Kurt Burneo: “Peru’s investment grade has not been lowered

The Ministry of Economy and Finance (MEF) affirmed that Peru continues to be the country with the second best credit rating in the region, after the rating agency Fitch Ratings kept it at BBB, which corresponds to a grade of investment.

However, given the review by the international rating agency of the credit outlook for the Peru from stable to negative, The MEF indicated that the task of the Executive will be to seek consensus to avoid deterioration in the credit rating In our country.

Along these lines, the Minister of Economy, Kurt Burneo, clarified that “Fitch has not lowered Peru’s investment grade”, but rather reformulated a change in the outlook for local performance from stable to negative. In addition, in the event of a downgrade in Peru’s credit rating, this would be in a scenario of an unstable international economy.

For his part, the president of the Central Reserve Bank of Peru (BCRP), Julio Velard, considers it unlikely that Peru’s credit rating will be lowered in the short term, since there is no justification because our country does have payment capacity.

“What matters is the ability to pay debt. The Government can be good or bad, that matters little; they are measuring whether or not Peru can pay debt, that is the rating. It does not measure whether Government is honest or corrupt. Lowering the rating when there is payment capacity would seem unfair to me”, said the banker.

The head of the issuing entity maintained that Peru’s debt level is the lowest in South America or Mexico, which shows the country’s good payment capacity. Also, highlighted the reduction of the fiscal deficit from 8.9% in 2020 to 1.9% for this year.

Impact of the downgrade

In the opinion of the former Minister of Economy Luis Miguel Castilla, This revision of the perspective is a wake-up call for the State, for which it should make efforts to improve in terms of governance and a better selection of officials, especially those who lead the various ministries, since this generates as a consequence a lower economic growth of the country.

“The impact is an increase in the cost of bonds, I don’t think it will happen in the short term because it was already internalized and the fundamentals are very solid. This is a wake-up call to the lack of growth in the country”, explained Castilla Rubia.

The economist also pointed out that this revision could affect ordinary citizens, since it results in investment projects being more expensive to finance, which would generate difficulties and therefore a lower demand for job.

MEF prepares new package of measures

Given the unfavorable international context, The Minister of Economy, Kurt Burneo, announced that from his office the new economic reactivation measures are already being fine-tuned, which will be presented next week and would be aimed at accelerating the rate of economic growth.

“The demand for employment depends on economic activity. If we speed up the economy, the demand for employment is boosted and the growth rate of tax collection also increases, ”he said.

The word

Kurt Burneo, Finance Minister

“If we had not done anything we would be in a much more complicated macroeconomic situation; We have not stood idly by regarding the slowdown in the economy.”