Current Economic Position and Prospects of Peru

rndlional B~nk for Reconstruction and Development e Current Economic sit1on and .Prospects Peru ••  ' ,. 0 ;g ' The World Bank Group issues country economic reports in two s~ries; This· reportis part ofan in- formal series and ·is wholly based on a document prepared . for .use, within the aank. The text is not meant to be definitive, but is offered' so as to make sqme resul~s of internal researth _widely avail- able to scholars and practitioners throughout the world. • • • • Other titles in this series include: Employment in Trinidad ancl Tobago (March -1971) Current Economic Position and Prospects of EcHdor (October :19_73) • Chad's Economic Development_ : Constraints and Potential •(forthc~rnh1g) •. The Economy of ,.~egal . (forthcoming) • • Another series of country reports .is publi~hed for tl\e e:ankGroup by Johns Hopkins University Press. Individual studies in this ·series ·are available in <=-1:<~thbound and paperback editions. •  CURRENT ECONOMIC POSITION AND PROSPECTS OF PERU This report is based on the findings of an economic mission which visited Peru in November and December 1972 and in January 1973. The mission was composed of Messrs. Percy Bargholtz, Michel Devaux, Jose A. Guerra (chief), Guillermo Rossel, Miguel Schloss, Kenji Takeuchi and Alberto Yanez of the World Bank Group, plus Messrs. George Pigott, Bank consultant, and Gonzalo Ruiz Ballivian, OAS. Ms. Myriam Suarez was secretary to the mission. \ International Bank for Reco'~struction and Development. }-\ 1s.siovi "lo 1Q,,f\,\,{ 1818 H Street, N. W. Washington, D. C. 20433 U.S.A. December 1973 133514 4F 3 30.1 JY) ~IC C,~  CURRENT ECONOMIC POSITION AND PROSPECTS OF PERU TABLE OF CONTENTS Page No. COUNTRY DATA •••. I •••••••••••••• I ••• I •••••••••••• V - Vi CURRENCY EQUIVALENTS AND GLOSSARY••••••••••••••• vii ?1AP , , • , , • , , , • , •• , , ••• , , • , • , ••• , ••• , , , , • • follows viii SUMMARY AND CONCLUSIONS••••••••••••••••••••••••• ix - xviii I. INTRODUCTION ................................... . 1 The Socio-Economic Setting ................ . 1 II. DEVELOPMENT TRENDS .............................. . 4 Population Trends ......................... . 4 Labor Force and Employment ................ . 5 Productivity and Incomes .................. . 7 The Productive Sectors .................... . 10 A Perspective on the Macro-Economy ........ . 12 III. DEVELOPMENT APPROACH AND STRATEGY .............. . 15 Institutional Aspects ........... ~ ......... . 15 Policies Towards the Private Sector ....... . 17 Reforms in Industry and Agriculture .....• ~. 18 IV. RECENT ECONOMIC DEVELOPMENTS ................... . 20 The General Growth Experience ............. . 20 Production Developments ................... . 24 Resource Use and .Savings .................. . 25 Central Government Finances ............... . 28 The Consolidated Public Sector ............ . 31 Credit Policies ..................... ~ ..... . 35 External Accounts ............ ~ ........._... . 37 Public Capital and External Debt .......... . 42 V. SECTORIAL ISSUES AND POLICIES .................. . 46 A. Agriculture ............................... . 46 The Agrarian Reform ............. . 48 B. Industry and Mining ....................... . 52 Manufacturing ................... . 52 Mining .......................... . 54 . c. Fishing Processing ........................ . 56 D. Transport and Electric Power .............. . 58 Transport ....................... . 58 Electric Power .................. . 60 -iii-  VI. THE BIENNIAL PLAN AND BUDGET 1973-74 62 A. The 1972-74 Development Plan ............. . 63 The Objectives of the Plan ..... . 63 The Programmed Public Investment by Sectors ................... . 66 B. The 1973-74 Public Sector Budget ......... . 69 The Central Government Budget .. . 69 The New Revenue Measures in the Budget ................ . 72 The Budgets of Other .Public Sector Agencies ...•..•........ . 75 The Budget and the Investment Program ...................... . 77 Financing of the Budgeted Public Investment ............ . 80 c. Financing a Total Investment Program ...... . 82 Slippage and Substitution of Projects ................... _. 82 Availability of Domestic Credit .. 84 Conclusion ...................... . 86 VII. BALANCE OF PAYMENTS AND EXTERNAL CAPITAL .. . REQUIREMENTS 1973-76 •......................... • 88 Foreign Exchange Constraint ............... . 88 Major Uncertainties ....................... . 89 Current Account Projections ............... . 92 Capital Requirements ...................... . 96 Exte.rnal Debt ............................. . 102 Conclusion ................................ . 103 STATISTICAL APPENDIX List of Tables ...... , . , ......... , . , ........... , . 105 Population and Labor Market ••••••••••••••••••••• 109 National Accounts ........•.........•.........••. 116 Balance of Payments ............................ . 123 Extemal Debt .......................... , ....... , 130 Public Finance .... , .. , ... , .. , ............... , . , .• . 165 Monetary ..... , , , , ....... , . , .... , , . , . , .. , , .. , , , , . 195 Agricultural and Fishing•••••••••••••·••••·•••·• 204 Indus trial , , .. , ..... , . , ........................ . 211 Price and Wage .............•........ , , . , •.. , , . , . 216 -iv-  COUNTRY DATA - PERU AREA POPULATION!/ ~ 2 1,280,219 km2 14.4 million (mid-1972) 11.2 per ", / Rate of Growth: 3.1% (from 1965 to 1972) 500 per km of arable lane¢ POPULATION CHARACTERISTICS (1971)!/ HEALTH (1970) Crude Birth Rate (per 1,000) 42 Population per physician 2,070 Crude Death Rate (per 1,000) 11 Population per hospital bed 435 Infant Mortality (per 1,000 live births) 75 INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIPl/ % of national income, lowest quintile % owned by top 10% of owners highest quintile % owned.by smallest 10% of owners ACCESS TO PIPED WATER (1971) ACCESS TO ELECTRICITY % of population - urban 60 % of population - urban - rural 14 - rural NUTRITION (1970) EDUCATION (1970) Calorie intake as% of requirements 94 Adult literacy rate% 66 Per capita protein intake 58 grams/dey Primary school enrollment% 82 GNP PER CAPITA in 197;!!_/: us $ 476 GROSS NATIONAL PRODUCT IN 1972 ANNUAL RATE OF GROWTH (% 1 constant prices) US$ Mln . ....1.. 1961-67~/ 1969-1972.2./ !.ill. GNP at Market Prices 7,692 100.0 5.9 6.2 5.5 Gross Domestic Investment 915 11.9 9.4 3.0 Gross National Saving 873 11.2 4.o 4J, -2.8 Current Account Balance -101 -1.3 Exports of Goods, NFS 1,126 14.6 2: 1ll -0.8 2.5 Imports of Goods, NFS 1,129 14. 7 12.9 4.7 4.5 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971 Value Added Labor Force§./ V. A. Per Worker US$ Mln. 1,199 ~ ~- 1, 961 ....1.. 44.4 !!§._j_ 610 :::L 40 Agricult~ e 17. 7 Industry- 7 2,356 34.8 872 19.8 2,700 175 Services 3,221 47 .5 1,440 32.6 2,240 145 . Unallocated 142 3.2 Total/Average 6,776 100:0 4,415 Ioo.1i 1,535 100 GOVERNMENT FINANCE General Government Central Government (Soles Bln.) % of GDP (Soles Bln.) % of GDP .!.fil 19n 1969-71 .!2Z!.... 1971 ~ Current Receipts 50.3 19.2 19.3 41.0 15.6 15.9 Current Expenditure 42.0 16.0 16.0 35.9 13.7 13.8 Current Surplus 8.3 3.2 3.3 5.1 1.9 2.1 Capital Expenditure 14.8 5.6 4.9 12.7 4.8 4.0 External Assistance (net) -0.1 - o.o 0.3 - 0.2 - 0.1 0.3 1/ Projected figures, based on 1961 census. 2/ "Arable" defined as actually cultivated~ areas officially given as "cultivable but not used". ""§.ILatest figures are from 1961; in view of the very significant Agrarian Reform going on in Peru these are ·t hought irrelevant today. f!./ The Per Capita GNP estimate is at 1970 market prices, calculated by the same conversion technique as the 1972 World Bank Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. ,2./ As there was a severe economic crisis in Peru 1967-68, it would not be meaningful to show the usual period 1965-70. Instead the chosen periods are "before the crisis" and "since the crisis". ~/ No trend discernible after the crisis. A record export surplus brought about a sharp peak in 1970; for other years savings have fallen short of the earlier trend. i~ Refers to 1962-68. ]V Total labor force; unemployed are allocated to sector of their normal oc cupation. "Unallocated'! consists mainly of unemployed workers seeking their first job. '}/ Comprises Manufacturing, Construction nnd Mining. All 1972 data are preliminary estimates not available not applicable -V- MONEY, CREDIT and PRICES 1965 1970 1971 ~ (Billion Soles outstanding end period) Money and Quasi Money 26.5 55,9 63.l 74.8 Bank Credit to Public Sector (net) 4,4 12.2 18.l 21.l Bank Credit to Private Sector 20.8 39.8 48.l 58.9 (Percentages or Index Numbers) Money and Quasi Money as% o~ GDP 23,0 23.7 24.l 24.9 General Price Index (1,963 = 100) 12R 219 229 248 Annual Percentage Changes in: General Price Index 13.4 6.8 4.8 8.4 Bank Credit to Public Sector 51.3 5.4 47.8 16.6 Bank Credit to Private Sector 25.6 16.2 20.6 22,5 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1970--72) 1971 !.ill... US $ Mln ...z... (Million US ~) Fish products 320 8 33.7 Exports of Goods, NFS 1.223.8 1,081.0 1.126.4 Copper 203.5 21,4 Imports of Goods, NFS 971.6 i,042.2 ! I 129.6 Sugar 67.5 7.1 Resource G•p (deficit=-) -----m:I 38.8. - 3.2 Iron ore 67 .l 7.0 Silver 57.3 6.0 Interest Payments (net)l/ -34.o -50.4 -33-9 Zink 53.2 5.6 Other Factor Payments (net) -98.7 -54.3 -'17.2 I All other commodities 182.0 19.2 Net Transfers 82.0 39.l 33.3 Total 951.4 Iocr.o Balance on Current Account 201.5 :u:a -IoCT EXTERNAL DEBT, DECEMBER 31 1 1972 Direct Foreign Investment -69.6 17.0 38.9 Net MLT Borrowing US$ Mln Disbursements 242.3 250.2 323.0 Amortization 191.3 226.7 216.9 Public Debt, incl. guaranteed 1,018.4 Subtotal ""'Tl:o 23.5 106.1 Non-Guaranteed Private Debt Total Outstanding and Disbursed SDR-allocation 14.3 14.2 14,l Other items n.i.e. 59.9 -89.5 -16.0 DEBT SERVICE RATIO FOR 19721_/ Increase in Reserves (+) +257.1 ~ +42.l Gross Reserves (en_ d year) 496 470 521 ...z... Net Reserves (end year) 4(')9 347 389 Public Debt, incl. guaranteed 17,8 Non-Guaranteed Private Debt Total Outstanding and Disbursed RATE OF EXCHANGE IBRD/IDA LENDING, (March 31 1 1973) (Million US $): US $ 1.00 = S/. 38.7~/ IBRD S/. 1,00 • US$ 0.0258 .ill... Outstanding and Disbursed 132.2 Undisbureed 34.o Outstanding incl. Undiebursed lbb-2 l/ Public sector only, interest on private debt included in "Other Factor Pa)'lllents," 2/ Ratio of debt service in foreign currency to exports of goods and non-factor services. 'J./ Thie is the main rate (certificate rate); there is also a eeco,;,.dary rate (draft rate US$ 1.00 = S/. 43. 38) at which about 15% of transactions are concluded. All 1972 data are preliminary estimates. not available not app lie ab le April 24, 1973  CURRENCY EQUIVALENTSt Currency Unit - Sol [S/.] US$1 = s/. 38.70 S/. 1 million= US$25,840 S/. 1 = US$0.026 US$ l million = S/. 38.. 7 million GLOSSARY OF ABBREVIATIONS CERTEX - Certificado de Teintegro Tributario, a tax rebate system used as an incentive for nontraditional exports COFIDE - Corporaci6n Financiera de Desarrollo, public development finance corporation ELECTROPERU - the public enterprise for power sector development EMADI - Empresa Nacional de Puertas, public ~nterprise for the management and development of ports ENCI - Empresa Nacional de Comercializaci6n Industrial, enterprise for trade in industrial inputs ENTEL · - Empresa Nacional de Telecommunicaciones, public enterprise in the field of telecommunications EPCHAP - Empresa Publica de Comercializaci6n de ~a Harina y Aceite de Pes- cado, public enterprise for marketing fishmeal and fishoil EPSA - Empresa Publica de Servicos Agropecuarios, public enterprise for importing foodstuffs and agricultural inputs and for the internal marketing of agricultural products EPSEP - Empresa Publica de Servicios Pesqueros, public enterprise for re- search and development in the field of fisheries INDUPERU - Industrias del Peru, public enterprise for developing industries INP - Institute Nacional de Planificaci6n, national planning board MINEROPERU - the public enterprise for the development of mining PETROPERU - the public enterprise for the development of hydrocarbon resources SAIS - Sociedades Agr:!colas de Inter~s Social, organization embracing agricultural cooperatives and Indian conmi.unities SIDERPERU - Empresa Siderurgica'de Peru; the public enterprise for steel GOVERNMENT OF PERU - -FISCAL PERIOD January 1 to December 31 biennium:, e.g., 1/1/71-12/31/72 t Rate applies to some 85 percent of all foreign exchange transactions (largely trade) and is normally used for conversion in this report. A draft market rate of US$1 = S/. 43.38 covers some 15 percent of foreign exchange transactions. NOTE: for a complete list of state enterprises, see page preceding Table 5.9a of the Statistical Appendix. -vii-  '" VII 1 0 i .~ • • ,q\lef ' ' . 8' Ct,irt1 r, 10' r, Pa Hoo a r, ../ ,6n Coll yo 12' :KI " / ql'Tiba <;ob_ Ptd. Carmen , ,_, .--"(f ,)1s1ona II b 0...j--..,,\ '- I ; 0 u, o am 6 \ Cerro A;!'r ,~S ~• Choul PERU S. . '-J1c.ef\ l ,e oe cof\el ' • . . ·P _oco pa - - P..:'ioc.,:Y:,. h -., u1'0 ~ ~ Machu Olla . "· ~ 1 ~ -· (h;n,ha . t-~~- e;;,, ~!;!5- ~ ---~,.JO,.,__,- cunJ --·· 1 "~o Huanco~!.l:)...:, ich: y ASPHALT ROADS Para uac H ,,. ~ ~ n~ ) / J ,,.:?~~ // / I t ZiALCOl'J '/'t,,-"'V'/ A ro r;:Cv/ ofo so t, i ~ Oroya 9 I ~00 0 14' ALL-WEATHER ROADS / I Ch,pao I L~'---17°ba., DIRT ROADS Palc9 / 'f ,'ill0l1AMBA \\ ,- (Cv) ( ta +-+-+-+-+ RAILWAYS .. '~ "''\..,,_J,\. ) +++++ RAILWAY FERRY ~ J :. ;.') Esp1nar " Pto CobollosO '\ Pu1co (( \ PORTS J .. P Yeo'iilo a A..l. _ ___ Pous \./ -..Orcopa,mpo 0 - ') :=,,,..- RIVERS S. Juan A ,_,,,. or (" i ? ,\ f11 1 \,,....oA ro<:o . '-~Andoguo Lari B~ * AIRPORTS I I Car -..0!1 (V+roco \ J'.'.\ Huambo -~.., (Cl U --..I 1--J\ \ \ • F' ' •Y '- ( I\ ~ uno Cuno , J MINES IN DEVELOPMENT • . 'f Apl' 16' Pto MINERO PERU CONCESSIONS MINERO PERU, CONCESSION IN DEVELOPMENT ' r.:-----;.-~ '-...!~ AREA SUBJECT TO AGRARIAN REFORM AS OF MAY 1972 .:x: AGRARIAN ZONES - •- INTERNATIONAL BOUNDARIES 30 30 60 90 120 OJ KI LOME TERS ;,;, CJ 18' 111e bounclorics sho wn mi thi.t map do IWI Lo s B imply emlorscmc11/ (Ir ocapta,,ce by the 0 IVorld Bank and its affiliarcs. ~ l------~:__________ 81' 79•· __:7I. _ _ _ _ _ _ _ _ _ _ _ ___:7~7:•_ _ _ _ _ _ _ _ _ _ _ __j75~ •_ _ _ _ _ _ _ _ _ _ _ _ _7'.[3'.__ :Jl_ ' _ _ _ _ _ _ _ _ _ _ _ _ _7 "_ __liL!.~J!!!ll!!la~""""~"'"'l.J..