Peru government proposes 9% budget increase for 2023

LIMA – The Peruvian government presented its 2023 budget plan to Congress Friday, proposing a 9% increase from this year’s initial budget to 215 billion soles ($55.93 billion).

According to the proposal, published on Congress’ website, the government estimates economic growth of 3.5% next year, as announced Thursday by the minister of economy and finance, Kurt Burneo.

Burneo has said that he is planning measures aimed at reviving private spending, increasing public investment and rebuilding investors’ confidence in the country.

The budget plan also estimates a 3.5% increase in accumulated consumer prices for 2023, well below the 4.9% inflation forecast by the economic ministry the day before.

Peru, the world’s second-largest producer of copper, counts mining as its main source of financing and the government is budgeting for a drop in copper prices in 2023. The industry frequently suffers from protests from local communities, stopping or slowing production.

Friday’s budget also estimates an average exchange rate for next year of 3.94 soles to the U.S. dollar. As the country faces political uncertainty, with President Pedro Castillo plagued by a wave of corruption allegations, the sol slumped to a historic low last October, though it has gradually recovered and on Friday closed up 0.23% to 3.8380/3.841 soles per dollar.

Along with the budget proposal, the government sent a public borrowing strategy for the coming year, with plans for domestic bond issues of up to 20.67 billion soles.

The government also plans to carry out debt management operations for up to $6 billion through prepayment of obligations, debt swaps or exchanges, repurchases and internal or external title issues.

($1 = 3.8198 soles)

Source: Reuters