LatinFinance - September/October 2016 - 26

ments. It's not the end of the world for us.
LF: Let's talk about Peru more specifically. One of the financial issues here is
land reform bonds. Gramercy, the fund,
is suing Peru. What's the strategy there?
Are you going to default or are you going
to pay?
PPK: These land reform bonds were
issued in the 1970s. They're under Peruvian
law. They are not internationally recognized
bonds. And we have a very good team of
lawyers.
These folks think they can buy something
for a cent and make 100. It doesn't work that
way. This is not funded debt like the Argentine bonds were, that were actually issued.
This is something quite different.
We will look at it when the issue comes
up. They've hired lobbyists, they're making

PEDRO PABLO KUCZYNSKI

"WITH THE CAMPAIGN
IN THE US THERE
ARE A LOT OF
PROTECTIONIST
NOISES. WE'RE A
SMALL ENOUGH
PLAYER SO WE
HOPE THEY
LEAVE OUR FTA
ALONE"

a big fuss. And we're not stupid. We know
what to do. We'll face the music if there is
music. But I think that we can look at this
with a clean view.
LF: So you're saying a solution
through negotiation?
PPK: Well, I don't think we owe them
anything. It's that simple. But we'll have to
see. We're reasonable people. They already,
the same group of investors - Paul Singer and
company - they already got Peru to pay up in
the late 90s. But that was funded debt. That
was internationally recognized debt. This
is not.
LF: Would you say that Peru has had a
following wind? It's benefitted from global factors, from the rise of China that's
brought in new money, new capital.

Peru's new president has pledged to grow the country's economy to among the best in the region. First he has to tame
the deficit and convince the opposition to accept lower taxes and a higher debt ceiling. By Lucien Chauvin

Busy agenda
Kuczynski began his five-year term at a critical time for Peru.
The economy is expanding faster than most others in the
region, but below potential. Gross domestic product grew by
4.1% in the first six months of this year. That's ahead of the 3.8%
target the previous government set in its multi-annual macroeconomic indicators in April and the forecasts of the IMF and
other multilateral agencies.
What's more, inflation in July eased into the 1%-3% target band
for the first time in 17 months and the central bank now expects
inflation to come in at 2.8% for the year, down from initial forecasts of 3.5%. The local currency, the sol, is also stronger than
anticipated, appreciating 1.8% against the dollar in the first seven
months of the year, much better than the central bank's initial
projection of a 7% decline for the year.
"Economic growth will give the Kuczynski government room
to maneuver," says Luis Hurtado, an associate for macro strategy
at Canada's CIBC Capital Markets. "The central bank is doing a
good job returning inflation to the target range and the sol is doing relatively well."
Exports, while still well below the record $45 billion at the
end of the last decade, have stabilized. The trade deficit for the
first six months of the year clocked in at $840 million, far below
the $2.2 billion deficit recorded in the same period last year. The
Kuczynski government announced in August that it would begin
implementing plans to boost exports, with the goal of reaching
$70 billion by 2021.
"The goal of $70 billion may sound too ambitious, but we think
that it is feasible. We are working on an integrated system that

26 L ATINFINA NCE.COM - September/October 2016

will address the recurring problems faced by exporters to provide a systematic solution," says Eduardo Ferreyros, minister for
foreign trade and tourism.
Although most numbers are promising, the Kuczynski government will have to deal with a larger-than-expected fiscal deficit
that could complicate its plans to ramp up public investment
while reducing taxes.
The fiscal deficit was equivalent to 3.3% of GDP in the 12
months ending in July. That month's deficit alone was double
what it had been last July. The administration has announced that
it will increase its estimate of the fiscal deficit to 2.5% of GDP for
2017, up from the 1.8% the previous government had included in
its debt calculations. The Kuczynski administration still plans to
lower the deficit to 1%, but allows it will take longer to get there.
"Looser fiscal policy is not a concern in the immediate term
because government debt is quite low, but it will reinforce a
pro-cyclical economic policy," says Adam Collins, Latin America
economist with London-based Capital Economics.
Alfredo Thorne, the finance minister, says the higher fiscal deficit will provide the government with approximately $1.5 billion
more for the 2017 budget, helping to ensure that the economy
grows by a sustainable 5% annually starting next year.
Ambitious growth
Kuczynski's growth plan revolves around a mix of policies to
ramp up public-sector investment, encourage private funding
sources and increase the buying power of Peruvians through
lower taxes and formal job creation.


http://www.LATINFINANCE.COM

Table of Contents for the Digital Edition of LatinFinance - September/October 2016

