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PERU.

PERU

 % Change (In millions US $)
 Interest Trade
Date CPI M1 Rate (%) Imports Exports Balance

 1990 7,649.00 750.00 33.80 2,883.00 3,276.00 500.00
 1991 139.20 40.00 12.90 3,355.00 3,281.00 -74.00
 1992 50.70 -2.80 7.00 4,061.00 3,484.00 -567.00
 1993 40.00 1.00 5.30 3,900.00 3,300.00 -600.00
 1994 15.40 22.00 3.90 5,582.00 4,473.00 -1,109.00
 1995 10.20 5.00 2.40 7,688.00 5,572.00 -2,116.00
 1996 11.80 2.50 2.40 7,321.00 5,832.00 -1,489.00
 1997 6.50 5.00 2.30 8,403.00 6,579.00 -1,824.00
 1998 6.00 5.00 2.10 7,649.00 5,689.00 -1,960.00
 1999 3.70 1.00 2.10 6,467.00 6,072.00 -395.00
Jan 0.00 -0.10 2.30 501.00 518.00 17.00
Feb 0.30 0.40 2.30 286.00 412.00 -75.00
Mar 0.60 -0.10 2.40 549.00 460.00 -89.00
Apr 0.60 -0.20 2.40 545.00 431.00 -115.00
May 0.50 0.10 2.30 523.00 502.00 -21.00
Jun 0.20 0.10 2.40 531.00 472.00 -59.00
Jul 0.30 0.20 2.30 516.00 534.00 18.00
Aug 0.20 0.30 2.10 565.00 546.00 -19.00
Sep 0.50 0.10 2.00 587.00 495.00 -92.00
Oct -0.10 -0.20 2.00 583.00 546.00 -37.00
Nov 0.30 -0.20 1.90 627.00 564.00 -63.00
Dec 0.40 0.70 1.80 654.00 592.00 -62.00
 2000 3.73 5.00 2.00 7,334.00 6,985.00 -349.00
Jan 0.10 -0.90 1.80 587.00 549.00 -38.00
Feb 0.50 -1.70 1.70 571.00 522.00 -49.00
Mar 0.50 2.10 1.80 623.00 563.00 -60.00
Apr 0.50 -1.70 1.80 565.00 502.00 -63.00
May 0.00 0.50 1.90 633.00 549.00 -84.00
Jun 0.10 0.40 1.90 638.00 629.00 -9.00
Jul 0.50 0.60 2.00 597.00 645.00 48.00
Aug 0.50 -0.60 2.00 624.00 647.00 23.00
Sep 0.60 0.10 2.20 554.00 553.00 -1.00
Oct 0.20 0.80 2.30 707.00 680.00 -27.00
Nov 0.06 0.60 2.40 636.00 539.00 -97.00
Dec 0.15 10.90 2.80 599.00 607.00 8.00
 2001 3.50 5.00 2.90 7,200.00 6,600.00 -600.00
Jan 0.50 -11.20 3.00 590.00 549.00 -41.00
Feb 0.25 0.00 3.20 641.00 550.00 -91.00
Mar 0.50 3.20 596.70 542.80 -53.90
Apr -0.42 2.00 2.80 576.70 541.10 -35.60
May 0.02 0.76 2.70
Jun 0.06 2.70
Column
Number 1 2 3 4 5 6

 (In millions US $)

