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Major Political and Economic Events |
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850724
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Service payments on public sector short-term debt to national or foreign banks would be authorized only if matched by a loan from such creditors to Banco de la Nacion or COFIDE in an amount at least as large as the repayment and conforming with specified conditions.a3(first entry) |
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870403
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A special exchange premium was established for the conversion of private capital into intis for specified direct investments in Peru. Capital repatriated for this purpose was to be converted at the free financial market rate, and subsequently was to receive a premium of 7.5% after the repatriation and a further 7.5% after 18 months.a3 |
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8800
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With foreign exchange reserves plunging and the cost-of-living rocketing, the government increased price steeply, imposed stiffer taxes, ended government subsidies, and devalued the Inti. b |
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8804
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A free Market Rate replaced the CD Rate. The financial system was authorized to buy foreign currency and exchange houses were allowed to operate again. b |
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8805
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President Garcia sacked his Cabinet. Armando Villanueva del Campo was appointed as the new Prime Minister and Cesar Robles Freyre replaced the former Finance Minister, but he left within four months. b |
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880729
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Until Dec. 31, 1990 any person or entity would be permitted to repatriate capital without revealing the origin of the funds. Such transfers would not be subject to the income tax and would be effected at the free market exchange rate.a3 |
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880907
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A new "economic package" was announced, including a "simplification" of the exchange rate system along with a devaluation of the Inti, as well as a 125% increase in the minimum wage, a doubling of basic food prices and a 400% hike in the cost of gasoline. b |
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8810
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Inflation galloped, shortages mounted, and strikes crippled various sectors. b |
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8811
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Another "economic adjustment package" sent the country to further disarray. b |
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8901
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President Alan Garcia resigned and the delegates to the 16th Congress of the Aprista Party voted to elect Luis Alva Castro as General Secretary. b |
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890203
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The Ministry of Economy and Finances was authorized to refinance principal and interest of private debt with public guarantees.a3 |
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890310
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Foreign Exchange Bank Certificates (FEBC) may be used for domestic investment purposes with the approval of the National Commission on Foreign Investments and Technology (CONITE).a3 |
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890318
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With the permission of the Central Bank, FEBCs could be redeemed to make provisions for meeting debt-service obligations.a3 |
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8903
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Rising violence and Shining Path terrorism cost the lives of two Congressmen and Prime Minister Armando Villanueva del Campo resigned. b |
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890421
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Legislation was approved for the conversion of donated public debt for development projects. For qualified projects, the fiscal authorities will make available an amount in domestic currency to cover local expenses equal to the face value of the donated debt obligation.a3 |
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890428
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Accounting and conversions of foreign exchange and domestic currency related to foreign investments made after April 28, 1989 were permitted at the free market exchange rate.a3 |
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8906
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The new Finance Minister, Cesar Vasquez Bazan, instituted a crawling peg system of daily mini-devaluations for the Inti. b |
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890704
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Disbursements of private sector debt, domestic foreign exchange credits, and payments of capital, interest, and commissions were permitted at the free market exchange rate. Lines of credit to the public sector were permitted to be serviced at the MUC exchange rate.a3 |
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890707
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A Conversion System for Donated Public Debt to finance economic and social development projects was approved.a3 |
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890811
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Repatriated foreign exchange earnings were permitted to be sold at the free market exchange rate or deposited in foreign exchange accounts.a3 |
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8909
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Peru made payments to other creditors while ignoring the IMF and World Bank. b |
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8910