Contents
LatinFinance - September/October 2016 - Cover1
LatinFinance - September/October 2016 - Cover2
LatinFinance - September/October 2016 - Contents
LatinFinance - September/October 2016 - 2
LatinFinance - September/October 2016 - 3
LatinFinance - September/October 2016 - 4
LatinFinance - September/October 2016 - 5
LatinFinance - September/October 2016 - 6
LatinFinance - September/October 2016 - 7
LatinFinance - September/October 2016 - 8
LatinFinance - September/October 2016 - 9
LatinFinance - September/October 2016 - 10
LatinFinance - September/October 2016 - 11
LatinFinance - September/October 2016 - 12
LatinFinance - September/October 2016 - 13
LatinFinance - September/October 2016 - 14
LatinFinance - September/October 2016 - 15
LatinFinance - September/October 2016 - 16
LatinFinance - September/October 2016 - 17
LatinFinance - September/October 2016 - 18
LatinFinance - September/October 2016 - 19
LatinFinance - September/October 2016 - 20
LatinFinance - September/October 2016 - 21
LatinFinance - September/October 2016 - 22
LatinFinance - September/October 2016 - 23
LatinFinance - September/October 2016 - 24
LatinFinance - September/October 2016 - 25
LatinFinance - September/October 2016 - 26
LatinFinance - September/October 2016 - 27
LatinFinance - September/October 2016 - 28
LatinFinance - September/October 2016 - 29
LatinFinance - September/October 2016 - 30
LatinFinance - September/October 2016 - 31
LatinFinance - September/October 2016 - 32
LatinFinance - September/October 2016 - 33
LatinFinance - September/October 2016 - 34
LatinFinance - September/October 2016 - 35
LatinFinance - September/October 2016 - 36
LatinFinance - September/October 2016 - 37
LatinFinance - September/October 2016 - 38
LatinFinance - September/October 2016 - 39
LatinFinance - September/October 2016 - 40
LatinFinance - September/October 2016 - 41
LatinFinance - September/October 2016 - 42
LatinFinance - September/October 2016 - 43
LatinFinance - September/October 2016 - 44
LatinFinance - September/October 2016 - 45
LatinFinance - September/October 2016 - 46
LatinFinance - September/October 2016 - 47
LatinFinance - September/October 2016 - 48
LatinFinance - September/October 2016 - 49
LatinFinance - September/October 2016 - 50
LatinFinance - September/October 2016 - 51
LatinFinance - September/October 2016 - 52
LatinFinance - September/October 2016 - 53
LatinFinance - September/October 2016 - 54
LatinFinance - September/October 2016 - 55
LatinFinance - September/October 2016 - 56
LatinFinance - September/October 2016 - 57
LatinFinance - September/October 2016 - 58
LatinFinance - September/October 2016 - 59
LatinFinance - September/October 2016 - 60
LatinFinance - September/October 2016 - 61
LatinFinance - September/October 2016 - 62
LatinFinance - September/October 2016 - 63
LatinFinance - September/October 2016 - 64
LatinFinance - September/October 2016 - 65
LatinFinance - September/October 2016 - 66
LatinFinance - September/October 2016 - 67
LatinFinance - September/October 2016 - 68
LatinFinance - September/October 2016 - 69
LatinFinance - September/October 2016 - 70
LatinFinance - September/October 2016 - 71
LatinFinance - September/October 2016 - 72
LatinFinance - September/October 2016 - 73
LatinFinance - September/October 2016 - 74
LatinFinance - September/October 2016 - 75
LatinFinance - September/October 2016 - 76
LatinFinance - September/October 2016 - 77
LatinFinance - September/October 2016 - 78
LatinFinance - September/October 2016 - 79
LatinFinance - September/October 2016 - 80
LatinFinance - September/October 2016 - 81
LatinFinance - September/October 2016 - 82
LatinFinance - September/October 2016 - 83
LatinFinance - September/October 2016 - 84
LatinFinance - September/October 2016 - 85
LatinFinance - September/October 2016 - 86
LatinFinance - September/October 2016 - 87
LatinFinance - September/October 2016 - 88
LatinFinance - September/October 2016 - 89
LatinFinance - September/October 2016 - 90
LatinFinance - September/October 2016 - 91
LatinFinance - September/October 2016 - 92
LatinFinance - September/October 2016 - 93
LatinFinance - September/October 2016 - 94
LatinFinance - September/October 2016 - 95
LatinFinance - September/October 2016 - 96
LatinFinance - September/October 2016 - Cover3
LatinFinance - September/October 2016 - Cover4
https://www.nxtbook.com/nxtbooks/latinfinance/0319QMR
