Ministry of Economy announces cuts to reduce fiscal deficit

The Ministry of Economy and Finance (MEF) has officially announced ten spending cuts in the public sector with the aim of reducing the fiscal deficit and complying with the rule that establishes that this indicator cannot exceed 2% of the Gross Domestic Product (GDP) in the year 2024. This measure becomes urgent in the face of the growth of the fiscal deficit, which reached 3% of GDP in February of this year, surpassing the initial projections. Among the measures adopted is the limitation on expenses for cell phones, travel, acquisition of uniforms, advertising, fuel consumption, seminars, consulting services, and the prohibition of acquiring motor vehicles, among others. These cuts aim to reduce current spending and generate savings in the management of public resources, thus allowing access to low interest rates in international markets and having a greater space in the public budget for productive spending in sectors such as health, education, and infrastructure. The MEF emphasized the importance of these measures to preserve fiscal sustainability and maintain the country's macroeconomic stability. In addition, the transfer of funds of more than S/ 55 million in favor of local governments with high poverty rates or reduced balance sheets was authorized, in order to finance investments within the framework of the National Multiannual Programming and Investment Management System. On the other hand, the Central Reserve Bank of Peru (BCRP) has proposed the possibility of increasing workers' contributions to pension funds as part of measures to strengthen the pension system. However, the credit rating agency Moody's pointed out that while the government's austerity plan is positive, it would not be the definitive solution to solve the country's economic challenges. In the midst of this scenario, it is essential that authorities continue working on the implementation of effective measures that contribute to economic recovery and the improvement of public finances, ensuring sustainable and balanced development for Peru.