Peru to Increase Public Spending

Peru’s president Alan Garcia has announced a plan to increase government spending by PES10bn. In addition, $3bn has been financed from international finance institutions and an additional $7bn of financing is being discussed. The funds would be invested in infrastructure, housing and credit lines for small and medium sized exporters. This extra injection, says JPMorgan, “suggests…a 1.6% of GDP fiscal deficit for 2009 –a still manageable figure.” Goldman Sachs says the implementation of the package “could turn the fiscal balance into deficit in 2009, from a projected surplus of 2.3% GDP in 2008.