Exclusive-Peru eyes spending in protest zones, fiscal targets ‘non-negotiable’ -minister

By Marco Aquino

LIMA (Reuters) – Peru’s economy minister said on Tuesday that the new government was looking at economic stimulus measures for regions roiled by protests after the ouster of leftist leader Pedro Castillo, but said fiscal deficit targets were “non-negotiable”.

The Andean nation, the world’s no. 2 producer, was thrown into disarray last week when leftist leader Castillo was ousted by Congress and arrested, sparking off protests in mining regions that have left at least seven people dead.

“We do not rule out some measures to try to generate reactivation in particular in these areas of convulsion, we recognize that there is discontent among citizens,” Economy Minister Alex Contreras told Reuters in his first interview with international media.

Amid warnings from ratings agencies about the economic impact of the unrest and elevated spending, Contreras pledged that fiscal responsibility would be maintained.

“The fiscal deficit (target) is something for us that is not negotiable,” he said, adding the government needed to take “very fast measures” to stimulate growth, but “that can be executed with the balances that we are going to have this year.”

Peru is aiming for a fiscal deficit of 2.5% of GDP this year and 2.4% next year.

Contreras said that the economic impact of the protests, which started just under a week ago with calls for rapid new elections and for Congress and new President Dina Boluarte to step down, was around 80 million soles ($21.05 million) per day.

“The impact of the protests is limited, we believe that they will moderate in the following days,” he said, adding the unrest would not force the government to change its outlook for 2023. “We are not going to review the projections.”

($1 = 3.8002 soles)

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