The main fiscal impulse implemented by the Finance Ministry of Peru through countercyclical measures, is to enable an imminent economic recovery to surge, Moody’s Sovereign Group affirmed.
Statements were made after Finance Minister Alonso Segura had announced public investment spending -at the regional and local government (sub-national) levels- increased 40% year-on-year in April.
“The increase is atypical, following a regional election cycle where capital expenditure by the sub-national governments usually contracts for an extended period. The result suggests that faster recovery in general government investment spending will likely support the central government’s counter-cyclical measures,” a release issued by the Vice President of the said group Jaime Reusche stated.
“[…] and push the 2015 general government deficit above our initial expectations and more in line with the authorities’ projections,” it added.
“We now expect that investment execution will pick-up substantially before the end of the year,” Reusche emphasized.
In this sense, Moody’s expects that the fiscal stimulus will not be forcefully withdrawn in 2016.
“This will allow the economy to regain solid footing […],” he stated.