The International Monetary Fund’s Executive Board concluded its 2026 Article IV consultation with Peru, finding that record-high terms of trade supported strong growth in 2025 and projecting growth of 2.8 percent in 2026. While the medium-term outlook remains positive and Peru retains strong buffers against shocks, the Board said risks are tilted to the downside, notably from political uncertainty, social unrest, weather-related events, insecurity and illegal mining, and spillovers from a protracted Middle East conflict. Directors emphasized fiscal consolidation to meet fiscal targets after the fiscal deficit narrowed to 2.2 percent of GDP in 2025 and is projected at 2 percent in 2026, while noting that the structural deficit remains high and spending rigidities from wages and pensions should be addressed. They judged a broadly neutral and data-dependent monetary stance appropriate as higher energy costs temporarily push inflation above the target range, supported a flexible exchange rate as a shock absorber, welcomed financial sector resilience and regulatory reform progress, and urged implementation of remaining Financial Sector Assessment Program recommendations. The Board also called for revenue reforms, improvements in public procurement and investment, close monitoring of recent public-private partnership and pension reforms, avoidance of further private pension withdrawals, action against illegal mining, updates to fiscal decentralization, and stronger integration of climate risks into macroeconomic planning. Peru’s authorities requested additional time to decide on publication of the staff report, with a final decision expected within 28 days of the Board’s consideration.

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