Peru agrees standby arrangement with IMF, initial $118 million available

Pittsburgh, June 9 - The executive board of the International Monetary Fund's newly approved stand-by arrangement for Peru enables the release of a $118 million first drawing, according to a news release

The $422.8 million arrangement was approved Wednesday and is designed to support Peru's economic program through mid-2006.

The IMF noted that Peru intends to treat the arrangement as precautionary.

"Peru's recent economic performance has been favorable, with solid growth and low inflation," Rodrigo de Rato, the board's managing director and chairman said in the release. "Substantial buffers, including a high level of international reserves and a well-capitalized banking system, have been built up to further reduce vulnerabilities associated with high dollarization and public debt."

Peru made progress in stabilizing its economy and adopting growth-enhancing structural reforms under the 2002-03 stand-by arrangement with the fund, the IMF said. Economic growth averaged 4.5% a year while inflation remained low under the inflation targeting framework of the central bank.

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