LIMA, Jan 29 (Reuters) - Peru, ranked world's second, plans to issue up to three sovereign bonds this year to fund its growing fiscal deficit after surpassing economic growth forecasts last year, as stated by Economy Minister José Arista to Reuters.
Peru stands as one of South America's most financially stable countries, however, a deficit stretching to 3.6% of gross domestic product (GDP) last year - the highest since 1992 excluding pandemic years - jeopardizes its credit rating and could increase financing costs.
"We plan to do it in two or three interventions in the external market," Arista told Reuters in an interview on Tuesday, mentioning the government's intention to await the calming of international political unrest first.
"Fiscal spending cannot be abruptly cut this year; it must be gradually reduced," he noted. The official forecast targets a 2.2% deficit by 2025.
Arista indicated that Peru's economy, recovering from a recession in 2023, is likely to have grown by 3.3% last year, slightly surpassing the projected 3.2%, with a notable 5% growth in December. Official growth figures for 2024 are yet to be published.
Peru, according to Arista, must significantly enhance its growth, forecasting a "conservative" growth rate exceeding 3% in 2025. "To efficiently address all our social challenges and improve the well-being of the population, we must achieve growth rates exceeding 5%."
The minister, who recently met with mining companies including Glencore, Anglo American, and Newmont in Davos, expressed that the sector benefits from Peru's economic stability but harbors concerns about certain issues.
He mentioned that Newmont had committed to gaining local community support for its $2 billion Yanacocha Sulfuros copper-gold project in northern Peru. "They have pledged to construct a dam for the city of Cajamarca, understanding that resolving the water issue is a prerequisite for mining operations."
Newmont, managing the largest gold mine in Peru, announced in mid-2023 a two-year postponement for its decision on Yanacocha Sulfuros.
Arista emphasized the importance for Peru to capitalize on its current growth momentum and increase investments in new mines, crucial for upholding Peru's global standing in the copper market.
"Peru is now experiencing a phase of continuous growth," Arista noted. "We must capitalize on this opportunity by initiating new mining projects, particularly copper mines."