-..c--...._....,._"-'...._"""~  CURRENT ECONOMIC POSITION AND PROSPECTS OF PERU SUMMARY AND CONCLUSIONS The developments in the Peruvian economy during the past two years represent essentially the continuation of the process of growth that started in 1970, when the economy was reactivated after the 1968-69 stabilization period. In 1970 favorable developments in commodity prices brought about an export boom, which decisively strengthened the country's international re- serves, increased fiscal revenues and made it possible for the government to adopt an expansionary policy, which rapidly stimulated the growth of out- put. This very good record could not be fully maintained during 1971, when copper export prices slumped, as did prices for other metals and fishmeal. In addition, the output available for export decreased as a result of pro- longed strikes at several of the important mines. Total commodity export earnings dropped by some 16 percent, while imports continued their expansion. The result was a sharp deterioration of the current account and a loss of re- serves in 1971. Despite these unfavorable balance of payments developments, an overall real growth of close ·to 6 percent was achieved. During 1972 the economy was affected by further adverse circumstances. Thus, domestic-consumption agriculture suffered from particularly unfavorable climatic conditions, and there was a severe--54 percent--drop in the anchovy catch. Despite these developments, GDP is estimated to have grown by 5.9 per- cent, as in the previous year. Overall growth was mainly sustained by the increase in exports, the high level of construction due to the continuing housing boom, and the further expansion of public investment. There was, how- ever, a slowdown in the growth of manufacturing production as capacity prob- lems were encountered. The severe reduction of the anchovy catch fortunately affected fishmeal exports only moderately due to the earlier accumulation of large stocks that could be drawn down. Copper exports more than recovered from the loss experienced in 1971, while exports of other minerals, sugar, coffee and wool expanded, more than compensating the reduction in fish prod- ucts and cotton exports. On the whole, earnings from commodity exports in- creased by 4.6 percent. In summary, the generalI level of economic activity slowed down only slightly, external financial stability was maintained, and inflation, though at a somewhat higher annual rate than in the preceding years, was kept under control. The developments of 1971 showed not only the vulnerability of the economy to an adverse export performance, but also the inadequacy of the exist- ing tax structure to sustain fiscal revenues in such a situation. The fact that in 1972 central government revenues increased only slightly in real terms, despite the recovery of income tax collections, illustrated again the inelas- ticity of the tax system. The result has been a lag in public savings after the peak in 1970 when they amounted to some 4 percent of GDP; in 1972 they may have been equivalent to only about 3 percent. · Meanwhile, aggregate sav- ings, which remained constant in real terms from 1971 to 1972, would have  - X - shown a significant improvement if it had not been for the drop in fishmeal production, which caused abnormal stock disinvestment. The determined expan- sion of public investment has continued, with an increase of some 20 percent · in 1972, bearing witness to the increasing project preparation and execution capacity of many public sector agencies. In the light of the experience of the past three years it seems reasonable to foresee that, as the demand for food and manufactured goods grows and the public sector investment capacity continues to increase, the negative effects of the constraints represented by the slow growth of private industrial investment, the lagging agricultural sector and the low elasticity of the tax system will be felt more strongly. Adequate agricultural pro- duction promotion policies and greater effort of domestic resource mobiliza- tion will be required to overcome these constraints over a number of years. Meanwhile, careful economic management is necessary during the.next few years, when the slow growth of exports and the heavy external debt service may other- wise raise problems for maintaining external equilibrium. During the four years it has been in power, the government has pur- sued a development approach in which economic growth is directly linked to a transformation of the society to achieve broader popular particiaption in the country's economic, social, and political life. This approach assigns to the state an active and much increased role in the economy, raising a number of basic issues. These concern, first, the need to reconcile the expansion of the direct eoconomic act.ivity of the state with the preservation of outlets for and incentives to private investment and initiative. The private sector in the past accounted for four-fifths of total investment .and virtually all investment in the productive sectors, and its alienation would involve a risk of a slowdown in growth, at least for several years. Secondly, as Peru's growth prospects in the medium-term future depend largely on increased mineral exports there is an evident need to ·reconcile the aspirations of national ownership and control over the country's basic productive resources with the need of attracting the huge amounts of foreign capital which are indispensable for developing the country's mineral resources. A third set of issues arises out of the trade-offs involved in the government's attempt to pursue simul- taneously economic growth and structural reform objectives. The government's policies during the last three years indicate that it is quite aware of these basic issues, and capable of adapting its policies to the realities and constraints of specific situations without sacrificing its goals. Faced initially with the problems arising from a heavy debt serv- ice and low level of reserves, and by a stagnation of private investment arising in part from the uncertainties created by the socio-economic reforms, the government has succeeded in reactiviating the economy, expanding public investment and considerably raising the level of external reserves. These achievements have been helped by the exceptional export performance of 1970 and by ample excess capacity after the 1968-69 stabilizatidn, which made possible the expansion of industrial output though .little new private in- vestment was taking place.  - xi - Perhaps the key element of the government's development strategy is the decision to assign to the state a large direct role in developing and exploiting the country's basic productive resources. During the past four years the government has laid the . institutional basis for carrying out this policy through the creation of public enterprises in the mining, petroleum and heavy industry fields, and of agencies for marketing an increasing num- ber of agricultural products for domestic consumption as well as the basic export products. It has also strengthened its position in the financial field through the creation of a public development financing institution and the acquisition of three large commercial banks. In addition, it has strengthened and broadened the control over imports. The institutional base having been laid, there are two important requirements for success in the state's entrance into the productive sectors of the economy: a rapid increase in the availability of trained manpower and a greater resource mobilization, especially through increased public sector savings. The government has made significant progress in improving its capability for preparing infrastructure and social service investment projects, but in addition it will soon. face the need of recruiting and train- ing technical and managerial personnel for operating and administering the industrial projects now in the planning or construction stage. Until now the expansion of public investment could be financed without greatly in- creased public savings. This cannot continue, however, if the government is to attain its goals, and thus an increased savings effort will be required. The urgency of this is strengthened by the fact th~t the public investment program comprises many large projects in the mining, power and industrial fields with long gestation periods, requiring the immobilization of large amounts of resources before production begins to generate funds to recover the investments and eventually produce surpluses. Finally, the considerable n of public sector agencies will require a closer monitoring of their expansio_ operations ·by the central government than has been the case in the past. The government's efforts to spread the fruits of economic growth to the masses of the population and improve the country's very skewed dis- tribution of wealth and incomes are embodied in the reforms adopted in the industrial field, and in the acceleration and deepening of the agrarian re- form initiated by the preceding government in 1964. Here those problems of trade-offs between social objectives and economic growth--at least in the short-term--that the government is attempting to solve, are raised explic- itly. Thus the reforms · in industry, which provide for profit-sharing by the employees and their gradual acquisition~-up to 50 percent--of the equity capital of industrial firms, initially resulted in near complete stagnation of private -investment. To reactivate it, the government has given strong fiscal incentives ·through generous tax exemptions for profits which are reinvested; these are in addition to the duty exemptions on capi- tal and intermediate goods imports under the general industrial promotion legislation. To some extent the tax exemptions are proving successful, which is a most timely development in view of the now urgent need to expand capacity  - xii - in industry. Private investment from other funds, however, continues. to be negligible, reflecting probably a feeling of uncertainty in the private sec- tor that is still not fully overcome regarding the ultimate role that the government will allow for private initiative. In fact, the government's avowed policies, while placing a heavy responsibility on the State, leaves to the private sector a very broad field of initiative within the industrial sector. If the government succeeds in persuading the business community that the reforms it has adopted and the role assigned to private enterprise in Peru do represent the established "rules of the game," it would be reasonable to expect an early resumption of private investment. The government has also adopted measures designed to attract direct foreign investment in particular s'ectors, and to make possible the continuing operation of important existing foreign enterprises. To these it modified at the end of 1971 earlier legislation to facilitate foreign participation in state-private joint ventures for industrial projects. Further, the Govern- ment availed itself of a provision of the Andean Group regulations concerning the operation of foreign enterprises in member countries in order to allow them continuing access to domestic credit. Finally, it has entered into contract arrangements with (so far) eight groups of foreign firms for petro- leum exploration and development. These arrangements provide for specific commitments of investment in exploration and development by the companies, and, in case of success, the sharing of production between them and the gov- ernment in agreed proportion over an extended period of years, at the end of which production facilities will be transferred to the state. In the field of agriculture, the outstanding policy measure, which · affects the development of the sector both in the short and in the long run, is the widening of the scope of the agrarian reform started by the previous government in 1964, and the acceleration of its implementation. Faced with the acute shortage of agricultural land, the government has increasingly oriented the reform towards cooperative forms of farm organization and manage- ment; even so it is estimated that there will remain, after full redi~tribu- tion, some 300,000 landless rural families. Both expropriation and settle- ment 1/ is proceding at a much faster rate than before. During the last two years-the number of families settled in reformed areas increased by about 50 percent over the number settled since the start of the reform in 1964, and the area settled more than doubled. It now seems likely that by 1975 all larger holdings will have been expropriated, but the implementation of the reform over the whole area will take longer. Aware of the negative effects that the uncertainty caused by the ongoing agrarian reform expropriations is having on agricultural investment and on the demand for credit by private farmers, the government has recently !/ This refers to the legal process including the final transfer of titles to the land (adjudicacion); the lands concerned are settled, in the sense of used in production, throughout the reform process.  - xiii - begun to issue "certificados de no afectacion, 11 with the purpose of ·guarantee- ing the present title to the land to those farmers whose holdings are in con- formity with the provisions of the law. It is not clear yet to what extent this measure has been successful. Restoring the confidence of the farmers is very important, however, for though the reform does not appear to have adversely affected production so far, a continuing stagnation of private investment could not fail to have negative effects. In fact, to remove as quickly as possible the grounds for this insecurity, it may be worthwhile for the government to concentrate available technical resources on the expropria- tion process, even at the price of a slower pace of settlements for a certain period. For the biennial plan 1973-74 the government has adopted a global target of 7.5 percent real growth per year. This would equal the.performance of the exceptional year 1970, and would mean a significant increase over the achievement in 1971 and 1972, estimated at 5.9 percent. The increase is ex- pected to come from a renewed upsurge in manufacturing, the gradual return to normal of the fishing sector, and better performance of mining and agri- culture. Individually, such better results in several of the important sec- tors appear entirely reasonable, but several of them depend on circumstances beyond the government's control, e.g., the return to normal of the ecological conditions for the anchovy, and also climatic conditions that are at least fair for agriculture. More successful incentive and production promotion policies are called for in agriculture, while the government's labor policies will be put to a test by the need to avoid a repetition of the past losses due to strikes in the mining sector. The higher growth rate in manufacturing may be difficult to realize in view of the rather sluggish investment during the last few years. On balance, it appears realistic to expect an actual growth rate somewhat lower than the targeted one, although above the 1971-72 figures. Fixed investment is assumed in the plan to grow by about 12.5 per- cent annually in real terms, with public investment growing on the average about twice as rapidly as private, 18 and 9 percent annually respectively. This is an ambitious target for public investment, and well above the 1971- 72 average, but is in line with the actual achievement during 1972. In view of the growing experience of the project preparation and implementation agencies, an overall public investment growth of the order envisaged may thus be physically feasible. For private fixed investment the assumed rate implies only a moderate increase over the past two years, as a reflection of the hopes for a somewhat greater success in stimulating private investment. Direct foreign investment is expected to be significant in mining and petro- leum exploration. The public investment program is heavily concentrated in four sec- tors--transport and communications, agriculture, industry, and power--which together account for over half of the total. In transport and communications, the largest increases fall on the public enterprises (ports, telecommunications, ships) where the proposed target may be possible to achieve. The power sec- tor has demonstrated in the past good ability to realize its program, and the new program does not appear to be out of line with executing capacity. The  - xiv - more ambitious sectorial targets, where shortfalls in actual ex~cution are likely to occur, are industry and agriculture. The program in industry, even allowing for the. fact that it contains some large projects (such as the fertilizer plant and the copper refinery) which are likely to be carried out, is nevertheless too large given the relative inexperience of most sector agencies in project implementation; substantial slippage will probably occur. The same general comment applies to agriculture, where shortfalls in execution in the past two years have been considerable, and where a major part of the investment contemplated is in large irrigation and colo- nization projects, the execution of which is necessarily slow. In financial terms, the 1973-74 public ·sector investment program calls for a total investment of S/. 