► Peru oil production to hit 100,000 barrels a day by 2023

Peru's oil production is expected to hit 100,000 barrels a day by 2023, taking into account the recovery of the industry in the last year, Energy and Mines Minister Juan Carlos Liu projected on Friday.

► Mining investment to continue increasing in 2020

► PERU Central Bank keeps benchmark interest rate at 2.25%

"Oil production has recovered (…) our goal is to reach a production of 100,000 barrels a day by 2023," he told El Peruano official gazette.

"A few days ago, we spotted a figure that has not been seen for several years, achieving a production of 63,000 barrels per day, but the average is 53,000 barrels a day," he added.

► Peru's 2019 inflation within  target range

In this line, Liu commented that the search for this hydrocarbon resource in new areas —such as Block Z-64, located off the coast of Tumbes— is expected to increase the production.

"A ship will arrive to carry out the first deep-sea drilling activities, respecting the environment and using the highest security measures, of course, in an attempt to prospect and locate reserves in an area that had not been explored before," he explained.

"The ship will report the results of such drilling within 30 days," the government official added.

► PERU Non Traditional exports up 7.6% in Nov 2019 

In addition, he noted the presence of British Petroleum (BP), the sixth-largest oil producer in the world, which came to Peru to carry out technical explorations.

"It will carry out explorations using non-invasive techniques for prospecting hydrocarbons in the continental shelf zone, trying to increase our reserves in such area," the minister explained.

PERU Central Bank keeps benchmark interest rate at 2.25%

(ANDINA) The Board of Directors of the Central Reserve Bank of Peru (BCR) decided to maintain the reference at 2.25% expecting year-on-year inflation to be around 2% over the forecast horizon, with a moderate downside bias due to the possibility of a lower-than-expected increase in domestic demand.

►Peruvian Blueberry exports break record in Nov 2019

Likewise, the financial entity indicated that inflation was 0.21% in December. Consequently, year-on-year inflation remained at 1.9% in December 2019, while monthly inflation excluding food and energy stood at 0.34% in December, so the year-on-year figure also remained at 2.3%. 

On the other hand, BCR pointed out that the one-year ahead expected inflation remained at 2.2% last December.

► Peru's 2019 inflation within  target range

According to the issuing entity, the weak performance of primary industries and General Government investment in 2019 was attenuated by the activity in non-primary industries.

"Business condition expectations as of December remained stable with respect to November, while economic activity indicators point to a gradual closure of the output gap," Peru's Central Reserve Bank stressed.

► PERU Non Traditional exports up 7.6% in Nov 2019 

Furthermore, it underlined that global growth risks from trade tensions have attenuated, although the impact of the recent geopolitical events on international energy prices is still uncertain.

The BCR Board affirmed that it pays close attention to new information on inflation and its determinants in assessing future changes in the monetary policy stance.

At the same session, the Board also decided to maintain the interest rates on BCR off-auction credit and deposit operations in domestic currency with financial entities.

► PERU Country risk at 107 basis points

It arranged: overnight deposits of 1% per year, as well as direct security/currency repo and rediscount operations: i) 2.80% per year for financial entities' first 10 operations over the last 12 months; and ii) the rate fixed by the BCR Monetary and Foreign Exchange Operations Committee for operations other than financial entities' first 10 operations over the last 12 months. It also decided that Dollar swaps should have a fee equal to a minimum annual effective cost of 2.80%.

► Peru exports to Canada total US$2.321 billion in Jan-Nov 2019, 153%

Finally, the BCR Board's next monetary policy session will take place on February 13, 2020.

► Peru's 2019 inflation within target range

(Andina) Peru's annual inflation rate was 0.2% in December and 1.9% in the year 2019, within the Central Reserve Bank's target range (1-3%), the issuing entity has reported.

