Transcript REPUBLIC OF PERU

REPUBLIC OF PERU
•
Area: 1.3 million km2
•
Third country in extension in South
America (five times the size of the UK)
•
Population: 27 million inhabitants
•
Capital : Lima (8 million inhabitants)
•
Currency : Nuevo Sol
•
3 Natural Regions: Coast, Highlands y
Jungle Forest
•
GDP 2001: US$ 54 billions
•
GDP per capita: US$ 2,500
REPUBLIC OF PERU
1. Economic fundamentals
• Peru’s estimated 2002 growth is poised to outpace the US, Europe and
most of Latin America
• Strong economic fundamentals have allowed Peru to weather the regional
crisis well
• Peru is undertaking measures to sustain economic growth by promoting
private investment, and fostering regional and sectoral diversification
• Tax reform and the strengthening of the collection system are already
boosting fiscal revenues
• The renewal of the Andean Trade Preference and Drug Eradication Act
(ATPDEA) by the US will further enhance Peru’s export base
REPUBLIC OF PERU
Objectives of the economic program
•
To achieve high and sustained economic growth
•
To reduce unemployment and poverty
•
To maintain low inflation rates
•
To maintain high level of international reserves that provides
a safeguard against external shocks
REPUBLIC OF PERU
Peru’s economy has been growing consistently for
the past 14 months…
Transition Government
10
8
6
4
2
0
-2
-4
Toledo Administration
7.6
4.2
2.7
2.8
S
O
1.4
3.9
4.3
3.4
2.1
7.3
3.6
3.8
3.8
J
J
A
1.6
0.1
J
-0.2
-0.3
-1.3
-2.2
-2.5 -3.1
F
M
A
M
J
J
A
N
D
J
F
M
A
M
3.7
4
2002E
1.5
2
1
2001
2.5
3
0.7
0.3
0.3
0.2
0
-1
-1.2
-2
USA
Europe
Source: INEI (above) and Consensus Economics Inc. (below)
Latin America
Peru
S
REPUBLIC OF PERU
…and the recovery is no longer being driven
by mining alone
GDP Growth by Sector (%, yoy)
2001
2002Q1
2002Q2
2002Q3
0.2
3.0
5.3
4.9
-0.6
7.4
5.6
1.4
-13.3
-22.1
2.2
4.4
Mining and Hydrocarbons
11.2
23.7
18.3
3.8
Manufacturing
-1.1
-0.8
4.3
5.6
Primary
-2.9
-3.6
-2.3
-1.7
Non-Primary
-0.6
0.0
6.4
7.6
-6.0
10.3
7.4
11.5
Retail
0.0
-0.1
4.0
3.0
Other Services
0.4
1.6
4.3
4.1
Primary Sectors
1.9
9.4
7.2
1.8
-0.2
1.6
4.7
5.6
GDP
Agriculture
Fishing
Construction
Non-Primary Sectors
Source: MEF
REPUBLIC OF PERU
The economic recovery is helping to reduce unemployment
Unemployment Rate
(%)
11.5
11.1
11.0
Lima Unemployment Rate
11.0
10.8
Three Month Moving Average
10.5
10.0
9.9
10.0
9.7
9.7
9.5
9.4
9.5
9.2
9.1
9.0
8.9
9.0
9.0
8.4
8.5
8.2
8.1
7.9
8.0
Source: MEF
O
ct
-0
2
-0
2
Se
p
-0
2
Au
g
l-0
2
Ju
-0
2
Ju
n
ay
-0
2
M
2
-0
2
Ap
r
ar
-0
M
02
Fe
b-
-0
2
Ja
n
-0
1
D
ec
-0
1
N
ov
O
ct
-0
1
-0
1
Se
p
-0
1
Au
g
l-0
1
Ju
-0
1
Ju
n
M
ay
-0
1
7.5
REPUBLIC OF PERU
Private investment is no longer falling and is expected
to recover in the upcoming quarters
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•
Private investment grew 4.5% year on year in the third quarter, after falling for 8
consecutive quarters on the same basis; correspondingly, credit to the private
sector is also recovering
The incentives in place are expected to increase private investment by 1% in the
whole of 2002 and 4.5% in 2003
10
6.7
Private Investment
Credit to Private Sector
4.1
5
4.5
4.5
1.0
0
-5
-2.0 -3.1
-10
-5.6 -4.6
-15
-20
-15.3
1999
Source: Banco Central de Reserva
2000
2001
2002E
2003P
REPUBLIC OF PERU