https://www.nxtbook.com/nxtbooks/latinfinance/1218JYM
https://www.nxtbook.com/nxtbooks/latinfinance/paraguay_2018
https://www.nxtbook.com/nxtbooks/latinfinance/8320YTM
https://www.nxtbook.com/nxtbooks/latinfinance/8465TBM
https://www.nxtbook.com/nxtbooks/latinfinance/1476YBW
https://www.nxtbook.com/nxtbooks/latinfinance/7835THM
https://www.nxtbook.com/nxtbooks/latinfinance/8655TGL
https://www.nxtbook.com/nxtbooks/latinfinance/0614IJP
https://www.nxtbook.com/nxtbooks/latinfinance/ecuador_20170910
https://www.nxtbook.com/nxtbooks/latinfinance/2713KNP
https://www.nxtbook.com/nxtbooks/latinfinance/4982CFT
https://www.nxtbook.com/nxtbooks/latinfinance/7803HWE
https://www.nxtbook.com/nxtbooks/latinfinance/3829THA
https://www.nxtbook.com/nxtbooks/latinfinance/7891MDD
https://www.nxtbook.com/nxtbooks/latinfinance/7714JCR
https://www.nxtbook.com/nxtbooks/latinfinance/5619CMK
https://www.nxtbook.com/nxtbooks/latinfinance/6939ASL
https://www.nxtbook.com/nxtbooks/latinfinance/1364ASF
https://www.nxtbook.com/nxtbooks/latinfinance/0453DAS
https://www.nxtbook.com/nxtbooks/latinfinance/0453DAS_supp
https://www.nxtbook.com/nxtbooks/latinfinance/1304APV
https://www.nxtbook.com/nxtbooks/latinfinance/7234GSD
https://www.nxtbook.com/nxtbooks/latinfinance/1643XGS
https://www.nxtbook.com/nxtbooks/latinfinance/9511JKM_supp
https://www.nxtbook.com/nxtbooks/latinfinance/9511JKM
https://www.nxtbook.com/nxtbooks/latinfinance/8745TNV
https://www.nxtbook.com/nxtbooks/latinfinance/3629PBC
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC_HSBC
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC_supp
https://www.nxtbook.com/nxtbooks/latinfinance/7466TBC
https://www.nxtbook.com/nxtbooks/latinfinance/9463RVB
https://www.nxtbook.com/nxtbooks/latinfinance/7345GPY
https://www.nxtbook.com/nxtbooks/latinfinance/6398TVB
https://www.nxtbook.com/nxtbooks/latinfinance/4899EXM_supp
https://www.nxtbook.com/nxtbooks/latinfinance/4899EXM
https://www.nxtbook.com/nxtbooks/latinfinance/3885CWS
https://www.nxtbook.com/nxtbooks/latinfinance/45923GBC
https://www.nxtbook.com/nxtbooks/latinfinance/67449NBD
https://www.nxtbook.com/nxtbooks/latinfinance/46733NLP
https://www.nxtbook.com/nxtbooks/latinfinance/78456HCL
https://www.nxtbook.com/nxtbooks/latinfinance/89456RBM
https://www.nxtbook.com/nxtbooks/latinfinance/22278HBL
https://www.nxtbook.com/nxtbooks/latinfinance/2895YBM
https://www.nxtbook.com/nxtbooks/latinfinance/9033TBM
https://www.nxtbook.com/nxtbooks/latinfinance/8934TNP
https://www.nxtbook.com/nxtbooks/latinfinance/costarica20130304
https://www.nxtbook.com/nxtbooks/latinfinance/4672PNB
https://www.nxtbook.com/nxtbooks/latinfinance/9377BKL
https://www.nxtbook.com/nxtbooks/latinfinance/drmtest
https://www.nxtbook.com/nxtbooks/latinfinance/drmtest2
https://www.nxtbook.com/nxtbooks/latinfinance/5532LMC
https://www.nxtbook.com/nxtbooks/latinfinance/9044TBM
https://www.nxtbook.com/nxtbooks/latinfinance/4877RBC
https://www.nxtbook.com/nxtbooks/latinfinance/3008JHV
https://www.nxtbook.com/nxtbooks/latinfinance/3728YBC
https://www.nxtbook.com/nxtbooks/latinfinance/9337KLM
https://www.nxtbook.com/nxtbooks/latinfinance/5674GNJ
https://www.nxtbook.com/nxtbooks/latinfinance/8330KMC
https://www.nxtbook.com/nxtbooks/latinfinance/7663HCM
https://www.nxtbook.com/nxtbooks/latinfinance/2319ZMB
https://www.nxtbook.com/nxtbooks/latinfinance/7110MKL
https://www.nxtbook.com/nxtbooks/latinfinance/8599FHG
https://www.nxtbook.com/nxtbooks/latinfinance/4517HJK
https://www.nxtbook.com/nxtbooks/latinfinance/7813GHB
https://www.nxtbook.com/nxtbooks/latinfinance/1564FBM
https://www.nxtbook.com/nxtbooks/latinfinance/8884HGV
https://www.nxtbook.com/nxtbooks/latinfinance/7863SVB
https://www.nxtbook.com/nxtbooks/latinfinance/5233SFB
https://www.nxtbook.com/nxtbooks/latinfinance/5899SML
https://www.nxtbook.com/nxtbooks/latinfinance/4311PMN
https://www.nxtbook.com/nxtbooks/latinfinance/1366FBB
https://www.nxtbook.com/nxtbooks/latinfinance/9355AXC
https://www.nxtbook.com/nxtbooks/latinfinance/8559EBN
https://www.nxtbook.com/nxtbooks/latinfinance/8244QXC
https://www.nxtbook.com/nxtbooks/latinfinance/1779BBN
https://www.nxtbook.com/nxtbooks/latinfinance/7144XVB
https://www.nxtbook.com/nxtbooks/latinfinance/8971QGH
https://www.nxtbook.com/nxtbooks/latinfinance/200805
https://www.nxtbook.com/nxtbooks/latinfinance/200804
https://www.nxtbook.com/nxtbooks/latinfinance/200803
https://www.nxtbookmedia.com