► PERU Non Traditional exports up 7.6% in Nov 2019 

In December 2019, the price rises with the highest contribution to inflation were observed in urban fares (1.1%), national transportation (24.1%), chicken meat (1.9%), and tangerines (9.7%).

On the other hand, the price decreases —which showed the greatest negative contributions to inflation— were those of fish (-2.6%) and fresh fruits (-3.8%).

► PERU Country risk at 107 basis points

Furthermore, inflation —excluding food and energy— showed a monthly rate of 0.34% as a result of the evolution of goods (0.03%) and services (0.52%), registering a variation of 2.3% in 2019.

Inflation expectations within target range

Economic agents' inflation expectations for 2020 and for 2021 remain within the target range of 1–3%, according to the BCR Survey on Macroeconomic Expectations conducted in December 2019.

► Peru exports to Canada total US$2.321 billion in Jan-Nov 2019, 153%

Inflation expectations for this year are between 2.2% and 2.4%, while the inflation rates expected for 2021 remain between 2.3% and 2.5%.

► PERU Non-traditional exports up 7.6% in Nov 2019

(Andina) Peru's non-traditional exports reached US$1.224 billion in November 2019, a 7.6% expansion over the same period in 2018, the Central Reserve Bank (BCR) has reported.

► Peru exports to Canada total US$2.321 billion in Jan-Nov 2019, up 153%

"This growth was explained by higher shipped volumes (6.6%) —mainly of farming, fishery, and iron-steel products— and due to increased average prices," the entity underlined.

Thus, non-traditional product sales abroad totaled US$12.403 billion between January and November 2019, which represented a growth of 3.5% compared to the similar period in 2018.

► Peru country risk at 107 basis points

Likewise, the issuing entity pointed out that —in the first eleven months of 2019— the increased sales of avocados (+2.6%), blueberries (+53.6%), grapes (+10.1%), frozen giant squid (+54.1%), and asparagus (+3%), among other products, were registered.

Peru's non-traditional exports value registered a rise of 4.4% in the last 12-month period that ended in November 2019. Compared with other Latin American countries, it meant the highest growth among the main countries in the region.

► Mining investment to continue increasing in 2020 

► Peruvian Country risk at 107 basis points

(Andina) In the week of December 31-January 8, Peru's country risk indicator —measured by the EMBIG Peru spread— remained at 107 bps, the Central Reserve Bank has reported.

► Mining investment to continue increasing in 2020

However, in the same period, the EMBIG LatinAmerica spread rose 3 bps to 349 bps within a context of geopolitical tensions between the United States and Iran.

Interbank interest rate

On January 8, the interbank interest rate in Peruvian Soles showed an annual rate of 2.25% and this rate in U.S. Dollars registered 1.75%.

On the same date, the 90-day corporate prime rate —the interest rate charged by commercial banks to lower risk businesses— in Soles was 3.29%, while the prime rate in Dollars recorded 2.69%.

► Peru exports to Canada total US$2.321 billion in Jan-Nov 2019, up 153%

Moreover, the interest rate on mortgage loans in Soles stood at 7.9% percent, whereas this rate on loans in Dollars was 6.9%.

Peruvian Agro-exports total US$6.232 billion in Jan-Nov 2019

(Andina) 
Peruvian agricultural exports (traditional and non-traditional) totaled US$6.232 billion between January and November 2019, an 8.7% expansion over the same period in 2018, the Association of Peruvian Exporters (Adex) has informed.

This result was due to higher shipments of avocados, blueberries, grapes, and asparagus to international markets.

It should be noted that the aforementioned rate is lower than the one registered in January-November 2018 (12.2%) and January-November 2014 (22%), when coffee boosted the supply of traditional goods.

Likewise, products such as avocados, grapes, preserved asparagus, quinoa, mangoes, cacao beans, evaporated milk, and preparations used in animal feeding boosted the supply of value-added products.

Traditional agro-exports (US$672 million) went up 1.8% after posting declines of 5% and 9% in January-November of

2017 and 2018 respectively.  