Higher mining and non-traditional exports are
pushing the trade balance into surplus…
Imports and Exports Evolution
(US$ BN)
9.0
Exports
Imports
8.5
8.0
7.5
7.0
6.5
6.0
5.5
5.0
Source: Banco Central de Reserva
1997
1998
1999
2000
2001
2002E
REPUBLIC OF PERU
1,0
0,0
(As a % of GDP)
Public Sector- Consolidated Economic
Results of
Fiscal policy is aimed at reducing fiscal deficit
-1,0
-2,0
-3,0
-1,9
-3,0
-2,3
-2,3
2001
2002
-3,2
-4,0
1999
Source: Central Reserve Bank (2002)
2000
2003
REPUBLIC OF PERU
… the ongoing efforts to boost tax collection are yielding
impressive results
Internal Tax Collection
(% change, yoy)
14.4
12.2
14.4
9.8
7.1
3.5
2
12.4
14.5
4.2
-1
-3.4
-4.4
-5.6
Source: MEF
Oct-02
Sep-02
Aug-02
Jul-02
Jun-02
May-02
Apr-02
Mar-02
-19.3
Feb-02
Jan-02
Dec-01
Nov-01
Oct-01
-13
Sep-01
15
10
5
0
-5
-10
-15
-20
Aug-01
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The tax measures implemented earlier this year seek to widen the tax base, and
curb evasion by strengthening the tax collection agency (SUNAT)
As a result of tax reform, revenues are expected to increase by 1% of GDP on an
annual basis
Jul-01
•
REPUBLIC OF PERU
Long-term flows cover all of the current account deficit
Current Account Deficit and Long-Term Flows
(US$ MM)
4000
3500
CA Deficit
3000
FDI* + Long-Term Loans
2500
2000
1500
1000
500
0
1991
1992
1993
*FDI figures include privatization revenues
Source: Banco Central de Reserva del Peru
1994
1995
1996
1997
1998
1999
2000
2001
2002E
REPUBLIC OF PERU
Inflation has declined drastically in recent years and
will end 2002 below the 2.5% target
Inflation Evolution
(%, yoy)
6
5
4
3
2
1
0
-1
Jan-99
May-99
Sep-99
Jan-00
May-00
Sep-00
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Inflation - Comparative Analysis
(% yoy, 2002E)
20
15.7
15
10
5.0
5
1.5
2.5
2.6
Peru
(Ba3/BB-)
Chile
(Baa1/A-)
6.0
7.6
8.0
Jamaica
(Ba3/B+)
Dom Rep
(Ba2/BB-)
0
Panama
(Ba1/BB)
Mexico
(Baa2/BBB-)
Colombia
(Ba2/BB)
Source: Banco Central de Reserva (above) and Government Official Data (Below)
Russia
(Ba3/B+)
REPUBLIC OF PERU
The Nuevo Sol has retained its value best amongst its
regional peers
Latin Currencies
(Jan 1st =100)
180
Brazil
Colombia
Chile
Peru
Mexico
170
160
150
140
130
120
110
100
90
D-01
J-02
Source: Bloomberg
F-02
M-02
A-02
M-02
J-02
J-02
A-02
S-02
O-02
REPUBLIC OF PERU
Prudent monetary policy has managed to reduce
interest rates while keeping prices and FX stable
Nuevos Soles Interbank Lending Rate
(%)
25
20
15
10
5
0
J-99 A-99 J-99 O-99 J-00 A-00 J-00 O-00 J-01 A-01 J-01 O-01 J-02 A-02 J-02 O-02
Source: Banco Central de Reserva
REPUBLIC OF PERU
Peru’s external liquidity position continues to
strengthen, while FX reserves are growing
Net International Reserves
(US$ BN)
11
10
9
8
J02
A
-0
2
S
-0
2
O
-0
2
J02
J02
F02
M
-0
2
A
-0
2
M
-0
2
J01
J01
A
-0
1
S
-0
1
O
-0
1
N
-0
1
D
-0
1
J01
F01
M
-0
1
A
-0
1
M
-0
1
7
Months of Import Coverage - Comparative Analysis
(Months, 2002E)
20
16.3
16
10.7
12
10.1
8.6
8
4.8
4
2.5
1.6
1.1
Mexico
(Baa2/BBB-)
Panama
(Ba1/BB)
Dom Rep
(Ba2/BB-)
0
Peru*
(Ba3/BB-)
Chile
(Baa1/A-)
Colombia
(Ba2/BB)
Russia
(Ba3/B+)
*as of Oct. 31
Source: Banco Central de Reserva (above) and JPMorgan (Below)
Jamaica
(Ba3/B+)
REPUBLIC OF PERU
Financial sector indicators continue to strengthen