58.6 billion ($1.5 billion) in the bien- nium, including projects which are to be started, but for which no provision was made in the original budget as the external financing had not yet been secured. As the target for public investment which could be considered the upper limit of an administratively feasible program is probably about S/. 50 billion ($1.3 million), which is the financial equivalent of 18 percent real growth per year, the adjustment or rephasing required is S/. 8-9 billion, or about one-sixth of the total. This proportion does not s~em unreasonably large, and it may well be that slippage in actual implementation will give that margin so that no major adjustment or rephasing of the formal program will prove necessary; in fact, a larger relative slippage has been experienced in the past biennium. In order to help meet the financial requirements of the investment program, the government in December 1972 adopted a number of tax measures, which together are expected to yield an additional revenue over the biennium of over S/. 7 billion. The most important of the new measures is the sub- stitution of a general sales tax for a large number of stamp taxes which existed previously; among the others are changes in the property tax and increased automobile licensing fees. Further, the government has indicated in the budget that additional revenue measures will be taken during 1973 with an estimated revenue effect of S/. 3.0 billion in 1974. The total to be raised by new taxes during the 1973-74 biennium would thus amount to over S/. 10.0 billion, close to 12 percent of total government revenues in the past biennium. With this, total public sector savings, including an in- creased surplus of enterprises and social security agencies, are expected to be about S/. 29.5 billion in 1973-74, compared with S/. 17.5 billion in 1971-72. These projected public savings would be equivalent to some 4 percent of GDP. Total public sector capital expenditures in the 1973-74 biennium are estimated at S/. 73.2 billion ($1.9 billion), and the financial resources likely to be available from identified sources amount to some S/. 70.0 bil- lion ($1.8 billion), distributed as follows:  - xv - Required funds 73.2 Fixed capital formation 50 .o • 1 Financial investments 7 .8_!_ External debt amortization 14.3 Expenditures in liquidation period of 1971-72 biennium 1.1 Identified sources 70.0 Public sector savings in budget 29 .5 Disbursements from existing external loans as of December 31, 1972 13.8 Disbursements from new external project loans 5.8 Nonproject external assistance 3o9 Domestic borrowing from banking system 10 .o Bond placements outside banking system 4.0 Additional government revenue 3.0 /a S/. 4.8 billion represent capital transfer to government banks. The uncovered difference of S/. 3.2 billion ($85 million) even after counting on S/. 3.0 billion of public savings in addition to those estimated in the 1973-74 budget, though small given the margin for variations in the projec- tions, indicates that the proposed investment program is ambitious not only in real terms, but also from the point of view of the financial requirements. It underlines the importance of a strong savings effort and tight fiscal man- agement by the government. Peru's economic growth has in the past been heavily dependent on imports of investment goods, and also on imports of raw materials and inter- mediate goods for the manufacturing sector. This pattern is likely .to con- tinue, at least in the medium-term, and thus the development of the capacity to import will remain a crucial factor for the country's growth prospects. This· capacity is likely to be constrained by a relatively slow growth of . ex- port volume through 1976. Even if the fishing crisis is assumed to be a temporary phenomenon, and the Cerro Verde copper mine is expected to begin production in mid-1975, a significant increase in Peru's export supply ca- pacity will not come until 1977, when the impact of the large Cuajone mining development is likely to he felt. Export volume in 1976 is only projected to be some 20 percent above the 1972 volume. The constraint on import ca- pacity would be alleviated if Peru's export prices were to be substantially higher than in the past. At the time of writing, prices were increasing; but given the experience with commodity markets, it would not be prudent to count on a major sustained improvement in Peru's terms of trade as a solution to its balance of payments problem. Also, no large-scale petroleum development is assumed; while the signs are most promising, commercial reserves are not yet proven, and it would not be prudent to count upon their existence. It is ciear, however, that if major petroleum reserves indeed confirmed, the pro- jections would be appreciably affected. With respect to fishmeal, the pro- jection appears to be on the optimistic side at least for 1973 and 1974,- judging from the results of the fishing up to the end of April 1973.  - xvi - Supply capacity being limited, commodity exports have been projected to grow in the 1973-76 period by about 9 percent annually in nominal terms, with about equal contributions from increases in volumes and prices. Imports, meanwhile, are projected at an average annual growth of 12.3 percent in no- minal terms (9.8 percent in real terms). This more rapid growth of imports, mainly on account of the capital goods required to sustain the economy's growth, results in a shift of the trade balance to a moderate deficit; after taking interest payments, profits and other remittances into account, there, will be a substantial current account deficit, estimated at $1,150 million over the four-year period. In addition, amortization on new borrowing a.nd miscellaneous outflows would raise the total to $855 million. Total gross external capital requirements are thus estimated at about $2,005 million during 1973-76. On an annual average basis for a compa- rable period (1973-74), they are quite close to the estimate.in the 1972 IBRD report (WH 212a). Of the projected amounts, direct foreign investment is projected to contribute about $415 million, mainly for the Cuajone and Marcona mining projects and petroleum exploration and development, while disbursements from public and publicly guaranteed loans signed by the end of 1972, will contribute about $535 million. The overall level of possible new external project borrowing (commitments) during the four years is seen as rising from an initial $295 million in 1973 to $470 million by 1976, a target which, thoug ambitious compared to the level of about $260 million in 1972, could still be achieved provided a sufficient effort at project preparation is made in Peru. The list of Projects for External Financing 1973-75 proposes commitments aggre- gating $1,593 million over the three years. 2/ This should make it possible actually to commit the $1,115 million projected here, allowing for a slippage of about one third. Allowing for realistic disbursement rates, disbursements from such new project loans are projected at about $810 million over the period. This would then leave about $245 million uncovered, despite the fact that local cost financing equivalent to some 11 percent of total project cost has been assumed. In order to avoid the need to draw heavily on reserves initially, when this would not be advisable in view of the major uncertainty surrounding the fishing sector, the projection foresees nonproject assistance of $100 million during the 1973-74 period. The $145 million left to be covered by reserves represent a considerable reduction of the level of reserves--they would· be reduced by 1976 to a level equal to about two months' imports--and it might thus prove necessary to utilize instead some further nonproject assistance and increase domestic resource mobilization further. The end-1972 level of net reserves was $389 million, equivalent to some five months of imports. While the projection thus indicates the need for utilization of reserves or nonproject assistance or both, this may be substantially reduced. The export projections (particularly copper) are based on price assumptions y Excluding the $340 million included for the trans-Andean pipeline, on which the final decision to go ahead has not yet been taken.  - :xvii - that the very recent developments may eventually prove to be too low. Given the uncertainty. surrounding the exports of fishmeal as well as the difficulty in making now a judgement as to how the currency realignments may affect world trade and commodity prices over the projection period, it has seemed prudent to maintain the projections in this report on the basis presented. If prices do stay at a higher l~vel, the _increased export earnings c_o uld provide an off- set to a possible substantial shortfall in f:_ishmeal export. 3/ In any case, the possible gains from higher prices would not be so high as to reduce the need for project borrowing from the level projected. With the high levels of commitments required to achieve a sufficient capital inflow over the period 1973-76, external debt outstanding (including undisbursed) is projected to increase by about 60 percent--from $1,500 mil- lion in 1972 to some $2,400 million at the end of 1976. The debt service payments would rise from an estimated $201 million in 1972 to $304 million in 1976; the service of debt already contracted will still amount to over $200 million by then. Expressed in terms of export earnings, the debt serv- ice would remain at about 19 percent over the period compared to 18 percent in 1972. Looking beyond 1976, export earnings are expected to be increased by some $120 million with the full coming into production of the Cuajone mine (in 1977). This would immediately ease the debt service burden and moderate the further requirements for capital inflow, which emphasizes the importance of .assuring the timely completion of this project and related arrangements. Assuming that other mining projects will be developed accord- ing to current plans, the external position can be ,expected to remain stable, with debt service as -a percentage of export earnings remaining at or below the 1972 value of 18 percent through the first half of the next decade. Should significantly higher copper prices than assumed -. prevail, or a major petroleum development occur, this figure would become considerably lower; alternatively a higher income growth rate could be sustained. Conclus.i on While the above projections do indicate that the period through 1976 will pose problems for Peru in terms of the external balance and debt management, these problems should not be insurmountable given reasonable external support. The Peruvian government has up to now shown such flexi- bility in its economic management and willingness to take necessary steps to meet problems as they arise, that it must be considered also capable of coping with those that lie ahead. To sustain over the next few years an adequate growth rate, and to make it possible for the government to continue its ambitious program of social transformation with economic development, fairly large amounts of external borrowing will be needed. Despite some recent improvements, Peru's debt structure remains unfavorable, with 80 per- cent to be repaid within 10 years, and with servic~ of comparatively short- terin loans a substantial part of the total for the next few years. An urgent 3/ Judging from developments until early May 1973, this is a likely result; see attachment to Table 3.2 of the Statistical Appendix.  - xviii - task for Peru and its creditors must be to find ways to improve on this situation by increasing the share of longer-term loans extended. ·Lenders should also give consideration to the already high debt service burden during the first few years, and to .the need to extend the grace periods, so that amortization does not begin until the foreseen additional export earnings begin to accrue. On th~ side of Peru, further measures to increase domestic resource mobilization are indicated to supplement those already taken, as well as continuing efforts to secure external support for activities leading to a sustained strengthening of the balance of payments.  CURRENT ECONOMIC POSITION AND PROSPECTS OF PERU I. ,INTRODUCTION When it came to power in October 1968, the present Peruvian govern- ment announced plans for a fundamental transformation of the pattern of devel- opment in the country: the excessive dominance of foreign capital and enter- prise would be broken, the.very unequal distribution of weal~h and income would. be changed, and a genuine popular participation in the national devel- opment would be promoted; new exports would be developed, and as rapid an • economic growth would be sought as would be compatible with the structural transformation goals (which clearly have first priority). To achieve this transformation, the role of the State in the economy would be greatly expanded, going into the production sectors, while the private sector would be actively influenced and directed along a new path. The government has now had a little over four years to implement its program, and, it is possible to draw some preliminary conclusions about what has been achieved and which areas need particular attention for the future. It may be useful to give first a sketch of Peru's historic develop- ment and the social and economic situation that has evolved. Only against such a background is it possible to properly appreciate the challenge which the country presents to any government which wishes to pursue an active policy of social and economic transformation, and thus to understand the government's approach to development. While it is true that many of Peru's problems also exist in other Latin American countries, the combination and intensity of the negative factors are quite pronounced. The Socio-Economic Setting Peru's development history is dominated by one pattern: great wealth is produced, but only by small segments of the population and for the benefit of even more limited groups. The rest of the population has been left largely untouched by development, securing its livelihood from a subsistence agriculture and having litttle contact with the money economy. At first, during colonial and early .republican days, there was the extrac- tion of precious metals and a plantation-type agriculture, with labor being provided largely by conscripted indians. Then Peru found itself in ,posses- sion of a veritable treasure in the form of vast guano deposits, which were exploited almost in "gold-rush" fashion as the international demand for fer- tilizers grew. • Intensive, irrigated agriculture for export crop production in the coastal valleys provided another new avenue of expansion at the same time as Peru's large deposits of copper and other megals began to be sys- tematically exploited at the beginning of this century. The latest addi- tion to the resource base was finally the anchovy, the great abundance of which in the waters off the Peruvian coast gave rise to yet another boom during the late 1950s and early 1960s.  - 2 - Significant economic development has taken place along the coast, and at some isolated mining enclaves in the Andes, but practically nowhere else. The country's extreme topography and difficult climate make transport and communications very difficult and costly, thereby further limiting the effect which development at one place has had on other parts of the country. These circumstances have had the effect of increasing the attractiveness of the coast for other productive investments--in industry and related trans- portation, power and commercial services--thus reinforcing the geographical concentration of economic activity. In turn, by drawing to Lima and other coastal urban centers almost everybody with initiative and aspirations to improve his lot, this may have staved off the effective pressures for economic and social change in the Peruvian highlands, i.e., the Sierra. At the same time, it is notable how much modern development has been carried out by foreign enterprises. Among Peru's export industries all the large-scale and most medium-sized mines are foreign-owned. This is also the case with many of the larger firms in the fishmeal industry; until the recent agrarian reform the same applied to the sugar estates. But foreign initiatives were not restricted to the export sector. While the government's drive towards Peruvianization is now rapidly changing the pattern-of owner- ship in some industries, foreign domination has been strong in the fields of petroleum development, power, telephones, railways and commercial banking. It is generally the case that most larger firms in modern sectors of manufac- turing are tied to foreign interests. This pattern of _development has proven its capacity to achieve a respectable rate of over.all global economic growth, but, coupled with rigid and outdated social institutions, it has also led to wide disparities in productivity, employment opportunities, income levels, and welfare, between the modern and the traditional sectors, between the coast and the rest of the country, between the urban and the rural population. Peru has a modern sector comprising highly specialized export agriculture, a limited manufac- turing sector, their related transport, trade, electric power and financial services and large scale production of minerals for export. Coexisting with this modern sector is the traditional agriculture sector in the Sierra which, until the advent of agrarian reform, was dominated by peasant-type, small farm units and Indian communities, on the one hand, and· large plantation- type "haciendas" raising mostly livestock on the other. Comparatively speaking, the modern sector is characterized by intensive use of capital, a relatively modern technology and organization of production, and conse- quently, relatively high productivity. In contrast, the traditional agri- • cultural sector exhibits a low level of investment and uses few technologi- cal inputs and modern production practices .. The general economic backward- ness of this agriculture with very low levels of productivity per worker and per unit of land, and the severe scarcity of arable land in the Sierra-- the average arable land per inhabitant is orily about 0.3 ha.--result in low levels of income both in absolute terms and relative to the population engaged in other economic activities.  - 3 - It must be concluded that the difficulties in successfully attack- ing the historic problems and initiating a development process capable of reaching the broad masses of the population and of transforming the whole country into a modern society, are serious. It would also be too simplistic to explain the limitations of past development only by reference to shortcom- ings of the private sector. The character and the location of Peru's modern economic sector have been dictated by the nature and the geographical dis- tribution of the country's basic productive resources, and the development of such resources in the areas and at the times it took place, probably represented the most efficient utilization of those resources to meet a given pattern of foreign and domestic demand. In addition, the special dif- ficulties posed by the country's physical structure, and the relative scarc- ity of agricultural land combined with a high rate of population growth can- not be overstated. Despite such difficulties, the present government is committed to bring about a major transformation of Peruvian society. It views the economic development of the country as an all-embracing process in which the objective of economic growth is intimately linked to social transformation goals. This is a commendable and ambitious program though fraught with enormous difficul- ties, It is bound to give rise to problems of trade-off between economic and social objectives with regard to specific - policy measures, programs and proj- ects, and face the authorities with difficult choices. This report, concerned with reviewing Peru's recent developments, is intended as a contribution to better understanding the country's current problems and policies and its short and medium-term prospects, against the background of the country's longer-term development problems, efforts and goals . . ,.· .;,,.  - 4 - II. DEVELOPMENT TRENDS In any discussion of developments during a period of only a few years, it is necessary to keep constantly in mind the underlying medium- term trends and larger problems they pose. The danger is that too much at- tention to short-run detail will obscure the basic issues. Similarly, there are basic factors in any economy, which change only slowly, but which funda- mentally affect the courses of action open to the government, whatever its priorities. These include the growth rate and composition of the country's population, the available natural resources, and major features of the pro- ductive structure. As background for the discussion of the new government's development approach and recent economic trends, this chapter will give a short summary of the major developments in the past decade and point to some of the basic problems suggested by them. • Population Trends Peru does not yet have population statistics which give accurate data on actual changes from year to year; hence analysis is limited mainly to information from the censuses. The final results from the most recent one, in 1972, are not yet available, but preliminary figures suggest that the average annual growth rate since the 1961 census has been about 3 per- cent, 4/ in comparison with the average of 2.1 percent experienced between the 1940 and 1961 censuses. Peruvian demographers are of the opinion that the most important cause for this acceleration of growth is the reduction in mortality at all ages. They also feel that, as there will be further such reductions accompanying the improvement of health services available to the population outside the major urban centers, the population growth rate during the coming decade may very well increase slightly. This im- mediately points to one of the basic factors affecting Peru's development. As in most Latin American countries, urbanization proceeds rapidly in Peru. The annual growth rate of the urban population increased from 3.7 percent in 1940-61 to 5.1 percent during 1961-72, which implies very rapid migration from rural areas. Part of this may be the effect of definitions, however, for while the census data (Statistical Appendix, Table 1 .1) imply that the rural population was almost stagnant, labor market statistics still indicate a substantial ~ncrease in the agricultural labor force since 1961. Nevertheless, rapid growth of urban areas is a real phenomenon and is con- firmed by data on the growth of urban centers with over 20,000 inhabitants. As a group, these cities increased their share of the total population from about 27 percent to over 38 percent during the period. Over half of this increase took place in the Lima metropolitan area; which in 1972 held about 23 percent of the country's population as opposed to 18 percent in 1961, and only some 10 percent in 1940. (See Statistical Appendix, Tables 1 .1 and 1.3.) 4/ In the absence of firm data, official population figures have been projected using a 3.1 percent annual growth rate from 1961.  - 5 - The process of rapid urbanization has made the geographicai distri- bution of the population uneven, with the greatest concentration along the ·coast. Of Peru's ten largest urban centers, the six located along the coast increased their share in the country's total population from 24 percent in 1961 to 32 percent in 1972. The coast as a whole increased its share of total popul~tion from 39.5 percent to 43.4 percent in roughly the same period. (See·Statistical Appendix, Table 1.2.) The rapid growth of Peru's population results in its having an age structure in which children weigh very heavily. It is estimated that, in 1970, 46.8 percent of the total population was 14 years old or younger. For the rural population this proportion was over 50 percent, reflecting both higher birth rates and a preponderance of working~age persons among migrants to the urban areas. (See Statistical Appendix, Table 1 .4.) The increased growth rate has brought about a higher dependency rate, i.e. a greater number of children and old persons now have to be sup- ported by each member of the working-age population. It is notable in this respect, however, that despite the fact that the age-groups 15-64 fell some- what as a proportion of total population, from 51.8 percent in 1961 to an estimated 49.7 percent in 1970, the proportion of the labor force remained constant at about 31.5 percent, implying some increase in participation rates. In drawing such a conclusion, however, one must caution that this may transgress the limits of precision of the labor market statistics. Even so, it is evident that the present high birthrate in Peru, estimated at about 41 per 1,000, makes the task of achieving a given target of per capita income growth harder, and calls for higher rates of increase in labor productivity than would otherwise be the case. Labor Force and Employment Between 1961 and 1971 Peru's labor force increased by over one- third. Table I shows the composition of Peru's labor force for those years and .the changes it has undergone over the period. The figures in the table . are illustrative of the structural problems of the Peruvian economy.2.,/ Several inferences may be drawn from them. 2/ The labor force is not synonymous with the number of people actually employed in a particular sector. Still, as the sectorial labor force is defined as consisting of persons full and partially employed and those actively seeking employment in each particular sector, and those totally unemployed, the sector distribution of the labor force may be taken as a reasonably good approximation of the sectorial structure of the economy. Although unemployment is Peru is generally low, the main problem is widespread underemployment.  - 6 - Table I: CHANGES IN THE DISTRIBUTION OF~ERU'S LABOR FORCE, 1961-71 Percent Shares of Total Sectors Thousands Increase (percent) 196:1 .1971 1971/1961 1961 1971 Agriculture 1,597 1,936 21.2 49. 1 43~8 Fishing 22 25 13 .6 .7 .6 Mining 70 83 18.6 2.2 1.9 Manufacturing 429 648 51 . l 13.2 14.7 (Factory) (155) (225) {45.2) (4 .8) (5.1) (Cottage industry) , (274) (423) (54.4) (8.4) (9 .6) Construction 108 141 30.6 3.3 3.2 Commerce 290 490 69.0 8.9 11. 1 Services 614 950 54.7 18.9 21.5 Not specified, and new entrants 120 142 18.3 3.7 3.2 Totals 3,250 4,415 35.9 100.0 100.0 Source: Statistical. Appendix, Table 1.5. Despite the large migration from the rural areas to the towns, the labor force in agriculture still accounts for nearly 44 percent of the country's total. In fact, it has grown quite substantially in the last decade (by 21 percent) and absorbed nearly one-third (31 percent) of the addition to the total labor force. Equally significant is the limited size of the labor force in the other good-producing sectors--fishing, mining, manufacturing and con- struction--and their relatively modest contribution to the overall growth of the labor force. Together they account for only 20 percent of total labor force (and almost half of these are in cottage industries) wnile commerce, services and the 11 not specified" category make up 36 percent. Fishing and mining are very important as foreign exchange earners, but rather insignificant in terms of total employment. Though higher than that of fishing and mining, the absorption capacity of manufacturing has also been limited, primarily because of the low base in_ the initial period. Even abstracting from a possible increase in underemployment, i.e., assuming that the increase in the labor force during the period represe~ted additional em- ployment, manufacturing absorbed only about 18 percent of the total labor force increase, despite a satisfactory increase of industrial value added during the period--about 7 percent per annurn--and over 4 percent annual growth in employment. When factory production is considered, the addition to the labor force during the decade--70,000 people--represented only 6 per- cent of the total increase and only about one-fifth of the number by which the agricultural labor force swelled in the same period.  - 7 - , A characteristic feature of Peru's unemployment problem is that it takes the form of underemployment and low earnings rather than overt, total. unemployment. Underemployment, measured by the number of people in the labor force that involuntarily work less than 35 hours per week or earn less than the official minimum wage, is extremely high. According to the available data, it appears that in 1971 only 4.4 percent of the labor force was un- employed. In contrast, the proportion of people underemployed is es~imated to be 44.4 percent of the labor force. The figures in Table 1 .5 of the Statistical Appendix show that, when the numbers of the employed and the underemployed taken together are expressed in terms of fully employed equivalent on the basis of 35 hours per week worked or minimum wage or salary· earned, the employment ratio is quite low, ranging from 69 percent of the labor force in agriculture to a high of 92 percent in mining, with the average for all sectors at 73 percent. These ratios, expressed as an effective unemployment ratio are equivalent to 31 percent in agriculture, 15 percent in manufacturing, around 20 per- cent in commerce and services, and 27 percent for all sectors. Agriculture in some respects represents a special case. Continuing large migration to urban centers has provided an outlet for the faster growing rural population; due to seasonal manpower requirements, there does not exist a surplus of iabor that would make it posslble for labor to be transferred out of the sector without affecting output. The employment problem in agriculture takes the form of widespread and severe underemployment rather than unemploy- ment. Measured in terms of man-hours available and required to produce pre- sent levels of output, there is considerable excess labor. This is reflected in very low levels of productivity and incomes of the agricultural .labor force. Under existing population growth and migration trends, the agricultural labor force should continue to increase in absolute terms though its share of the country's total labor force would,continue to drop, as has been the case dur- ing the last two decades. A solution to the problems of unemployment and low incomes in the Peruvian countryside would require, on the one hand, changes in technology within the sector to increase output and income per worker, and, on the other hand, the expansion of the agricultural frontier, to provide additional outlets for the rural labor force and improve the very unfavorable existing land-man ratio. Productivity and Incomes Labor productivity-i.e., value added per worker, rather than per hour worked--is the critical nexus between employnent and incomes. On the one hand, a lower rate of productivity increase means greater labor absorp~ tion within a given rate of growth, but on the other hand, a lower rate of productivity increase, perpetuate and may even increase existing income dif- ferences between sectors. The latter is of course especially the case if the low rate of productivity increase occurs in the sectors which were bad off to start with, while the higher-income sectors exhibit a more rapid increase.  - 8 - The annual average rate of productivity growth has been about 1 .6 percent, reflecting the difference between growth rates of. 4.8 percent for GDP and 3.1 percent for the labor force. The experience has been quite varied, however, with manufacturing and fishing higher than the average, and agriculture much lower--possibly even declining somewhat. Agriculture, which in 1961 had an average labor productivity of only about 40 percent of the overall average, fell to about 35 percent of the 1971 average. If a comparison is made between agriculture and the average of all other sectors, the drop is from 28 percent to 24 percent. Also, those sectors which show the lowest rate of productivity growth--agriculture and services--are where most of the increase in labor force between 1961 and 1972 was absorbed (75 percent of the total). Since these are the easiest sectors to enter under- employment is kept high and productivity per worker low. Table II: . SECTORIAL PRODUCTIVITY, 1961 AND 1971 Value Added Proportion Percent Annual per Worker of Average change /a Average 1961 1971 1961 1971 1961/71- change /a (In thousands of 1970 soles) Agriculture 21 20 .41 .35 -3.8 -0.4 Fishing 149 208 3.0 3.6 40.0 3.4 Mining 215 236 4.4 4 .1 9.7 1.0 Manufacturing 60 81 1.2 1.4 33.6 3.9 Construction 94 107 1.9 1.9 14.2 1.3 Commerce and other services 76 83 1.6 1.5 8.4 0.8 Average 48 57 17.6 1.6 /a These rates have been calculated from absolute figures. Source: Tables 1 .5 and 2. 1 of the Statistical Appendix and Central Reserve Bank (for 1961 value added data). While agricultural productivity on the average is very low in com- parison with other sectors, it should be reorgnized that the average values for several other sectors also cover very wide disparities. Manufacturing for example, which has a moderately high value, is an average between the very high for the minority of factory-employed, and quite low values for the majority of workers, who are engaged in handicrafts or cottage industry. Similarly, the commerce sector contains large numbers of street vendors, many of whom have very small sales and profits to show for their work. There are in many sectors large numbers who contribute very little in value added,  - 9 - and in consequence derive low incomes. The situation in agriculture is un- usual because of the number of people involved, and the low average. There is little doubt that, if one could isolate those employed in export agricul- ture and those who worked on the best lands, the low productivity of the remainder would be even more conspicuous. The marked differences in the sectorial distribution and produc- tivity of Peru's labor force are inevitably reflected in large disparities of per capita incomes and living standards. These are particularly sharp between the urban and rural areas, and between the coast and the Sierra, which largely correspond--with the exception of the mining enclaves--to the geographical location of the modern and the traditional sectors respectively. There is no statistical basis for even rough estimates of the dis- tribution of income among the different segments of the population. Though several studies on the subject have been made over the past several years, the authors have been forced by the lack of data to rely on assumptions which cannot in any way be tested. Information exists on minimum wages and salaries by Departments (Statistical Appendix, Table 9.3), and an index of actual wages paid is published for the Lima-Callao area. Minimum legal wages, however, are not a sufficient basis for inferences about income levels; the mor,e so when it is not known to what extent they are in fact observed, even as minimum, or, whether on the contrary, wages actually paid exceed the legal minimums. This is, however, the only direct information bearing on the incomes of the agricultural sector, which in 1971 still comprisednearly 44 percent of Peru's labor force. The information about actual wages paid in urban centers is only partial, as a large proportion of the urban labor force is made up of people self-employed. (The problem of self-employed of course also exists in agriculture.) Rather than to offer an extremely partial--and necessarily dis~ torted--picture of the situation in these circumstances, all we can say on the subject of income distribution in Peru is that the extremely low level of labor productivity in the agricultural sect.o r relative to the national average and to the nonagricultural activities, suggests that the per capita income of Peru's rural population is extremely low. In 1961 the agricultural labor force--49.1 percent of the total--produced 21.4 percent of total GDP. By 1971 these proportions were 43.8 percent and 15.6 percent respectively. Using labor productivity as a rough approximation of gross income, these figures suggest (a) the very low income level of the rural population and (b) that their relative situation has become worse in the last decade. The fact that labor's share of total value added presumably is larger in the low- productivity activities (where little capital is used) than in the more modern high-productivity ones, cannot materially alter this conclusion. The Productive Sectors Beginning in the early 1950s and continuing into the 1960s, Peru's productive structure has under gone a major transformation, as two new sectors,  - 10 - mining and fishing, have eclipsed the traditionally dominant agricultural sec- tor as the main source of exports. While in 1950 agricultural products made up well over half of exports, minerals and fish products make up 75-80 percent, and agricultural products are less than 20 percent of the total. Within agri- cultural exports sector, there has also been a shift from cotton and wool to sugar and coffee. Mining has a long tradition in Peru; the first major mining company, the Cerro de Pasco Corporation, began its activities at the turn of the cen- tury. However, it was not until the Marcona iron ore deposits were developed in the mid-1950s and the large Toquepala open pit copper mine was put into production by Southern Peru Copper Company in 1960-61, that the sector attain- ed its present importance. Since the effect of Toquepala is over, growth in volume has been rather slow. The Cerro de Pasco Corporation put a new copper mine into production in 1967-68, but otherwise new mining development was limited throughout the decade. Strikes have frequently marred production, adding instability as well as reducing average output. This relative stagnation will be broken in the coming years. Despite the fact that most parts of the country are inadequately surveyed for mineral resources, several significant ore bodies are known which can be developed, especially of copper minerals. One very important such development is al- ready well under way, and the government is actively engaged in the further- ing of other projects either directly by the state or in joint ventures with foreign firms. Construction of a new copper refinery has also begun, which will help realize additions to value added in the country. The explosive growth of the fishmeal industry came to an end in 1964, when the annual catch of anchovy--the resource base of the industry --had reached 8.8 million tons, and Peru became one of the world's largest fishing nations. By then both industry and government recognized that con- trols on fishing were necessary to prevent overexploitation. In 1965 measures were introduced to limit the catch to what could be considered safe from the point of view of assuring sufficient reproduction of anchovy. Until 1972 the size of the annual catch remained essentially constant. Due to improved yields in processing, fishmeal production has shown a moderate expansion. (For the latest developments, including the crisis of 1972, see "Protection Developments" below.) Meanwhile, the fishing industry has been faced with the problems caused by excess capacity (a legacy of the boom period, when the lure of the high profits attracted large numbers of entrants) in both the fishing fleet and the processing industry. The government is now seek~ ing a restructuring of the industry, and is also promoting the diversifica- tion into fishing products for human consumption. Near stagnation has characterized the third of the primary producing sectors, agriculture. The long-term trend of production according to the official statistics has been about a 2 percent increase per year, a rate that compares unfavorably with that of population growth, let alone income growth. What is .also striking is the u'neveness of the performance from year to year. Of the twelve years from 1960, value added fell during three and was stagnant  - 11 - during another, which illustrates great vulnerability to adverse climatic con- ditions. Yields per unit of area have shown little improvement for most crops, and seem to reflect the effect of climatic conditions more than any underlying trend. Above and in Table II it was shown that average value added per worker may actually have decreased. While food production did not increase in the early years of the decade, declining world market prices and increasing do- mestic costs brought about a reduction in the area devoted to export crops. This has given room for some expansion of crops for domestic consumption. Im- ports of food rose rapidly during the first half of the 1960s, when incomes grew rapidly and production fell far behind, but have not grown much since. Recurring reports of shortages of various products in the recent period in- dicate, however, that the containment of import growth may reflect partly import controls rather than a real absence of demand. A major factor behind the inadequate domestic supply response to the increasing demand for food in Peru, has been the stagnation of on-farm investments. Incentives for agricultural investments naturally suffered with the deteriorating terms-of-trade position of the agricultural sector within the Peruvian economy over the last decade. For example, between 1960 and 1963, prices on agricultural inputs rose by 41 percent, while farm output prices only increased by 18 percent. This trend continued up to 1967. The official policy of import protection for the domestic industrial sector and the decision not to alter the foreign exchange rate of the sol during the period 1960-6 7 were largely responsible for this development. After the change of government, the uncertainty among the larger commercial farmers about agrarian reform has presumably acted as a new disincentive. The con- tinuing concern with keeping food prices low to consumers in the urban cen- s to whether present ters has also prevented giving proper cons id era tion a_ agricultural price policies provide sufficient incentives to expand output. Beginning in the early 1960s, a policy of industrialization has been pursued, which has met with success in the sense that manufacturing industry has expanded rapidly and quite consistently with average annual growth rates above 8 percent except during 1968-69. Most of this expansion has, until the last two years, been in consumer goods industry catering for the domestic market--often in the form of "finishing" imported products. Industrial exports have remained virtually inexistent, and, with the except- ion of the fishing boat construc.tion, linkages to the main export sectors have also been weak. Relatively high levels of tariff protection have been used to promote import substitution. Up to the 1967 devaluation, the increas- ing overvaluation of the Peruvian sol gave a further incentive; since 1968 direct import prohibition has been used to give the required protection for .a growing number of products. Especially since 1968, generous fiscal invest- ment incentives and exemptions from import duties for capital equipment and industrial inputs are used further to stimulate industrial investment and production. The combined policy of protection and incentives aimed mainly at lowering the cost of capital investment has often resulted in high cost and inefficient production, and has provided a stimulus to more capital intensive production processes than would have otherwise occured. As dis- cussed further in Chapter -IV the loss of fiscal revenue to the government ·.- . . .. •  - 12 - on account of the various incentives is also of serious concern. Among the state industries several, ·notably the steel mill in Chimbote and the fer- tilizer plant in Cachimayo, were in difficulty during most of the last decade and have sustained heavy losses; this trend has been partly reversed in the last few years. Table III illustrates the process of change in the Peruvian pro- ductive structure in terms of sectorial contributions to GDP. Fishing re- mains a small sector despite its strong increase. The growth of manufactur- ing has not been able to compensate for the sharp decline of agriculture and the stagnation--towards the end of the period actually a relative decline-- of mining. The result has been some decrease in the total share of goods producing activities-and a matching growth of services; a more detailed breakdown of this group reveals that the national accounts attribute this growth mainly to the category of "other services," which comprise about a third of total GDP and are little known. The warning should be repeated not to give too much significance to the precise national account figures, since the methodology used for this compilation necessarily means that the margin of uncertainty is quite wide. Table III: CHANGES IN THE PRODUCTIVE STRUCTURE (Per~entage.shares of GDP) Sector 1960 1964 1967 1971 Agriculture 22.3 19.0 17. 1 15.6 Fishing 1. 7 2.4 2.3 2 .1 Mining 9.7 8.5 9.4 7.8 Manufacturing 16.3 17.7 19.5 20.9 Construction 5.7 5.6 5.3 6.0 Services 44.3 46.8 46.4 47.6 Source: For 1960, 1964 and 1967, mission GDP estimates base on ~ t a s Nacionales del Peru, 1960-69 (Central Reserve Bank of Peru: 1970); for 1971, statistical Appendix, Ta~le 2.1. A Perspective on the Macro-Economy Peru entered the 1960s with an export-led boom; this continued during the first few years of the decade. In terms of volume, the export growth slowed down considerably in 1962, but helped by favorable price de- velopments, the stimulus to the economy was maintained essentially until 1967. In that year, a progressive worsening of the fiscal situation and accompanying deterioration of the external accounts brought about a serious crisis, which eventually led to the adoption of a stringent stabilization policy, including a 45 percent devaluation of the sol, limitations on credit  - 13 - expansion, and emergency tax measures. The effect of these measures .was quite drastic. During 1968 GDP came to a complete standstill, imports dropped by 15 percent after having grown very rapidly in earlier years, and gross domestic investment fell by a third in real terms. The new Gov- ernment, which came to power in October of 1968, continued the stabilization program throughout 1969. The economy has been able to resu~e its growth during the last three years. Data on this growth experience are given in Table IV. Table IV: ANNUAL REAL GROWTH RATE OF GDP (percent) Cumulative average Cumulative average 1961-1966 1967 1968 1969 1970-1972 6.4 2.5 2.3 6.5 It is worth looking somewhat closer at the developments which preceded the 1967-68 crisis, as they illustrate some of the main problems any Peruvian government must face. On the external side, there was the failure to secure a steady growth in the supply of export products, a weak- ness which, as mentioned, was hidden for a while by the price movements. On the internal side, an ambitious--and much needed-program of public in- vestment in health, education, transport and agriculture was undertaken in 1963, with the development of the "forgotten" Sierra and Selva as one of the main objectives. At the same time there was a failure-for various political reasons--to increase public sector savings in support of this program. On the contrary, the budgetary savings progressively declined and even became negative as a consequence of the failure of revenues, in the absence of major new tax measures, to keep pace with the increase in current expenditures. The government resorted first to domestic borrowing, and then to rapidly growing external financing, much of which came from suppliers and banks on relatively hard terms, With simultaneous high investment demand from the public and the private sector, imports grew rapidly--by some 13 percent annually in real terms--and the external current account deterio- rated progressively, The mounting external debt also led to a rapidly rising debt service burden, and when in 1966 speculative inventory invest- ments and short-term capital outflows were added, the crisis was imminent. One of the objectives of the present government is to prevent the recurrence of these phenomena. As a means to this end, the external sector has been brought under more direct state control. It is intended to assure a steady growth of exports, primarily by increased mineral production. Im- port controls give the power to check nonessential imports, while restric- tions on current spending by the central government has made a more positive savings performance possible. As will be discussed in later chapters, the problem of relatively slow automatic revenue growth persists, making recur- rent and politically paniful revenue measures necessary.  - 14 III. DEVELOPMENT APPROACH AND STRATEGY As indicated in Chapter I, the government has adopted an approach to development in which economic growth is directly linked to a transformation of the society to achieve broader popular participation in the country's eco- nomic, social and political life. Among other things, this means effectively drawing the "forgotten" rural poor into the modern development process, im- proving the distribution of income and wealth, and increasing the participa- tion of Peruvians in the ownership and management of the economy. Since the government attributes much of the limitations of the past development to the dominance of unregulated private enterprise and the excessive weight of for- eign private interests, its approach assigns to the state an active and much increased role in the economy. The main elements of the development strategy followed by the government can thus be summarized by the following: (a) expanding the economic role of the state by increasing its direct participation in developing and exploiting the country's basic productive resources and marketing its main export products; (b) carrying out structural reforms in the industrial field and an agrarian reform entailing substantial changes in land ow- nership and farm organization and management; and (c) stimulating economic development in regions outside the Lima-Callao area. This strategy raises some basic issues of a general character, which the IBRD 1971 economic report (WH 206a) identified. These concern, first, the need to reconcile the expansion of the direct economic activity of the state with the preservation of outlets for and incentives to private investment and initiative. The private sector in the past accounted for four-fifths of total investment and virtually all investment in the produc- tiv.e sectors, so the government cannot risk alienating it without running a risk of economic dislocation, at least for quite.some time. Secondly, there is need to reconcile the aspirations of national ownership and con- trol over the country's basic productive resources with the need of attract- ing the large amounts of foreign capital which are required for developing the country's mineral resources; Peru's growth prospects in the medium-term future depend largely on increased mineral exports. A third set of issues arises out of the trade-offs likely to be involved in the government's at- tempt to pursue simultaneously economic grow~h and social reform objectives. Developments in Peru during the last three years indicate that the government is aware of these basic issues. The need to balance the various objectives is reflected in the new legislation adopted, and also explicitly stated in the development plans. In addition, the government has shown, in a number of specific cases, a high degree of pragmatism and flexibility in its application of the general laws. Without abandoning their general course or sacrificing important elements of their strategy and goals, the authorities  - 15 - have adapted specific policies to the requirements and constraints of given situations. Institutional Aspects !!_I Perhaps the key element of the government's strategy is the greater role given to the state in the economy; and the decision to . use state enter- prise as a basic instrument of development. During its four years in power, the government has moved a long way towards building the basis for such an expanded role for the state. The actions that it has taken fall in three broad categories: {a) the establishment and revigoration of public enterprises in e most important commodity and services producing several of th_ fields; (b) the creation of state agencies for marketing several basic export and domestic_ consumption products; and (c) the strengthening of its position and role in the financial field. In addition, it has strengthened and broadened its control over imports. Foremost among the new producing enterprises is PETROPERU, 7/ which is in charge of all oil refining operations and the distribution of oil products in Peru, and is the state's agent for petroleum exploration and production. It is also responsible for negotiating with foreign oil companies the conditions for their entry and operations in the petroleum field. A wholly new enterprise-- MINEROPERU--has been set up for exploiting the country's other mineral re- sources. It is responsible for developing the mining concessions which reverted to the state at the end of 1970, as well as for surveying and developing other possible mineral deposits. All this MINEROPERU may do by itself or jointly with private capital under agreed conditions. It also has a monopoly for new metal refining activities and in marketing of minerals abroad. Still in the commodity production field, the government has expanded the responsibility of SIDERPERU (formerly SOCESA)--the enterprise which operates the steel mill in Chimbote--to cover intended future developments in the field of basic steel. Finally, INDUPERU has been set up as the state agency responsible for those new manufacturing ventures which none of the existing enterprises cover. The operation and future expansion of telecommunications is the 2./ See the Glossary on page vii for a list of acronyms used here and else- where in the report. 7/ There existed a forerunner to PETROPERU as a public enterprise-the Empresa Petrolera Fiscal--but this did not have operations on a similar scale.  - 16 - responsibility of ENTEL, which is gradually taking over the existing private- and largely foreign-owned-telephone companies. Legislation recently enacted has consolidated the three former public enterprises in the electric power field, creating ELECTROPERU, to plan, construct and operate new electric generation facilities, merge the existing regional public power systems, and regulate the sector with the ultimate goal of placing the whole electric power sector under state ownership and managment. In the field of marketing, in addition to the monopoly given to MINEROPERU for the export of minerals, the government has placed the export of fishmeal under a new public enterprise, EPCHAP, and the marketing of an increasing number of agricultural products for domestic consumption under another public enterprise, EPSA. EPSA operates on both sides of the market for the purposes of supporting or controlling prices, depending on the pro- duct. Recently it has also been made responsible for the coffee exports. The import of some important industrial inputs is the monopoly of ENCI. Finally, the Central Committee of Sugar Cooperatives is the single seller of sugar for export. The gqvernment has also expanded and strengthened its position in the financial· field. In addition to the previously existing specialized public banks (Banco Industrial, Banco Minero, Banco de Fomento Agropecuario and Banco Central Hipotecario) in the fields of industry, mining, agriculture and mortgage financing respectively, a Housing Bank and a large development finance company (COFIDE) have been set up. The latter is in the nature of a holding company, and will hold all government interests in the public enterprises, serve as the channel of the central government transfers to them, and attempt to stimulate joint ventures with private interests in industry. By taking over three of the five largest commercial banks, the government has also gained a position of considerable importance in the commercial bank- ing field. • In addition, a strengthening and expansion of the Banco de la Nacion has been· brought about by making it the sole depository for public sector agencies' funds, and by forcing the commercial banks to keep reserve accounts there. With the institutional basis set forth, expansion of the direct state activity in the productive sectors of the economy has two important requirements for success: a rapid increase-in the availability of ·trained manpower within the.public sector, and greater resource mobilization and public sector savings. The government now faces the need of expanding and improving the capability of the public sector for quickly and efficiently preparing and implementing investment projects in the productive sectors, in addition to the traditional task of building infrastructure and social service facilities. _It will shortly face the problem of recruiting or training the technical and managerial personnel that will be required for operating and ·administering several of the enterprises that now are only in a planning or construction phase. In some fields, notably electric power and hydrocarbons, adequate technical and managerial capability already exists, but in others, e.g., the mining and metallurgical fields, a strong training  - 17 - program should be mounted early, to insure the efficient operation of the productive facilities once they are-built. Utilization of managment contracts with foreign firms should not be ruled out. The second requirement aris~s not only from the magnitude of the public investment program, but also from its composition. In addition to the large investment foreseen in agriculture, transport and education, the gov- ernment contemplates large investments in the industrial, mining and power fields. Many of these consist of projects with relatively long gestation periods, requiring the utilization of large amounts of resources for several years before production begins to generate funds to recover the investment and eventually produce surplus, The situation of MINEROPERU, and, to a · somewhat lesser extent, ELECTROPERU is illustrative of this; their current operations are expected to generate no surplus at all during 1973-74. Though in the last three years the government has been successful in substantially increasing public investment while maintaining financial equilibrium, it has been able to do so only by adopting new revenue measures to compensate for the low income elasticity of the existing tax system. Even so, public sector savings have not increased, and during the last two years extensive domestic borrowing has also been required. In the future, a thorough overhauling of the tax structure would be required, to ensure an adequate growth of public sector revenues in response to economic growth, and rise its relatively low ratio to the gross national product. - The pricing policies for the public enterprises should also be such as to enable them to generate a growing pro- portion of the investment funds required. Policies Towards the Private Sector In parallel with the institutional reforms in the public sector, the government has adopted policy legislation for more important sectors: industry, mining, fishing, power, agriculture, etc. When considered with ' the attitude revealed in specific cases ·of policy interpretation, this legislation now gives a fairly clear picture of the government's intentions vis-a-vis private enterprise and initiative . .Thus, while a number of indus- trial activities have been declared as "basic" and reserved for the state, generous fiscal incentives are being given to private investment and activity in the rest of the industrial field. Similarly, while the increased control over the credit market is being used to influence the allocation of credit, there is no evidence that shortage of ~redit has restricted private sector activity. Neither has the introduction of complete government control over imports so far resulted in restrictions on imports of capital or in~ermediate goods needed for i.ndustrial expansion. An equally flexible policy has been followed concerning the admission of foreign capital in Peru and the regulation of its operation. The strategy of reconciling national aspirations with need for foreign direct investment is well illustrated also by the contract arrangements under which a large number of foreign oil companies have started exploration and drilling operations in Peru in the recent period. These contracts, based on the recognition of the country's .?wnership of underground resources, provide for the investor to I  - 18 - carry out exploration and drilling activities within a specified period and at own cost, and--in the case of success--for a splitting of the output between the companies and PETROPERU in agreed proportions. All production costs will be borne by the contractor, and production facilities will become property of the state after a normal period of twenty five years, which may be extended for eight additional years. The government at the end of 1971 .took action to facilitate foreign participation in joint ventures for indus- trial activities. Finally, it has also availed itself of the escape clause of Resolution 24 of the Cartagena Agreement 8/, which permits the supplying of domestic c.r edit to enterprises classified-as foreign under that resolution. Reforms in Industry and Agriculture The government's strategic aim of broadly distributing the fruits of economic growth finds. expression mainly in reform policies adopted in the commodity producing sectors. As specific sectorial policies will be discussed in Chapter V, only the broad lines and ·g eneral direction are treated here, to indicate how the government attempts to reconcile the potentially conflicting objectives of economic growth and social transforr.tation contained in its devel- opment approach. In the field of agriculture, the outstanding policy measure, which affects the development of the sector both in the short and long-run, is without question the acceleration and broadening of the agrarian reform started in 1964. The main changes introduced by the new agrarian reform legislation adopted in 1969 were: (a) to eliminate those exceptions of the earlier law, . which had had the effect of virtually excluding many of the larger estates from the reform process; (b) to lower the size in excess of which coastal landholdings would be affected, and to ~ubject to• expropriation the whole of such excess-the earlier law left part with the original owner; (c) to establish the self-assessed values of 1968 for tax purposes as the temporary basis for determining the value of the compensation to expropriated landowners, pending the outcome of the special valuation process--thereby ~peeding up the expropriation process consideraply; (d) to lower the amount of compensation to be paid in cash; and §j The agreement creating the Andean Common Market; Resolution 24 regulates the treatment of foreign capital in member countries.  