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Rebel forces mounted their biggest terror campaign to disrupt upcoming municipal and presidential elections. Some 123 mayors and other local officials, political leaders and candidates were assassinated during the year. b |
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8911
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The Democratic Front of Mario Vargas Llosa won in the municipal elections. The outflow of U.S. dollars prompted the government to close the borders with Bolivia, Chile and Colombia for 15 days. The banks were virtually cleaned out of sight deposits. b |
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8912
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Peru agreed to resume partial payment to the IMF of US42.3 million. The inflation rate on a year on year basis was 2775%, up 61% from 1988. b |
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900214
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Prime Minister and Minister of Economy & Finance Juan Carlos Hurtado Miller resigned over a dispute with another Cabinet member. b |
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9003
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Import tariffs were put on a two-tier basis of 15% to 25%, down from a previous top rate of 50%. Foreign exchange dealings were freed to favor exporters. Peru received a 10-year, interest free loan of US$10 million and a US$400,000 commodity grant from China.b |
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900417
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The max transfer abroad for banks that had not completed required transfers of surrendered export proceeds was reduced from US$100,000 to US$50,000.a3 |
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9005
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A new tough campaign against tax evaders was announced and State monopolies of food products, steel and agricultural credit and domestic monopolies of national railways, government television and new services were eliminated. The Peruvians could open U.S. Dollar accounts in local banks, foreign companies could repatriate profits and deposits of foreign investors, frozen since 1986, were released. The inflation rate was reduced to 150% on an annual average basis. b |
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900610
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Alberto Fujimori, an agricultural engineer, was elected as the president in largely peaceful voting. Juan Carlos Hurtado Miller was named Prime Minister. b |
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900730
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The restrictions on debt-service payments on nonguaranteed private sector debt were eliminated.a3 |
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900808
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The economic austerity program was announced. Fuji called for a lifting of subsidies, removal of many price controls and a floating of the Inti in an interbank market. Overnight, prices skyrocketed, and the Inti tumbled to I/.500,000 per U.S. Dollar. A one-million Inti banknote was rushed into circulation. b |
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900808
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The restrictions on debt-service payments on nonguaranteed private sector debt were eliminated.a3 |
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9011
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The 10% tax on imports was removed, restrictions on foreign investments in oil, fishing, mining and tourism were eased and a tentative agreement was reached with the IMF on guidelines for economic reform which could clear the way for new loans. b |
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901224
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Peru's Senate repealed the 1987 law of Alan Garcia to expropriate the private banking system. b |
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9012
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The austerity virtually paralyzed the economy. b |
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9100
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Capital controls and interest rate controls were removed. Mehrez and Kaufmann Liberalization date. a1 |
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9100
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The introduction of the Insider Trading Laws.a4 |
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910311
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Interest rates for foreign exchange deposits and loans from the domestic banking system were liberated.a3 |
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910313
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Restrictions on the transfer abroad of foreign exchange by the private sector were eliminated. Banks were permitted to transfer funds for domestic residents to establish foreign exchange deposits overseas and to make financial and non-financial investments. The restrictions on frozen foreign currency deposits in the domestic banking system were lifted.a3 |
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910314
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The foreign investment regime was simplified, and authorization was granted to direct investment in all sectors of the economy, except those expressly reserved by law. Profit, dividends, and royalties were made freely transferable following prior payment of applicable taxes. Foreign capital would remain subject to restrictions under the Andean Pact.a3 |
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910322
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Blocked deposits at the Central Bank established for the purposes of servicing private sector debts were permitted to be withdrawn.a3 |
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910425
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The legal framework for the domestic financial industry was revised, whereby foreign investments in the banking, financial, and insurance sectors would be treated on the same basis as domestic investments.a3 |
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910727
