A strengthening track record of sound macroeconomic policy, characterized by high economic growth, low inflation, and declining public debt. Strong growth prospects over the medium term supported by a diversifying economic structure. A solid improvement in the country's external position. Still-evolving political institutions, in the context of significant economic, social, ethnic fragmentation, and high poverty. Limited fiscal flexibility, characterized by low revenue to GDP and high social needs constraining expenditure flexibility. 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 solid growth through 2012, despite the sharp slowdown in 2009. The government has maintained prudent fiscal