The main export markets were the United States (+22.1%) and Germany (-6.7%), among others, such as Belgium, Colombia, Sweden, and Canada.

Moody's: Peru among countries with most fiscal space in LatAm

(Andina)
Chile, Paraguay, and Peru remain the sovereigns with the most fiscal space in the region, followed closely by Mexico, Moody's Investors Service has reported.

Some, including Argentina, Costa Rica and Ecuador, experienced a material reduction in fiscal space during the last five years, it said.

According to the credit rating agency, Colombia and Uruguay saw large increases in their debt burdens, although debt affordability remains sufficiently high. Panama similarly saw an increase in debt in 2019.

"We do not foresee LatAm sovereigns making material progress in rebuilding lost fiscal space. We anticipate continued, albeit modest, deterioration in government debt metrics, i.e., higher debt ratios and interest burdens," Moody's forecast.

Weak fiscal profiles leave governments with limited ability to manage shocks through countercyclical fiscal policies, it warned.

Furthermore, across the region, most sovereigns have improved their debt structures by extending maturities and —more importantly— reducing their share of foreign-currency-denominated debt. This mitigates liquidity (rollover) risk and balance sheet risk because of reduced exposure to currency fluctuations.

In this sense, "Peru and Uruguay materially reduced the share of foreign-currency debt in their debt burdens."

Moody's: Peru has fiscal space to boost public investment

(Andina)
Peru has fiscal space to implement the countercyclical measures aimed at boosting the economy in the short term, Moody's Investors Service Vice-President Jaime Reusche affirmed on Thursday.

In this sense, the officer indicated it is possible to use part of the fiscal space gained so far, although he warned against falling into fiscal overspending.

Last April, Peru's fiscal deficit reached 1.7% of GDP, whereas it stood at 1.5% of GDP in May.

"It could be easily expanded to 2% this year and then continue with the reduction. However, it (Peru) must do everything possible to reach 1% of GDP by 2021," he told El Peruano official gazette.

Evolution

"In recent months, there has been a fiscal revenue recovery that has reduced the deficit gap, but there is still work to do with the purpose of achieving the goals," Reusche expressed.


"Leaving behind the path towards the reduction of deficit to 1% of GDP would be a serious mistake that would destroy Peru's so important fiscal credibility, which anchors the favorable vision of foreign investors," he stressed.

Likewise, the Moody's representative pointed out public expenditure is inefficient and spending without clear objectives —of what is being purchased with those resources— could be dangerous and irresponsible.

Trade war

On the other hand, the senior analyst informed the trade war —between the United States and China— has still a small impact on the Inca country, but an escalation could highly affect its economic growth.

Furthermore, the officer stated mining investment is still stable, and the cash cost of exploiting minerals in Peru is one of the lowest in the world. Thus, even if metal prices drop, this will remain as a competitive sector.

► Peru added-value exports to Canada grew 12.2% in August 2018

Peru added-value exports to Canada amounted to nearly US$116 million between January and August this year, up 12.2% from the same period in 2017, Peruvian Exporters Association (Adex) informed.

Agro-industrial products (US$65.586 billion) accounted for 58% of the total, followed by those of garment (16%), fishery (12%), and iron-steel (4%) sectors. 

Tangerines, quinoa, mangoes, cotton t-shirts, frozen trout fillets, shrimp tails, and blueberries stood out among the most demanded goods by the North American country.

Diversification

Nevertheless, the agro-industrial industry constitutes only 58% of Peru's added-value shipments. Therefore, Adex stressed the need to keep on working to diversify the Inca nation's exportable supply.

To that end, Adex is implementing the TFO Canada 'Ready-to-Export' project aimed at strengthening the textile-garment chain.

According to Adex Project and International Cooperation Manager, Luis Barreto, the initiative seeks to promote trade with Canada by getting textile-garment small and medium scale enterprises involved.