 Current Exchange
Date Acct Bal Reserves Rate

 1990 -665.00 692.00 540,000.00
 1991 -900.00 1,942.00 1.02
 1992 -2,065.00 2,451.00 1.62
 1993 -1,437.00 2,925.00 2.15
 1994 -2,772.00 5,696.00 2.17
 1995 -4,300.00 6,641.00 2.33
 1996 -3,600.00 8,600.00 2.58
 1997 -3,700.00 10,250.00 2.72
 1998 -4,000.00 9,184.00 3.15
 1999 -2,000.00 8,404.00 3.48
Jan -- 9,320.00 3.25
Feb -- 9,173.00 3.40
Mar -- 9,078.00 3.38
Apr -- 8,845.00 3.35
May -- 8,766.00 3.33
Jun -- 8,858.00 3.33
Jul -- 8,781.00 3.32
Aug -- 8,644.00 3.36
Sep -- 8,836.00 3.48
Oct -- 8,677.00 3.47
Nov -- 8,582.00 3.48
Dec -- 8,404.00 3.48
 2000 -2,100.00 8,493.00 3.52
Jan -- 8,786.00 3.50
Feb -- 8,800.00 3.50
Mar -- 8,803.00 3.44
Apr -- 8,755.00 3.48
May -- 8,952.00 3.50
Jun -- 8,710.00 3.49
Jul -- 8,823.00 3.48
Aug -- 8,747.00 3.48
Sep -- 8,714.00 3.48
Oct -- 8,470.00 3.50
Nov -- 8,410.00 3.51
Dec -- 8,493.00 3.52
 2001 -2,500.00 8,395.00 3.65
Jan 8,201.00 3.52
Feb 8,018.00 3.53
Mar 8,111.00 3.52
Apr 8,127.00 3.56
May 8,226.00 3.60
Jun 8,632.00 3.54
Column
Number 7 8 9

FOOTNOTES BY COLUMN: Annual figures for 2001 are projections. 1:
CPI for Lima metropolitan area. 1-2: Annual figures represent
January-December increase. 3: Effective monthly rate for typical
30-day promissory notes. Annual figures are average monthly rate.
4-9: Annual figures represent year-end values.

SOURCES BY COLUMN: 1: Instituto National de Estadistica. 2-9:
Banco Central.


FINANCIAL OUTLOOK

* Inflation will reach 2.5%-3.5% by year-end, per official forecasts, and most analysts are in agreement. Consumer prices fell 0.06% from May to June, bringing the CPI to 0.49% from January-June. Food and beverage prices, which account for 58% of the total index, fell 0.28% in June. The 12-month figure was 3.73%. The current low inflation is primarily due to an ongoing slump in internal demand.

* Interest rates reflect political volatility, with the interbank rate skyrocketing to 26% shortly before June elections. Just as the sol and the stock market indices did, however, they were swift to recover once Toledo was securely in place as president. Interest rates are expected to remain highly sensitive to cabinet appointments, in particular the finance minister.

* The 2001 trade deficit will be slightly higher than that of 2000, as exports fall back and imports stagnate.

* Peru's net international reserves remain relatively stable, reaching $8.632 billion June 26, up $406 million compared with the end of May and $452 million higher than the reserves figures recorded on December 31, 2000.

* The sol was extremely volatile in the second quarter due to ongoing electoral turmoil. It lost 1.11% against the dollar in April, trading at an average of S3.56:$1, when it became clear that presidential candidate and former president Alan Garcia would run against Alejandro Toledo in a second round in June. The sol continued to slide in May, losing 1.18 % against the US currency when polls showed that Garcia was nipping at Toledo's heels. However, Peru's national currency recovered instantly when Toledo won the runoff, gaining 2.9% against the dollar in June. The sol also stabilized when Toledo named market favorite Pedro Pablo Kuczynski as finance minister. Kuczynski, director of a Miami-based investment fund and former energy minister, is seen as lending credibility and stability to the market.

ECONOMY MONITOR

* Growth Outlook: GDP fell for the fifth straight month in April, declining 0.9 % compared to a 4% rise in April 2000. This brought April year-on-year figures to -2.2%. New finance minister Pedro Pablo Kuczynski predicts growth will likely to be zero this year, though he believes recovery would begin in the fourth quarter.

* Political Factors: The second quarter's most significant political factor was the election of Alejandro Toledo, four elections and two years after he first hit the campaign trail. He beat former president Alan Garcia in a highly contested second round. Official results gave Toledo 53.08% while Garcia won 46.92%. Toledo will face many challenges when he takes office July 28. The country is reeling from a corruption scandal that broke last September and brought down the former Alberto Fujimori regime. New shock waves are expected following the late June capture in Venezuela of former spy chief Vladimiro Montesinos, widely believed to have been the true power behind the government. Montesinos has promised to "tell all," and claims to have 30,000 videos documenting corruption involving foreign diplomats and businessmen as well as Peruvians. Montesinos faces 52 legal suits ranging from embezzlement to murder, and 200 more charges have been filed. Toledo has pledged to eradicate corruption, and must also come through on campaign promises including 2.5 million jobs, better salaries and tax cuts. But perhaps his biggest challenge will be congress, given the fact that no single party holds a majority in the 120-member body. Toledo's Peru Posible has 45 seats, while Garcia's APRA has 21. While Toledo claims to have convinced enough political groups to back him, the commitment is tenuous at best.

