The election of Keiko Fujimori as president of Peru strengthens the outlook for investment and the sovereign credit profile by favoring the continuity of the economic policy framework, although fiscal and political risks persist, according to Moody’s Ratings.
The rating agency noted that a more predictable macroeconomic environment should improve investor sentiment, support a solid investment dynamic, and strengthen growth prospects.
He also considered that the continuity of policies and efforts to reduce regulatory burdens and streamline permits could unlock large-scale projects in mining and infrastructure.
This progress would allow economic growth to once again approach the average of 3.5% recorded in 2024-25 and even surpass it in the medium term.
The agency expects the new administration to maintain the current macroeconomic policy framework, preserve the Central Bank’s independence, and respect contractual and property rights, reducing the risk of abrupt changes in public policies.
It also anticipates that the government will maintain its commitment to fiscal discipline and a low debt burden compared with other countries in the region.
Public debt amounts to about 30% of GDP and, together with solid fiscal buffers and a credible and independent central bank, provides significant capacity to absorb shocks, Moody’s indicated.
However, the rating agency warned that the outlook remains marked by fiscal challenges.
The government’s ability to reconcile budgetary discipline with social demands and political pressures will be key to preserving market confidence and the credibility of the fiscal framework.
The risks
Moody’s indicated that short-term growth could also be affected by an El Niño event of moderate to strong intensity, which would likely impact the primary sectors and introduce volatility in production.
The agency also warned that recent legislative measures have increased the rigid components of the budget. Added to this are greater social demands, congressional initiatives without compensatory funding sources, and potential additional support for Petroperú, factors that could hinder compliance with fiscal rules.
The infrastructure reconstruction needs and emergency spending associated with the El Niño Phenomenon also threaten to worsen fiscal results in the short term.
In the political sphere, Moody’s expects risks to decrease under the new administration, although they will remain a limiting factor for the country’s credit profile. The composition of Congress and the reestablishment of the Senate reduce the likelihood of a presidential impeachment and the high turnover of leaders seen over the past decade. However, the high polarization and fragmentation of Congress will limit the ability to push through reforms and could generate recurring episodes of political uncertainty.
(The original version of this content was written in Spanish)