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The restrictions on amortization of working capital loans were extended at least up to Feb. 1992.a3 |
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911115
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The reciprocal credit agreement with Cuba was suspended until further notice.a3 |
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911203
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The requirement prohibiting the servicing of working capital loans were abrogated, and banks were permitted to withdraw up to $12 million of deposited proceeds from the Central Bank.a3 |
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9200
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Subsidized lending was eliminated. Mehrez and Kaufmann's second Liberalization date. a1 |
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921012
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A Decree on the Private Sector Investment Guarantee Regime was promulgated, under which the rights and guarantees that are accorded to domestic investors would be extended to foreign investors.a3 |
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921101
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An agreement on Overseas Private Investment Cooperation was concluded with the United States.a3 |
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9300
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Germany reestablished aid to Peru. Japan and Korea issued a credit line to finance exports from Peru to Japan. A free trade zone for Korean companies in Peru having access to port facilities would enable production from this zone to be exported to different countries in Latin America. The Inter American Development Bank approved loans to Peru for the 1993-1994 period. |
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9306
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The Administradoras de Fondos de Pension were authorized to start operations. Banks in New York were willing to swap debt for equity in Peruvian companies, after the finance minister met with a committee of commercial creditors in New York. |
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9300
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The government had sold more than 13 companies since the privatization program first started. Peru's hydrocarbons law was revised to give equal treatment to foreign and domestic companies and to allow for private ownership of oil and gas sectors. |
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9400
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CPI rose only 15.4%, compared to 40% in 1993. Though Citibank steering committee refused to continue talks until Peru recognized a controversial $72 million loan from Chemical Bank and American Express, a Brady-style restructuring agreement was expected before the end of 1995. |
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9404
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President Fujimori won 44% support in opinion polls. |
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9400
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Copri, the privatization committee, introduced two programs aimed at boosting participation of Peruvian citizens and corporations in the privatization program. |
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9407
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Copri would allow workers to take their state pension in the form of shares in privatized companies and have AFPs manage them. |
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9400
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The first prosecution under the Insider Trading Laws.a4 |
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941201
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ADR effective date. (Company=CEMENTOS LIMA SHARES 144A, Exchange=PORTAL)a11 |
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9501
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Tension broke out along the border with Ecuador. |
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9502
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Ecuador and Peru reached a cease-fire agreement. |
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9504
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President Alberto Fujimori was reelected. |
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9506
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Economy Minister Jorge Camet began negotiating a commercial debt restructuring plan for Peru's external debt. A recession in Argentina increased selling pressure. |
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9509
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Trade between Peru and Ecuador resumed after months of stagnation. |
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9511
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Peru reached a Brady style debt reduction agreement with creditor banks. |
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9500
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Laeven's banking liberalization (FLI) dates.a13 |
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9602
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The government failed to reach an accord with the IMF on economic policy. |
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9604
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The government made progress in negotiations with the IMF. Congress approved strengthening tax regulations and collection. |
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961123
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The maximum level of participation of variable rent instruments in institutional investors' portfolio was raised from 30% to 35%. Among those instruments, the maximum level for convertible stocks and labor stocks was raised from 30% to 35%.a3 |
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961217
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The Marta's terrorist attacked the Japanese Embassy. |
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9612