(%)
% of Past-Due Loans
Reserve Coverage
140
10
8
120
6
100
4
80
2
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
3Q02
(%)
Net Interest Income / Interest Income
Return on Assets
1.40
70
1.05
60
0.70
50
0.35
40
0.00
30
1997
1998
Source: Superintendencia de Banca y Seguros
1999
2000
2001
Jan-Sep 02
REPUBLIC OF PERU
Emerging Markets Country Risk (EMBI)
(in basic points)
7 000
6 500
6 498
6 000
Argentina
1 658
2 000
1 614
1 000
962
Venezuela
1 000
500
617
322
Perú
686
Colombia
México
Source: Reuters
25/11/2002
Brazil
Ecuador
Latin America
1 063
REPUBLIC OF PERU
The decentralization process underway seeks to develop
the manufacturing base outside of Lima
• Lima currently concentrates
– 54% of GDP generation
– 62% of registered companies
– 46% of the labor force
• Decentralization Law put limits
on the size of the deficit and
indebtedness of regions
• Legislation in place ensures that
decentralization will not thwart
fiscal discipline of the central
government
Regional Contribution to GDP
% of GDP
Lima
54%
Source: INEI
Rest
of
Peru
46%
REPUBLIC OF PERU
Succesful Sovereign Bonds Issue
(Nov 2002)
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•
•
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•
•
Amount issued
Maturity
Maturity date
Coupon rate
Rate of return
Price
:
:
:
:
:
:
US$ 500m
5 years
Jan. 2008
9.125%
9.35%
99.073%
REPUBLIC OF PERU
Peru has a flexible and manageable financing plan for
2003
Millions of US Dollars
Uses
Amortizations
2002E
2340
1060
2003P
2525
1450
1280
1075
Sources
2340
2525
External
2045
1800
1670
1350
375
450
295
725
270
385
25
340
Fiscal Deficit
Multilateral and bonds
Projects
Internal
Local Market Bonds
Other*
* Includes use of privatization proceeds
Source: MEF
REPUBLIC OF PERU
Peru’s public external debt to GDP ratio has been cut
by nearly half since 1993
Public External Debt to GDP
(%)
70
60
50
40
30
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002E
External Debt to Exports
 (%)
500
450
400
350
300
250 Central Reserve Bank of Peru
Source:
1995
1996
1997
1998
1999
2000
2001
2002E
REPUBLIC OF PERU
Peru’s dependence on market financing is relatively low
Brazil
Mexico
Other
17%
US$BN
Multilateral
23%
US$BN
Other
8%
Brady Bonds
8%
Bilateral
9%
Bilateral
6%
Global Bonds
39%
Eurobonds
53%
Brady Bonds
15%
Total = $97.7
Colombia
US$BN
Bank Loans
17%
Total = $77.9
Export Credits
4%
Multilateral
27%
Other Bonds
16%
Bilateral
2%
US$ Bonds
34%
Total = $23.1
Source: JPMorgan
Multilateral
22%
Peru
US$BN
Supplier 5%
Global Bonds
7%
Commercial
Bank Loans 1%
Brady Bonds
14%
Bilateral
40%
Total = $19.8
Multilateral
33%
REPUBLIC OF PERU
The macroeconomic framework 2002-2005 points to a
consolidation of the economic recovery
Macroeconomic Framework
GDP growth rate
2002E
2003P
2004P
2005P
3.7
4.0
5.0
5.5
3.0
3.1
3.3
3.3
14.7
15.0
16.4
16.9
Inflation Target
2.5
2.5
2.5
2.5
Exports of Goods and Services (%-change, yoy)
5.6
6.4
6.8
9.0
-2.3
-1.9
-1.4
-1.0
Investment (% of GDP)
Public
Private
Consolidated Fiscal Deficit (% of GDP)
Source: MEF
REPUBLIC OF PERU
2. Strategic regional
position
PERU holds the key so that
Asian partners of APEC can
trade with:
The countries of
MERCOSUR, specially
Brasil and Argentina
REPUBLIC OF PERU
PERU is the only country in
the Andean Community that
