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 over the last decade despite political uncertainties. In fact, over the past three years the government has run fiscal surpluses leading to significant declines in net general government debt. Furthermore, current account surpluses and high levels of foreign direct investment helped lower external vulnerabilities. Despite these successes, the government's reform agenda is relatively weak even though there is a need to improve the quality of social spending, develop the local capital market, and create more labor market flexibility. This is especially true in the context
