(Adds comments from finance minister and analyst on impacts on
By Teresa Cespedes and Mitra Taj
LIMA, March 17 The government of Peruvian
President Pedro Pablo Kuczynski is hiking the 2017 budget by 3
percent in order to fund emergency and recovery efforts as the
Andean nation grapples with deadly downpours and extreme
Peru's Finance Minister Alfredo Thorne said the 4.4 billion
sol ($1.35 billion) increase, which will be published in an
urgent decree on Saturday, would not affect his 2017 fiscal
deficit target of 2.5 percent of gross domestic product.
The decree will also create a special tax exemption for
companies that donate food and other goods for emergency
efforts, Thorne said.
At least 62 people have died in rain-related events since
December, many in recent days after a sudden warming of Pacific
waters near Peru unleashed torrential downpours, landslides and
Kuczynski, a 78-year-old economist, said Peru has not seen
such extreme rains since the powerful global El Nino weather
pattern of 1997-1998.
Before the floods, Kuczynski's government had been working
to counter the impacts of a corruption scandal that has delayed
its plans to boost domestic demand with infrastructure projects.
Thorne told Reuters he did not expect the extreme weather to
prompt a downward revision to official growth estimates of 3.8
percent for 2017 and 4.3 percent for 2018.
The floods might even help bolster economic growth starting
in the second quarter if the government can orchestrate a rapid
reconstruction effort, despite the damages wrought, said Pedro
Tuesta, the chief Latin American analyst for 4Cast and a Peru
"Peru may have fewer assets but the flow of production could
be larger," Tuesta said. "But it all depends on the government
About half of Peru has been declared in emergency to
expedite resources to the hardest-hit areas, the government
The extreme weather could fan inflation as some food prices
have risen on supply disruptions from farming regions.
The floods have destroyed 1,250 km (777 miles) of highway
and blocked parts of the main road linking the interior of the
country to Lima, according to the civil defense institute.
More than 56,000 acres of crops have been damaged, including
in areas that grow grapes, mangoes and bananas for export.
(Reporting by Teresa Cespedes and Mitra Taj; Editing by
Meredith Mazzilli and Lisa Shumaker)