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The entry requirements for the banking sector were eased.a13 |
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9702
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The government sold Utility Electro Sur Medio. |
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970422
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The military successfully rescued the hostages in the Japanese ambassador and killed all Movimiento Revolucionario Tupac-Amaro members responsible for the 126-day siege. |
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9705
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President Alberto Fujimori gained increased approval. Tensions along Peru's border with Ecuador increase. A Shining Path car-bombing brought political concerns to the forefront. |
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9706
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The onset of El Nino increased brewery shares. |
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9707
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Government regulators ruled that competitor Tele2000 was entitled to a portion of the Peruvian cellular phone market. |
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9708
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Zinc and copper prices continued to fall. |
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9710
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The government announced a set of tax breaks. Peruvians alleged an Ecuadorian mortar attack on Peruvian army post across its border. |
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9801
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Low metals prices, lower fishing output due to El Nino, and Asian market instability depressed trading on the bolsa. |
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980701
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(Provisions specific to commercial banks and other credit institutions) The marginal reserve requirement for foreign exchange deposit was reduced to 35% from 45%, and the remuneration to additional reserve requirements was raised from three-month LIBOR rate minus 1% to minus 1.375%.a3 |
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981001
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(Provisions specific to commercial banks and other credit institutions) The average reserve requirement for foreign exchange deposit was reduced by 1.5%. A liquid asset requirement as a percentage of short-term liabilities for financial institutions (20% in foreign currency and 8% in domestic currency) was introduced. a3 |
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9810
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Peru and Ecuador signed a historic peace agreement ending a 56-year border dispute. Peru gave a $41.5 billion aid package for Brazil. |
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981101
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(Provisions specific to commercial banks and other credit institutions) A limit of 100% of the net worth over the long foreign exchange position and a limit of 2.5% over the short foreign exchange position of the financial institutions was introduced.a3 |
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9900
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Gold prices rallied on an agreement by 15 European central banks to limit the sale of bullion. The National Elections Board decided to allow President Alberto Fujimori to seek a third consecutive presidential term in April 2000. |
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9901
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Zinc, copper, and tin surged on a recovery in global demand. |
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9909
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The price of gold rose 20%. |
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991001
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(Provisions specific to commercial banks and other credit institutions) The CRBP remuneration for reserve requirement in foreign exchange was increased to the three-month LIBOR rate minus 0.125% from LIBOR minus 1.375%.a3 |
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200001
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President Alberto Fujimori bid for an unprecedented third term. Peru postponed an agreement with the IMF and delayed the privatization of the Camisea natural gas distribution project. The Spain-based Telefonica announced that it would consolidate its Latin American assets. |
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200004
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After two rounds of elections, Fujimori was controversially certified as the winner. Foreigners fled from the capital markets. To control the deficit, due to the high election cost, the government reduced incentives for the mining sector, the major source of foreign investment in the previous decade.. |
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20000724
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Fujimori took the oath as president amid violent protests. The public outcry against the president erupted when videotapes showed his closest political aide, Vladimiro Montesinos, bribing opposition legislators. Popular uproar and loss of support in Congress forced Fujimori to step down. |
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200010
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The Congress prohibited a president from running for a third term, but still approved Fujimori as the head of the government until elections in July 2001. However, Fujimori had to resign immediately due to extensive disapproval and protests from the military. Valentin Paniagua succeeded to the presidency. Former U.N. head Javier Perez de Cuellar was appointed as prime minister and Javier Silva was brought back as economy minister. The Economy Ministry and the Central Bank consistently followed a policy geared towards low inflation and low interest rates as well as manageable fiscal deficits and debt levels. |
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200105
