Deepening macroeconomic stability well supported across the political spectrum; Strong commitment to fiscal responsibility; and An improving external liquidity position boosted by robust export growth. Still-evolving political institutions, in the context of significant economic, social, and ethnic fragmentation; External vulnerability, derived from a significant level of financial dollarization and high public-sector external debt; and, Very limited fiscal flexibility, characterized by low revenues to GDP and high social needs constraining expenditure flexibility. The recent outlook revision on Standard&Poor's ratings on the Republic of Peru reflect expectations that the country's economic and fiscal profile will continue to improve over the medium term, despite a potential cyclical downturn in commodity prices. Favorable external conditions, as well as cautious macroeconomic management, have
