A strengthening track record of sound macroeconomic policy, characterized by high economic growth, low inflation, declining public debt. Strong growth prospects over the medium term supported by a diversifying economic structure; and A solid improvement in the country's external position. 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 Peru are supported by the government's commitment to economic stability and a positive investment climate that will underpin strong growth through 2012. The government has successfully maintained prudent fiscal and monetary policies