belongs to APEC; the Andean
Community is a market of
more than 100 million
inhabitants with a combined
.. And the Andean
Community of Nations that
include Venezuela,
Colombia, Ecuador and
Bolivia...
GDP of US$ 250 billions.
REPUBLIC OF PERU
3. Clear framework for foreign investment
Stable and predictable investment environment
Basic principle
Same treatment for
domestic and foreign
investors
Restricted activities
None
Performance requisites
None
REPUBLIC OF PERU
Legal framework for investment
Constitutional principles
 Equal treatment for domestic and foreign investors
 Expropiations are prohibited, unless it is for national interest or national security
Foreign Investment Law
 Access to the best exchange rate for profit remission
 Free remissión of profits and royalties
Stability contracts
 For concessions and investments spannning more than 10 years
 Protects the investors in case of policy changes
REPUBLIC OF PERU
Legal stability
• For foreign investors:
– Equal treatment as with domestic investors
– Free disposal of foreign exchange
• For companies
– Hiring policies mechanisns
– Export promotion mechanisms
– Corporate income tax
REPUBLIC OF PERU
Perú is member of the following institutions:
• MIGA
• OPIC
• ICSID
Bilateral Investment treaties with:
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•
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•
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•
•
•
•
•
Argentina
Germany
Australia
Bolivia
China
Korea
Canada
Chile
Colombia
Denmark
Ecuador
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•
•
•
•
•
•
•
•
•
El Salvador
Spain
Finland
Netherlands
Great Britain
Italy
Malaysia
Norway
Paraguay
Portugal
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•
•
•
•
Rumania
Sweden
Switzerland
Thailand
Venezuela
REPUBLIC OF PERU
Many companies are now investing in Peru
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•
•
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Telefónica de España
Banco Bilbao Vizcaya
Endesa Desarrollo S.A.
Grupo Santander
Repsol - YPF
•
•
•
•
Orient Express
Royal and Sun Alliance
CDC Partners
Exotic Farm Fruits
•
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Noranda
Teck Corp.
Cominco
Hydro Quebec
Quebecor
Barrick
Newmont
Cyprus Minerals
Bell South
Nextel
Citibank
Bank Boston
BHP
Firth Ind.
NZ Dairy Products
Mount Isa Mines
Newcrest
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• Duke Energy
• PSEG
• Entergy
• Aguaytia Energy
• Cargill
• Nabisco
• Procter & Gamble
• Kimberly Clark
• Group Mexico
• Group Portales
• Group Bimbo
• Zeta Gas
Shougang Corp.
Marubeni
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Matsushita
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Mitsui
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Honda Motor
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Daewoo Corp.
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Mitsubishi
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SK
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Nestle.
Asea Brown Boveri
Aventis
Saint Gobain
Sodexho
Schneider Electric
Pechyney
Degrémont
Holbah II Ltd.
Shell
Stet Mobile
Adrien
Luchetti
Falabella
Ripley
Mantos Blancos
Empresas Pizarreño
Empresas IANSA
Costa S.A.