* Fiscal Situation: Tax collection reached S2.032 billion ($574 million) in May in real terms, up 2% year-on-year. January-May tax revenues totaled S10.51 billion ($2.97 billion), up S500 million compared to a year ago. The government has agreed to a fiscal deficit target of 1.5% of GDP for 2001.

* Major Sectors: Copper output fell 2.1% year-on-year from January-April to 172,573 metric tons, while gold output declined 11.3% to 41,201 kilos. January-April zinc output rose 6.2% to 311,912 metric tons. Silver output climbed 10.8% to 26,507,994 ounces (824,492 kilos). The January-May fish catch for fishmeal was 4.9 million metric tons, up 7.35% year-on-year. Oil production reached an average of 104,265 b/d in May, up about 3% year-on-year and averaging 97,905 b/d from January-May. Argentina's Pluspetrol is the leading producer.

* Employment: Employment was the top campaign issue for all presidential candidates. Toledo pledged to create 2.5 million jobs in five years and said he hoped to "produce results" within six months, gut incoming finance minister Kuczynski has warned that the current fiscal situation is likely to restrict the government in the short term. Toledo's government is seeking outside funding for an emergency employment program.

* Stock Market: The Lima Stock Exchange gained 11.5% in from January-June, making it the third most profitable in the region, following Mexico and Bogota. While the indices were hard hit by election turmoil for much of the first half, a strong surge in early June helped boost stocks. Analysts see the indices gaining slowly and steadily over the course of the second half as confidence in the new government grows.

COMPANY MONITOR

* The huge Antamina copper-zinc project began a six-month test run in June and will start shipments of concentrates on July 1. Investment over the three-year construction period is targeted at $2.3 billion. Once in full production, Antamina forecasts annual sales of $900-$950 million, assuming average prices of 95 cents/pound for copper and 55 cents/pound of zinc. It could boost by 30% Peru's mining exports, currently around $3 billion per year. The mine's life is estimated at 20 years.

* Telecom Italia Mobile-Peru's introductory packages have brought in 30%-40% more clients than expected, said general director Pedro Aguado. More than 46,000 Lima and Callao residents have signed up since the company began operations January 2001. By year-end, TIM expects to have operations in 10 cities, aiming for 200,000 users. TIM is Peru's third-largest cellular operator after Telefonica del Peru and US-based Bellsouth.

* Zinc producer Milpo plans to finish its feasibility study on zinc-copper deposit Cerro Lindo by October. The deposit also contains silver, gold and lead. Development will require some $90 million. This year Milpo plans to invest $22 million in Peru and Chile, with other top projects the El Porvenir mine in Peru and Chile's Ivan.

* AT&T Latin America has filed a complaint with telecom regulator Osiptel about Telefonica del Peru, charging excessive interconnection fees, blockage of AT&T phone lines during peak hours and rerouting of calls. Telefonica has responded that AT&T is pushing Osiptel to allow it free use of Telefonica's infrastructure. Osiptel must name a special committee to resolve the case within four months, and appeals are allowed.

* Argentina's Pluspetrol, involved in both the upstream and the downstream phases of the Camisea natural gas project, is evaluating construction of a $1.6 billion liquid natural gas processing plant. The project would make it possible to give Camisea gas greater aggregate value on international markets. Meanwhile, the rest of Camisea is on schedule. Work this year has focused on the environmental impact study due in coming weeks. Four wells are slated to be drilled starting in July 2002 and the gas treatment plant at the site will be up and running by 2003.
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Title Annotation:economic indicators
Publication:America's Insider
Article Type:Illustration
Geographic Code:3PERU
Date:Aug 3, 2001
Words:2184
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