SANTIAGO (Reuters) - Peru has extended the deadline for reducing its fiscal deficit by three years, to 2024, to focus on kickstarting its stalled economy, the government announced in an emergency decree on Thursday.
The original goal was to reduce the deficit to 1% of Gross Domestic Product (GDP) by 2021.
The change came after Peru’s central bank said on Friday it had reduced its economic growth projection for 2019 to 2.3% from 2.7% previously amid a global economic slowdown and lower public investment in the Andean mining nation.
“Maintaining the current trajectory of reducing the fiscal deficit would imply a significant withdrawal of fiscal impulse in 2021, which could have a negative impact on economic growth,” the Ministry of Economy and Finance said in a statement.
The new fiscal deficit trajectory would “allow a more gradual withdrawal of fiscal impulse as Peru’s economic growth accelerates,” the statement added.
The ministry said that despite the change, Peru’s public debt would remain one of the lowest in Latin America, below those of countries with a similar credit rating and fiscal norms.
Peru, the world’s second largest producer of copper and zinc, has a public debt ratio of 26.9% of its GDP.
Reporting by Marco Aquino; Writing by Aislinn Laing; Editing by Richard Chang