Peru - Public finance



The central government publishes an annual budget representing the government's consolidated accounts (including budgetary and extrabudgetary transactions). Indirect taxes, including import and export duties, constitute the major source of government revenues. In the early 1970s, the number of state enterprises increased rapidly, which led to increased public-sector spending. As the revenues from state enterprises lagged behind expenditures, the budget deficit increased to about 10% of GDP during 1975–77, as compared to 1.7% during 1970–72. As a result of a fiscal stabilization program, the deficit was reduced to 6.5% of GDP in 1978, and to 2.5% in 1985.

In 1990, the Fujimori administration began to pursue tighter fiscal policies and attempted to avoid domestic financing of the deficit. The consolidated public sector deficit, which in 1990 was6.5% of GDP, fell to 2.5% by 1992, despite the suspension of most foreign financing after the 5 April coup. The IMF program allowed a foreign-financed deficit of 2.9% of GDP in 1993 for increased social sector spending and investment in infrastructure. However, with lower than expected foreign financing and tax collection, the deficit that could be maintained while meeting the public sector external debt obligations was only equivalent to about 2% of GDP. The privatization of state enterprises fattened the government's coffers between 1992 and 2000. The budget deficit for 2000 was 2.5% of GDP due to a rise in public sector wages of 16%, and lower than expected revenues from privatization that year.

The US Central Intelligence Agency (CIA) estimates that in 2002 Peru's central government took in revenues of approximately $10.4 billion and had expenditures of $10.4 billion. External debt totaled $33.1 billion.

The following table shows an itemized breakdown of government revenues. The percentages were calculated from data reported by the International Monetary Fund. The dollar amounts (millions) are based on the CIA estimates provided above.

Peru

R EVENUE AND G RANTS 100.0% 10,400
Tax revenue 84.2% 8,756
Non-tax revenue 13.5% 1,405
Grants 2.3% 239

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