On 13 June 2016 the IMF published on its website a concluding statement following the completion of discussions with Peru under Article IV of the IMF’s articles of agreement.
Peru’s economic growth fell in 2014 as a result of declines in commodity prices but recovered to 3.3% in 2015. Economic activity was supported by stimulus plans announced in late 2014 including tax rate reductions, simplified tax administration and more public investment. Although growth is expected to rise further in 2016/17 there are risks from low commodity prices and substantial structural reform is required to strengthen growth.
The IMF considers that more fiscal space will be required for the higher public capital spending. In addition to containing current spending that is not linked to structural reforms or capital expansion this can be done by raising the current low levels of tax revenue collection. The IMF therefore recommends that Peru should stream line tax administration; reduce the informal sector; limit tax exemptions; and tighten the protection of the tax base from international profit shifting by multinational enterprises.