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S&P affirmed Peru's foreign currency rating as well as assigning a stable outlook for the country. |
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200106
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Toledo won the president election. |
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200108
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Toledo confirmed the appointment of economist Richard Webb as the new central bank chief and Congress passed most of the short-term economic measures proposed by Prime Minister Roberto Danino. |
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200100
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In the fourth quarter, Congress approved a study to investigate the issuance and utilization of foreign debt during the 1999-2000 period. Citibank and JP Morgan were appointed financial brokers for 2002's international bond auction. The government completed a letter of intent with the IMF for a 2002-2003 standby agreement. |
| 010914 | A Peruvian Supreme Court judge, José Luis Lecaros, has issued an arrest warrant for disgraced former president Alberto Fujimori. Lecaros has also ordered a freeze on Fujimori's assets in Peru up to a value of US$1m. The judge said that he intended to pass the arrest order to the Interpol international police agency. An international arrest order through Interpol would not oblige Japanese police to arrest Fujimori but could require Japan to supply information about him. Earlier in September, Peruvian prosecutors indicted Fujimori on homicide charges relating to two massacres by an army death squad |
| 011214 | The World Bank yesterday announced that it was preparing up to US$300m in loans to Peru. The loans are to be focused on rural education programmes. The loans should be approved in March. The Bank also praised plans for the country to tap the sovereign bond market for the first time in over 70 years. Economy Minister Pedro Pablo Kuczynski has stated that the government does not need to tap the bond markets, but that it may 'test the water' with a US$700m 10-year issue |
| 020204 | The IMF on Friday approved a two-year stand-by credit to the government. The package will be used primarily to bolster the country's improving sovereign debt outlook, as the country goes to the bond markets for the first time in over 70 years. |
| 020418 | The Peruvian Central Bank yesterday intervened for the first time this year to halt the appreciation of the Peruvian currency, the Nuevo Sol, which this week reached its 1999 levels at S/3.42 to the US dollar. The Central bank intervention, worth US$55m, took the exchange to S/3.46:US$1. The intervention came after the third consecutive appreciation of the Nuevo Sol this year, and is aimed at preventing excessive transitory volatility. The appreciation of the Nuevo Sol has made it one of the strongest currencies in Latin America |
| 020430 | The Peruvian Transport and Communications Minister Luis Chang Reyes has announced that the US Federal Aviation Authority has decided to once again grant A-1 status to Peruvian aviation. This means that Peruvian aircraft will be able to enter and transit through US territory without restrictions. Chang said that this status was a reflection of Peru's institutional capability in air travel, and stresses the importance of the Peruvian authorities ensuring the security of passengers as well as employees in the aviation industry. |
| 020430 | Ratings agency Fitch yesterday (29 April) stated that it had improved its outlook on sovereign Peru ratings from negative to stable, whilst maintaining a rating of BB- on foreign currency debt. The agency reported being impressed at the consistency of government macroeconomic policy, even during the (slight) recession of 2001. Slippages on fiscal policy, which had been anticipated by the agency, have not occurred over the last year. |
| 020617 | The Peruvian government has declared a state of emergency in the southern department of Arequipa, amid extended protests against electricity privatisations that have left nearly 100 people injured and caused widespread damage. |
| 020620 | The government has temporarily suspended the sale of Egasa and Egesur to Tractebel in order to halt growing unrest in the region. Interior Minister Fernando Rospigliosi has resigned in protest at this decision, which raises doubts about the viability of the government's electricity privatisation programme and could lead to an increase in large-scale protest as a strategy to counter unpopular legislation |
| 020822 | Fitch, the ratings agency, has announced that it has cut its sovereign outlook on Peru from stable to negative. Fitch currently rates Peru at BB-, three notches below investment grade. The downgrade in outlook represents concerns for the country's external financing needs going forwards. The government has set a fiscal deficit target of -2.2% of GDP for 2002, and -1.9% of GDP into 2003. |
| 030129 | The Peruvian government has cleared the way for a sovereign bond issue, which will be worth US$1bn, on the New York markets. No firm details of the sale have been revealed, although the issue is expected to have a maturity in excess of 10 years. Peru went twice to the international bond markets in 2002, which were the first issues that the country had made in over 70 years. A number of emerging markets are taking advantage of the currently benign financing conditions to issue sovereign debt |
| 030331 | On 28 March the IMF approved an increase in its stand-by facility with Peru. The sovereign's previous stand-by facility was US$347m, which it had treated as precautionary. That figure has now been raised by a further US$38m. The authorities went to the international bond market twice in 2002 - the first time in 70 years that Peru issued sovereign bonds. The IMF expects the economy to expand by 4% of GDP in the current year, making it the leading growth candidate in Latin America. |
| 030528 | Mass Strikes Prompt State of Emergency in Peru |
| 030603 | A general strike organised by Peru's main union is to go ahead today, although the government is keen to avoid major unrest and has offered to selectively lift the state of emergency declared last week |
