Fitch: Peru outlook positive

Fitch Ratings said it revised the outlook on Peru's long-term foreign currency rating to positive from stable on improving public and external finances and reduced public financing vulnerabilities. The long-term foreign currency rating remains at BB-. The long-term local currency (Peruvian Nuevo Sol) rating was affirmed at BB+ with a stable outlook.

According to sovereign analyst Therese Feng at Fitch Ratings, "Fiscal consolidation has been achieved in spite of a challenging political climate, which has helped to stabilize Peru's high public indebtedness and enhance the credibility of fiscal management'. Since 2001, 4% GDP growth, tax reform, and restraint in spending growth have underpinned a 1% of GDP reduction in the general government deficit.

"The government has also been resourceful in generating new sources of revenue to anticipate added expenditures. Furthermore should a second vote in Congress to approve constitutional reform of the public pension system be secured in the fall, both near-term public finances and the actuarial deficit of the pension system would improve."

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