- Scotiabank thinks there is a high likelihood that the government will miss its new fiscal rule targets, which includes a fiscal deficit that cannot exceed 2.8% of GDP in 2024, 2.2% in 2025 and 1.8% in 2026. In addition, total debt outstanding cannot exceed 38% of GDP in 2024 and should be 30% of GDP or lower by 2035. They say that although it’s premature to be worried over the fiscal situation in general, the trends warrant monitoring.
- Scotiabank notes that the July fiscal deficit of 4.0% of GDP is a big reason why the situation should be monitored more closely. Although much of this was due to increased spending to stimulate growth, they believe it will be difficult to slow local and regional government spending much before the 2026 elections, noting that the slowdown would need to be quite sharp to meet the fiscal targets.
- Scotiabank also questions whether the 3.4% increase in real government revenue on average for 2025–2028 envisaged in the recent multiannual macroeconomic framework would be sufficient to meet the targets. Despite this, Scotiabank believes that as long as the fiscal deficit is consistently lower than GDP growth, such that debt to GDP declines, then it’s hard to see too much cause for concern.
PERU: Scotiabank Says Government Likely To Miss Fiscal Targets
Last updated at:Sep-09 17:16By: Keith Gyles
Peru
- Scotiabank thinks there is a high likelihood that the government will miss its new fiscal rule targets, which includes a fiscal deficit that cannot exceed 2.8% of GDP in 2024, 2.2% in 2025 and 1.8% in 2026. In addition, total debt outstanding cannot exceed 38% of GDP in 2024 and should be 30% of GDP or lower by 2035. They say that although it’s premature to be worried over the fiscal situation in general, the trends warrant monitoring.
- Scotiabank notes that the July fiscal deficit of 4.0% of GDP is a big reason why the situation should be monitored more closely. Although much of this was due to increased spending to stimulate growth, they believe it will be difficult to slow local and regional government spending much before the 2026 elections, noting that the slowdown would need to be quite sharp to meet the fiscal targets.
- Scotiabank also questions whether the 3.4% increase in real government revenue on average for 2025–2028 envisaged in the recent multiannual macroeconomic framework would be sufficient to meet the targets. Despite this, Scotiabank believes that as long as the fiscal deficit is consistently lower than GDP growth, such that debt to GDP declines, then it’s hard to see too much cause for concern.
