Peru seeks national fiscal pact ahead of 2026 general election

By Marco Aquino

LIMA, Dec 17 (Reuters) - ⁠Peruvian President Jose ⁠Jeri on ‍Thursday met with several leaders of state agencies, businesses, and civil society in an effort to reach a "fiscal pact" aimed at preserving the country's economic ‍stability ahead of upcoming presidential elections in the new year.

The meeting took ​place amid concerns about public spending targets due to a backlog of measures that could break the fiscal ​balance.

“The main purpose of this agreement is to overcome current circumstances, safeguard the future of our country, and go beyond the political cycles that occur every four or five years,” Jeri told the meeting, ​held at the presidential palace in the capital Lima.

Peru expects to meet its fiscal deficit target of 2.2% of GDP this year, after failing to do so for the ​previous two years. The deficit is lower than last year's 3.5%, which was the South American nation's worst performance in ‌three decades, excluding the pandemic period.

Peru's fiscal oversight body warned in October that legislative initiatives approved in the last four years could undermine ​the country's economic and fiscal stability.

With just a few ⁠months to go before the April 12 general elections, Congress is evaluating 352 projects, mainly related to spending and salaries, 10 of which ‌have an annual fiscal cost equivalent to $7.4 billion.

Luis Valdivieso, one of several former economy ministers at the meeting, said the country's leaders must act to reverse committed expenditures that are not yet budgeted, "to prevent ‌disaster from materializing."

At the meeting, some asked the government to take legal action before Peru's constitutional court ‌to overturn certain laws previously passed by Congress, including pay raises and bonuses for public employees and certain tax exemptions.

Most of these spending initiatives were approved during the administration of former president Dina Boluarte, ‍who was removed from office in October this year.

Interim President Jeri cannot run in April but has a 47% approval rating according to a ⁠November poll, two percentage points higher than when he took office in October.

Peru, which has an annual inflation rate of 1.4%, has projected economic growth of 3.5% this year, compared to an expansion of 3.3% in 2024, one of the highest projected growth rates in the region.

(Reporting by Marco Aquino; Editing by Chizu Nomiyama )

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