A strengthening track record of sound macroeconomic policy, characterized by high economic growth, low inflation, declining fiscal deficits, and current account surpluses; A solid improvement in the country's external position, boosted by strong export growth, and; A growing commitment on fiscal responsibility across political parties. Still-evolving political institutions, in the context of significant economic, social, and ethnic fragmentation and high poverty; Limited fiscal flexibility, characterized by low revenue to GDP and high social needs constraining expenditure flexibility, and; Monetary vulnerability, derived from a significant (albeit declining) level of financial dollarization. The ratings on the Republic of Peru (BB+/Stable/B foreign, BBB-/Stable/A-3 local currency sovereign credit ratings) reflect a comprehensive improvement in the country's economic indicators, and favorable medium-term prospects in the