| 030626 | Facing pressure from the opposition to stand down, President Alejandro Toledo has, as expected, partially lifted the state of emergency declared at the end of May amid strikes and unrest |
| 030630 | President Alejandro Toledo has finally reshuffled his cabinet, naming independent lawyer Beatriz Merino as Peru's first female prime minister |
| 030729 | In a much-anticipated state of the union address, President Alejandro Toledo put forward a series of measures, including tax reforms, an increase in the minimum wage and an anti-terrorism strategy |
| 030822 | Standard & Poor's (S&P) yesterday reaffirmed its BB+ rating (one notch below investment grade) for Peru's long-term local-currency sovereign debt, as well as the BB- (three notches below) it accords long-term foreign currency bonds. It also maintained its outlook at stable for all Peru sovereign debt. The |
| 031003 | Peru's Communications Minister Eduardo Iriarte has raised further concerns about espionage in Peru claiming that he 'can't sleep easy' because he knows he is being tapped. CNN reported fears that spies are still succeeding in penetrating both government and society three years after former-President Alberto Fujimori's government was brought down by a spying scandal. |
| 031110 | Monetary policy was eased on Friday (7 November), with the overnight lending rate cut 25 basis points to 3.25% and the rate the Central Bank pays banks for overnight loans reduced to 1.75% from 2%. This represents the fourth loosening since June 2003 and reflects the fact that inflation is slowing: consumer prices rose just 1.3% in the 12 months to October, putting it outside of the official 1.5-3.5% target range |
| 031219 | Economy Minister Jaime Quijandria has raised corporate tax from 27% to 30%, keeping his promise to push ahead with ex-Prime Minister Merino's taxation programme |
| 040106 | Struggling to restore faith in his crumbling new cabinet, President Alejandro Toledo has picked unionist Juan de Dios Ramírez Canchari as his new labour minister |
| 040130 | Peru's capital, Lima, faced further disruption yesterday as a 12-hour public transport strike turned violent. Streets were choked with the fumes of burning tyres, and rocks were used as missiles, leading to the arrest of over 30 bus drivers, as reported by AFP newswire. The drivers are the latest public workers to protest in Peru, which has been plagued by social unrest in recent months |
| 040402 | Consumer price rises slowed to 0.46% month-on-month from 1.1% the previous month, the national statistics agency (Inei) said yesterday. This reduces 12-month inflation to 2.8% from 3.4%; the official target is 2.5%, plus or minus one percentage point. Also yesterday, the Central Bank said that it was holding the key interest rate at 2.5% - an all-time low - for April. Rates were cut four times last year as inflation undershot the official target |
| 040416 | GDP rose 4.09% year-on-year in February 2004, according to official statistics released yesterday, above the consensus market forecast of around 3.4%. The chief growth driver was the mining and hydrocarbons sector, where output rose 17.42%. Also performing strongly was electricity and water, which expanded by 6.47%, although the fishing sector - where output tends to be volatile - contracted by 6.89%. This respectable pace of growth, however, is not translating into net job creation |
| 040427 | The Peruvian authorities yesterday sold a 12-year, US$500m dollar-denominated bond. The initial yield was 8.4% - 395 basis points above comparable US Treasuries. The issue, which was raised from a planned US$300m in response to strong demand, completes the government's financing needs for 2004 and improves its debt profile, according to the Economy Ministry |
| 040524 | Peru's election authority (JNE) has set 17 October 2004 as the date for a local vote in the troubled southern town of Ilave, which was left without a local leader when its mayor, Cirilo Robles Callomamani, was lynched to death by an angry mob last month. Residents are set to go to the polls on the first anniversary of the ousting of Bolivian ex-President Gonzalo Sánchez de Lozada, who was forced to resign last year under the weight of popular pressure. Violence continues to plague Ilave as the election date approaches |
| 040603 | Peruvian lawmakers have voted resoundingly in favour of stamping a royalty tax on mining exports, despite strong opposition from the sector, leaving President Alejandro Toledo under pressure from business groups and his economy minister to send the controversial bill back to Congress |
| 040609 | Standard & Poor's (S&P) yesterday upgraded Peruvian long-term foreign currency debt one notch to BB on the back of strengthening economic fundamentals and the likelihood of these policies being maintained. |
| 040702 | Consumer prices climbed 0.56% month-on-month in June, the national statistics institute said yesterday, which compares with an increase of 0.35% in May and a decline of 0.47% in June 2003. Sharp rises in food and drink prices (up 1.02%) and fuel (up 0.49%) account for last month's larger-than-expected increase. Twelve-month inflation now stands at 4.26%, well above the official target of 2.5%, give or take one percentage point. Nevertheless, the central bank decided yesterday to hold the overnight target rate at its all-time low of 3.25% |
| 40714 | The public finances in H1 2004 were in surplus to the tune of US$188m, 0.6% of GDP, Economy Minister Pedro Pablo Kuczynski said yesterday - far better than the forecast of a US$57m (0.2%) deficit. The strong result was attributed in part to a delay in capital spending - which undershot the target by US$365m in H1, according to official data. Nevertheless, the government is now predicting a fiscal deficit of 1.5% of GDP for 2004 as a whole - below the 1.9% knocked up last year but above the 1.4% agreed with the International Monetary Fund. |
|
|
Regulations on Foreign Investors |
|
1998
|
Restrictions: None Taxation: No dividend tax. Capital gains and readjustment of capital paid to bond holders are tax exempt until 2000.a6 |
|
1999
|
Restrictions: No change. Taxation: Capital gains are tax exempted until Dec. 31, 2002.a7 |
|
2004 |
No changes |
Last update 7/23/04 by Jerome Mo, Duke University