developments that could further erode investment or worsen economic policies, under a more extreme scenario....

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