They will allocate more than S / 18,000 million to the FEF and the RSL

The Ministry of Economy and Finance (MEF) announced that more than S / 18,000 million (about 2% of GDP) will be allocated to the Fiscal Stabilization Fund (FEF) and the Secondary Liquidity Reserve (RSL) during the first quarter of 2022 , with which these fiscal savings of the country will exceed the levels registered before the pandemic.

According to the entity, this recovery of the country’s fiscal savings has been achieved thanks to the significant recovery of economic activity that will lead, according to estimates, to the PBI grow 13.0% in 2021, which will be one of the highest growth rates in the world.

This favorable evolution of the Peruvian economy is associated with a rapid advance in vaccination, as well as an expansionary monetary and fiscal policy, together with favorable prices of commodities (such as copper), which generated a significant increase in tax revenues, which not only allowed to reduce the fiscal deficit 2021, but will also see tax savings accrue to the FEF and RSL.

In this way, added to the prudent management of public finances and within the framework of the current fiscal institutionality, resources will accumulate in the FEF and the RSL for an amount greater than S / 18,000 million. During the pandemic, almost all of these country’s savings were used to face the emergency, as well as to avoid a further increase in public debt and to finance the response plan to the COVID-19.

After more than 6 years, the FEF will accumulate resources again. Said entity is one of the main elements of countercyclical fiscal policy, since it accumulates resources mainly in scenarios of increases in fiscal income associated with high levels of growth or favorable commodity prices, so that they can then be used as a source of financing for responses from fiscal policy in the face of negative shocks, such as economic crises or natural disasters.

It should be noted that, due to the pandemic, most of the Fiscal Stabilization Fund was used in order to face the health emergency, which made it possible to reduce the need for greater indebtedness in a context of high uncertainty and volatility in international financial markets.

Thus, Peru will not only be the country the largest economic growth of Latin America and with the greatest reduction in the fiscal deficit in 2021, but will also reconstitute strengths through the accumulation of resources in the RSL and in the FEF, which will preserve the response capacity of the country’s fiscal policy in the face of future adverse scenarios .