19 - (e) to provide for payment of the remainder in bonds, non-negotiable for a period of 10 years '}_/--in contrast to the fully negotiable bonds of the previous law. The effect of the changes was to increase considerably the area of farm land subject to expropriation and to extend the agrarian reform practical- ly to the whole country. Previously it had been effectively limited to a few regions in the Sierra. Despite the very large area of farmland subject to expropriation under the new law, nearly half the total in the country, it soon became evident to the authorities that the available land would not be sufficient to provide economically viable farm units to the several hundred thousand landless rural families. In· such circumstances, the government policy has been increasingly oriented towards cooperative forms of farm organization and management . . In some cases--notably the expropriated sugar estates in the coastal area--the cooperative comprises both agricultural laborers and industrial workers, and the changed ownership has not entailed appreciable changes in the structure and organization of the productive process. In the Sierra, the large cattle ranches (haciendas) have been maintained as production units in so-called SAIS organizations, 10/ embracing not only the ranch proper and its employees, but also the population of the surrounding areas, be they individual farmers, members of cooperatives, or even engaged in nonfarm activities. The rationale of this typically Peruvian form of organization is to preserve the core of the former hacienda as an efficient .economic unit, capable of generating surpluses to be used for on-farm investment in the surrounding areas and to provide them with social services, mainly education and health. In the fields of industry, mining and fishing, the reforms provide for direct cash payment to the employees of a certain proportion of the firm's profits before taxes, and capitalization until 50 percent ownership is reached, at which point another proportion of the profits goes to the "Industrial Community" of the firm. This "Industrial Community" comprises all the em- ployees of the firm, and is represented on the board of directors in proportion to its equity holding. U/ Profits accruing to the "Community" for reinvestment in the enterprise are exempted from the income tax. The provision for reinvestment of the larger portion of profits accruing to the employees; rather than distribution of the whole in cash payments, obviously aims .at preserving and even increasing industrial invest- ment. Similarly, the fact that the agricultural cooperatives--including the SAIS-are subject to income tax on their net profits helps to preserve a tax base in the reformed agricultural sectors, and illustrates the government's awareness of the need to balance its objectives of socio-economic reforms with the requirements for the economy's growth. ti The bonds can be redeemed if the proceeds are used for investment in industry; this requires an additional cash contribution by the holder of an amount equal to the bond value to be redeemed. 10/ Sociedades Agricolas de Interes Social. 11 / This applies to the normal case. In enterprises where state ownership ex- ceeds 25 percent, the "Community" does not take up ownership (instead it receives COFIDE shares) and has a fixed board representation of two members.  - 20 - IV. RECENT ECONOMIC DEVELOPMENTS This chapter discusses in greater detail the developments during the four years since 1968, first in terms of the overall picture each year, and then in terms of special topics: production, resource use, public finances, money and credit, and external accounts. Throughout the first section, reference'is made to Table V, which shows selecte<l economic indi- cators for the 1969-72 period. The General Growth Experience In 1969 the then-new government continued and improved on the stabilization policies initiated earlier, with the aim of bringing down the inflation rate and increasing international reserves. A freeze in remunera- tions within the public sector contributed to keeping current expenditures virtually unchanged from 1968; in real terms, public consumption contracted. As current revenues grew substantially in response to the new tax measures taken in 1968, the current surplus increased tenfold, and the overall deficit contracted to about one third of the 1968 level. Credit expansion was quite limited throughout most of the year, and did not exceed the growth in money GDP. Overall investment grew only by 3 percent with the public sector, mainly the public enterprises, providing all the growth. In accordance with the stabilization and contractive policy, most production sectors grew only little during 1969. The exceptions were agri- culture, where severe floods and climatic adversity had created a near-disast- er, and construction, -which was hit hardest by the initial stabilization effort. Overall GDP-growth was low, but the policies proved successful in containing inflation. The GDP-deflator increased by only 8 percent as against 18 per- cent the year before and foreign reserves grew by $42 million. While both exports and imports contracted in real terms, export prices were favorable, especially for copper, and the resourc~ balance surplus increased by $65 million. Increased factor payments offset this partly, however, to give a current account improvement of just $24 million.  - 21 - Table V: SELECTED ECONOMIC INDICATORS, 1969-72 Estimate Variable 1969 1970 1971 1972 A. Real growth rates, :eercent GDP 2.3 7.6 5.9 5.9 Consumption 3.4 9.7 8.3 6.7 Public investment 20.7 23.8 9.6 20.3 Private investment - 4.0 - 9.5 5.8 - 8.8 (private fixed inv.) - 1.0 1.0 7. 1 8.0 B. Current US dollars million Exports of goods+ NFS 1,050 1,224 1,081 1, 126 Imports of goods+ NFS 895 972 1,042 1,130 Current account balance Net public capital inflow 2 110 202 59 - 27 31 - 101 113 Reserve changes(+ increase) + 42 + 257 - 62 + 42 c. Current soles billion Government current revenue 32.1 38.5 40.9 44.8 Government current expenditure /a 28.2 32.7 35.9 40.9 Government capital expenditure 6.0 9 .s. 12 .6. 13.9 Government fiscal deficit 1.9 3 .1 7.2 • 9 .4 D. y ear-to-xear change 2 :eercent GDP-def la tor 8.0 7.0 4.8 8.4 Credit to public sector 12.6 5.2 48.4 16.6 Credit to private sector 9.9 16.3 20.6 22.5 Money and quasi-money 14.8 33.4 12 .9 18.5 Copper price /b + 30 - 12 - 22 Fishmeal price/b + 23 + 33 6 3 /a~ Including current transfers to public sector agencies. /b Average unit value, f.o.b. Peru. Source: Statistical Appendix, Tables 2.4, 2.5, 3.1, 3.2, 5.1, and 6.1. Excellent growth experienced in 1970 was largely a consequence of the exceedingly favorable development of world market prices for fishmeal. These were on the average one third above the preceding year's, and in combination with increased volumes gave rise to a jump of $100 million in export earnings from this commodity alone. Copper prices fell back from their 1969 high, but increased export volumes moderated the fall in revenue. Overall, exports of goods and nonfactor services grew over 16 percent in nominal terms, which was faster than imports, and the resource balance sur- plus increased by nearly $100 million; falling factor service payments made  - 22 - the effect on current account even more dramatic. On the capital account there was substantial private disinvestment, reflecting largely the govern- ment's purchase of a number of foreign-owned enterprises, but compulsory repatriation of capital held abroad by nationals helped to bring about a total reserve increase of over $250 million. Stimulated by the external sector, the pace of ,economic activity increased sharply. Private consumption grew in volume by over 10 percent and this demand produced a corresponding high growth ~n manufacturing pro- duction. Agriculture had another good year, and in the fishing sector all records were shattered with the largest catch. ever in one calendar year, and a 32 percent jump in value added. In the mining sector, strikes were held to a low level, and production could grow aomewhat in contrast to the stagna- tion of 1969. A 15 percent growth of construction activity initiated a boom which was continued for the next few years. The exception to this general picture was in private investment (other than housing); investment growth continues to come mainly from the public sector. The high earnings of the export sector,. in combination with · a noncurrent revenue increase that followed the introduction of a pay-as- you-go system for enterprise taxation, boosted central government current revenues so that the current account surplus increased by 50 percent despite a much more relaxed policy for current expenditures than ·during the stabiliza- tion period. Capital expenditures increased by over 70 percent, however, on account of the high capital formation and growing capital transfers to the rest of the public sector, and central government overali deficit consequently showed some increase again. The large foreign inflows in combination with a relatively limited expansion of credit resulted in a sharp build-up of liquidity in the banking system, and thus laid the foundation for a very large credit expansion during the following year. The rate of price increase further dropped, indicating that the demand pressure wa~ ,c ontained by the availability of excess capacity in the manufacturing sector, but also by the good results of agriculture and the relatively liberal imports. The very good record of 1970 could not be matntained during 1971. There was much less of a stimulus from the external sector as export prices slumped for metals (particularly copper) and fishmeal. · tn addition, the output of metals available for export decreased as a result of prolonged strikes at several of the important mines. Total commodity export earnings dropped by some 16 percent, while imports continued their expansion; in terms of volume they grew by 6 percent compared with a drop of ·a lmost 5 percent in export volume. At the same time the financial position of the central govern- ment deteriorated significantly from the comfortable position reached in 1970. • Current expenditure was allowed to grow considerably ~ore rapidly than revenues, and the fiscal deficit more than doubled. A po's itive feature in comparison with the years before was in the field of private investment, where the earlier stagnation was broken. The increase was still not very rapid and was concentrated in construction investment rather than machinery and equipment, i.e., mainly in housing rather than in industrial expansion.  - 23 - The financ~ng of the fiscal deficit was effected entirely from the banking systems, as net foreign financing became negative on account of high _amortization payments. The central government's borrowing thus grew from S/. 500 million in 1970 to S/. 7 .9 billion during 1971. Some of this was offset by accumulation of bank balances by several state enterprises, that were not in a position to spend the sums transferred to them for investment purposes, but in spite of this, credit expansion to the public sector .was very rapid for the year. As no attempt was made to restrain credit to the private sector, overall domestic credit grew by 27 percent--over twice the rate of money and quasi-money. Among the productive sectors, fishing experienced an unavoidable drop after the record of 1970. Agriculture had a less than good year while the mining sector, as noted, had great problems with strikes. The construc- tion boom continued, propelled mainly by the government's stimulus to housing and the growing public infrastructure investment. Manufacturing growth slowed down. somewhat in response to some slackening in private consumption demand, while the services expanded at a pace above the GDP-average. Domestic re- source use grew more rapidly, with the increased imports taking pressure off the prices. As measured by the GDP-defiator, the rate of price increase fell further. This only expresses year-to-year average changes, however, and monthly cost-of-living data indicate that the price increases accelerated in the second half of 1971. It is thus likely that the large credit expan- sion did contribute to the higher inflation rate measured by the GDP-deflator the following year. Preliminary figures for 1972 indicate a global growth rate similar to the one during 1971, with the services contributing even more to keep the figure up, as the performance of several of the goods-producing sectors sagged. Hardest hit was fishing, where changes in the ecological conditions brought about the virtual disappearance of the anchovy and the all but total loss of the second fishing season of the year. Climatic conditions were also adverse for agriculture, so output of many domestic crops was severely reduced. However, better fortunes in the livestock subsector offset the overall decline in crop production and prevented an actual drop in value- added. Mining was less disturbed by strikes, and regained the losses of 1971, while manufacturing slowed down further, probably both as a consequ- ence of having reached capacity in some branches, and reduction in domestic demand in others; fishmeal production, of course, tumbled as no fish were there to be processed. In contrast, construction surpassed even the high growth rates of earlier years, reaching 22 percent for the year. Private fixed investment continued to grow along the pattern of the year before, but the large reduction of fishmeal stock caused a drop in total private invest- ment. Despite the disruption to fishmeal production, export volume was nearly maintained by selling from stocks. Gains in other commodities brought about a slight increase in volume of total exports, and somewhat larger gain in value, but imports exhibited higher rates in both respects,  ~ 24 - so that the resource balance surplus was further reduced. However, larger private direct investment, and a much increased net public capital inflow, reversed the reserve loss. The central government's finances showed no improvement, as no new revenue measures h~d been taken du~ing 1971, and the current account surplus decreased further. Expenditures for fixed capital formation increased considerably, but, as capital transfer1s were reduced in the light of the 1971 experience, the overall growth of goyernment capital expenditure was limited to 11 percent. The resulting.defi'cit was eveniarger than the year before, but much less of its financing came ;from the banking system. First, the government increased its external financing considerably by large nonproject borrowing, and, secondly, it succeeded: in placing in- significant amounts of treasury bonds outside the banking 1system. Despite this, however, the expansion-of total domestic credit conbinued at a pace considerably above money-GDP, thus probably contributing to the build-up of demand pressures in the economy, and the obvious need for careful financial management for the future. 1 Production Developments Table VI illustrates that the. structural changes! have followed the historical pattern, viz., a diminishing share for the primary activities, and an almost offsetting increase in that of the secondary ones. Among sectors, agriculture has continued its secular relative decline, but with some notable exceptions among subsectors. The export crop production has been growing only very slowly in volume, while production of domestic c:rops grew rapidly I during the good years of 1969 and 1970, stagnated in 1971, and fell sharply in 1972 as a result of adverse climatic conditions. MeanW:hile, the livestock subsector has been growing consistently and quite rapidly 'throughout the period. (See Statistical Appendix, Table 7.3.) Table VI: STRUCTURAL CHANGES IN PRIMARY, SECONDARY AND TERTIARY ACTIVITIES OF GROWTH RATES, 1968-73 • (percentages) Structure Real growth rates Structure 1968 1969 1970 1971 1972 1972 Primary activities 27.3 2.0 7.3 -Q.6 I -2.3 23.6 Secondary activities 24.8 2.4 12.2 10. 7 i 10.4 28.0 Tertiary activities 47.9 2.4 5.5 7 .1 7.7 48.4 GDP 100.0 2.3 7.6 5.9 5.9 100.0 Source: Statistical Appendix, Tables 2.1 and 2.2.  - 25 - The fishing sector has suffered very irregular development·. After the 1969 decline, a record catch and production of fishmeal took place in 1970. All of the catch could not be sold, however, and a considerable accumulation of stocks was begun. This accumulation continued in 1971, for while the catch and the fishmeal production were reduced by 16 percent,. the marketing process also suffered some initial disruption at the introduction of the state exporting monopoly. This stock accumulation proved to be of great help in 1972, however, when changes in ocean currents°""and water temperature caused a virtual disappearance of the anchovy during the'{econd half of the year. The catch, and the production of fishmeal, were reduced to less than half the level of the year before, but drawing on the accunntl·ated stocks prevented the e~port volume from falling more than 8 percent. (See Statistical Appendix, ? Tables .6 and 8.4.) ~ ·,'As no significant new production capacity was introdii'ced during the •' period, the'mining sector experienced limited growth. Individual '"'-- year.:.._s show variations which reflect the effect of stri~es more than anything else~M,anu- facturing growtli'"was restricted in 1969 by· the lack of demand brought about~ by the stabilizatio~ policy, but has since shown a satisfactory rate of growth,~ albeit a somewhat falling one. 12/ The general degree of capacity utiliza- • tiori was very low initially, 50to 60 percent in many cases, but reports " during 1972 from several branches tell of approaching restrictions to further ',,\production increase; in this respect sluggish private investment in machinery /and equipment throughout the period is significant. The highest rates of growth were initially recorded by the consumption goods industries, but dur- ,/ ing the two most recent years capital goods production expanded rapidly and reached high rates of growth, although from a small base. (See Statistical Appendix, Table 8.1.) Construction, finally, has been growing at very high and increasing rates throughout the period, reflecting on the one hand an orientation of private investment towards housing, and on the other hand the still dominant share of infrastructure in public investment. Resource Use and Savings The dominant features of the patte~n of resource use noted in Table VII are the growing share for consumption and the reduction in the ex- port surplus. The changes in relative prices mask some of the structural shifts in the current-price series, but these are brought out clearly in the constant-price data, where the trends are quite consistent. Gross investment has taken an essentially constant share of total resources (falling in current terms), but the separation of stock changes reveals some growth in the share for fixed investment; the large stock disinvestment during 1972 is, of course, mostly attributable to the fishmeal sector. These developments together imply falling savings. This trend is also clear in the table. In Table VI this does not appear clearly, as the fall for manufacturing is offset by the strong performance of the construction sector within the secondary activities.  - 26 - Table VII: RESOURCE USE AND SAVINGS (percentages of GDP) Estimate 1968 1969 1970 1971 1972 A. At current prices Consumption 84.2 83.4 83.7 87.1 88.2 Gross domestic investment .13.9 13.6 12.2 12.3 11.8 Fixed investment (13 .0) (13.0) ( 12. 5) ,(12.7) ( 13 .3) Stock changes ( 0.9) ( 0.6) (-.0.3) (-0.4) (-1 . 5) Resource balance 1.9 3.0 4 .1 0.6 Domestic savings . 15.8 16.6 16.3 12.9 11.8 National . savings 14.5 15.2 16.6 12.9 11.4 B. At constant 1970 prices Consumption 81.2 82.1 83.7 85.5 86.2 Gross domestic investment 12.9 12 .9 12.2 . 12.4 12 .1 Fixed investment (12.0) ( 12. 3) ( 12. 5) (12.8) ( 13. 6) Stock changes ( 0.9) ( 0.6) (-0 .3) (-0.4) · (-1.5) Resour·c e balance 5.9 s.o 4 .1 : 2 .1 1.7 Domestic savings 18.8 17.9 16.3 14.S 13.7 National savings 17.8 16.7 16.6 14.5 13.3 Source: Statistical Appendix, Tables 2.3, 2.4, and 2.6. The performance of domestic and national savings, shown in Table VII, is obviously a negative feature of development in recent years. It is necessary to consider, however, that the figures for savings as 4erived in national ac- counts are partly the unavoidable effect of circumstances ·beyond the control of the government. One example of this is the fall of export prices in 1971, which in the current-price series decreased the resourde ~alance, and thus total savings by about 1.5 percent. Again in 1972, the fishing crisis led to an involuntary drop in exports and also to the large stock disinvestment; it is likely that without this there would actually have been some increase in the savings rate, instead of .a further decrease.  - 27 - The government has not been able to bring about a domestic resource mobilization which can be said to reflect its ambition to reduce the foreign dependence of the economy. Private consumption (as well as total consumption) has been allowed to grow more rapidly than GDP and, after the initial stabiliza- tion effort, the public sector's savings have not grown in current terms, i.e., falling in real terms (see Table X fo~ a derivation). The discussion in the preceding section of weaknesses of the tax system has obvious relevance here: with the slow observed automatic revenue growth, falling savings are bound to result in the absence of major new revenue measures on a regular basis. It would seem imperative for the government to stop this negative trend, and to achieve higher savings as soon as possible, especially as it seems unlikely that the current investment rate of only .about 12 percent can be compatible with growth rates of the order the Government aims for in the medium-term. Turning to the division between public and private sector resource use, Table VIII illustrates a marked structural shift, namely the great increase in the public sector's investment share. This has resulted from a combination of the -determined expansion of public investment on the one hand, and stagnant private investment through 1970 on the other. When pri- vate fixed investment (particularly in housing) picked up in the most recent years, the unusual stock developments have, of course, had the ef_fect of keeping total private i~vestment depressed in spite of this. Considering that the public sector's entrance into the field of productive investment is hardly reflected in actual expenditure, yet it is likely that this change in the investment balance between public and private will be maintained, and probably even become more accentuated during the next few years (see Chapter VI, Section A, for the intentions of the 1973-74 plan). It is also notable, however, that the increase in investment share for the public sector has · been almost completely offset by a decrease in the consumption .share, so that the government's strategy of expanding the role of the state in the economy has not yet required any significant increase in the public sector's claim on total resources. With respect to savings, Table VI shows that the public sector has not been able to perform significantly better than the private sector after the initial effort of fiscal prudence which was part of the stabilization policy. Public savings, 13/ as a result, have been falling in proportion to GDP since the peak of 197Owhen the proportion was about 4 percent; in 1972 it may have been only about 3 percent. In combination with the growing public investment, this also means that public savings have been financing a part of investment, which has declined from approximately 80 percent in 1969-70 to little over 50 percent in 1972. / 11.l See Table X for the derivation of public savings for the 1970-72 period.  - 28 - Table VIII: PUBLIC SECTOR RESOURCE USE AND SAVINGS (percentages of category totals) Estimate .Public Sec tor Proportion 1968 1969 1970 1971 1972 Consumption 16 15 14 14 14 Fixed investment 30 35 39 40 42 Total investment 28 33 40 41 48 GDP 17 17 17 18 18 Gross domestic savings (4) (22) 25 25 25 Source: Statistical Appendix, Table 2.3 and text Table X~ Savings estimates for consolidated public sector in 1968:and 1969 are taken from IMF, as consistent data were not available to derive them directly for years prior to 1970. Central Government Finances In general, central government finances have been managed prudently and with a flexible adjustment to changing economic circumstances. There are, however, some signs that indicate that the long-standing weaknesses of the revenue system have not been removed, and that this-may be ,one area where. the government will have to take more direct action in the :near future. As mentioned earlier, these weaknesses result in a failure.of ,revenues to grow automatically at the same pace as--let alone more rapidly than--GDP, and thus make recurring tax increases necessary for the government just to keep the. same share o·f national resources. Central government revenues grew rapidly in 1969 ,and 1970, first because of the very substantial new tax measures included in the 1968 stabil- ization effort, and then as a result of the favorable economic developments in 1970. The strong _export growth sharply increased incomes of the export sector, which is the main source of income tax. At the same time the pay- as-you-go principle was introduced, which gave rise to an ~xtraordinary growth of tax collections in that year. After this peak, revenue failed to grow in 1971 in real terms, despite some new taxes, and ·a new nonrecurrent revenue effect of the introduction of a tax amnesty, under ,which business firms were allowed to revalue certain assets, and regulate :for tax purposes their balance sheets, without paying any penalties above the back taxes due. This measure proved quite effective, and yielded about S/. :1 billion in the first year, and about S/. 2.8 billion in the second (and last). Without this extra nonrecurrent increase, equivalent to 6 percent of total revenues, re- venue in 1972 would actually have fallen in real terms-from the year before. (See Statistical Appendix, Tables 5.1 and 5.2.)  - 29 - The nonrecurrent revenue items have served to conceal, in the global figures, the insufficient growth in revenue from the tax system per se. It ·has been possible to postpone fundamental action precisely because these tem- porary sourc~s of revenue have been available, but similar possibilities cannot be relied upon for the future. As shown in Chapter VI, the government has also taken initial action in late 1972, introducing important changes in the tax system which are expected to yield substantial new revenue, Part of this, however, will only serve to offset the disappearance of the tax amnesty as a source of revenue, and further revenue measures are contemplated also to be taken during 1973. There are several reasons for the observed low income elasticity of the Peruvian tax system, which was estimated to be as low as 0.7 during the 1968-71 period. The problem arises mainly in income tax and import taxes, while the revenues from taxes on production and consumption have been growing at a satisfactory rate. With the income tax, a major problem is the excessive dependence on taxation of profits of businesses rather than incomes of in- dividuals. In turn, most business income taxes are paid by firms in the export sector, where profits are subject to even greater fluctuations than with business in general. Individual incomes should normally provide a much more stable and growing base for taxation, but the high personal deduc- tions seriously reduce its importance. Another reduction of the, income tax base stems from the fact that there exist a great many fiscal investment incentives, which take the form of income tax exemptions. While such incentives have existed in the past, many have been introduced or increased since 1968. Thus, for example, re- invested profits in priority industries are now given tax exemptions varying from 65 to 85 percent, and even up to 99 percent if the investment is in preferred regions, while outsiders investing in these industries are only allowed a 50 percent tax exemption. Obviously, to the degree that such in- centives are in fact utilized, income tax collections are reduced for the time, and here again the large proportion of income taxes assessed on legal persons make the effect on overall revenue greater. A similar tax reducing effect is created by the exemption from income· tax of interests paid on mortgage bonds, COFIDE shares, and treasury bonds. The government has been successful in diverting savings to the public sector through these instruments, but that has also given rise to larger tax exempt incomes. A new and important addition to the list of measures that have the effect of reducing the base for the income tax, is the introduction of the legislation about Industrial Communities, and the obligation of firms to pay a fixed proportion of pre-tax profit to their employees and to the "Community." The proportion for the "Community" is wholly tax-exempt, and and in the case of the profits distributed to employees, the effective tax rate will normally be much lower than the (marginal) profit tax rate for the firm. As these payments are substantial--totaling 25 percent of profits for manufacturing firms, 20 percent for fishing, and 10 percent for mining enter- prises--the effect on the tax base is also quite significant.  - 30 - The failure of import taxes to grow in line with the value of imports • is in part due to a similar effect that income growth has affecting income taxes; imports for priority projects or activities are exempted from payment of taxes. There is, however, a more subtle effect, which stems from the gradual- ly changing composition of imports. Partly as a result of the success of the earlier import substitution policy, and partly as a result of the current import controls, there is a shift towards a greater proportion of capital and intermediate goods, and these generally pay lower taxes than consumer goods. From the preceding discussion it is clear that much of the observed low income elasticity of the Peruvian tax system is not inherent in the taxes as such, but rather stems from measures taken for nonfiscal reasons, which have the side-effect of reducing the base for various taxes. To the extent that the objectives which these measures seek to promote are deemed more im- portant than the preservation of an adequate automatic growth of the tax base, this simply means that the government will have to continue to take discre- tionary revenue measures to counteract this effect. 14/ It should be studied, however, whethe·r in all cases the tax exemptions granted are indeed on balance the best way to achieve the ends. For example, the fiscal investment incen- tives· now appear overly generous in many cases, and it may well be that the (total) fiscal revenue foregone on this account is disproportionately large in comparison with the (marginal) increase in investment that is achieved by making the incentives higher. It should also be taken into account, that the investment incentives are now only designed to lower the cost of capital; under Peruvian labor market conditions it might be more reasonable to introduce instead a system of investment grants tied to the actual employment creation. Similarly, it can be argued that the practice of keeping interest rates for savings low (for Peruvian conditions) and then increasing the attractiveness of saving by making interest income tax exempt, has quite a regressive effect, as higher income groups can be expected to be more in a position to take advantage of these deductions. It may also be doubted that the system acts as a stimulus for small savers, as the high personal and family deductions allowed in Peru will exempt most interest incomes from taxation anyway, unless other incomes are quite high. 14/ While it would appear probable that no further substantial reduction of the income tax base on account of additional investment incentives will be introduced in the near future, another effect is likely to become more marked, namely the fiscal cost of the export promotion system of tax rebates for so-called nontraditionai export products. "ncreased exports will, of course, also bring additional government revenue on account of additional import duty and income tax from the increased economic activity and capacity to import; whether this will be sufficient to offset the full cost depends on the tax structure and elasticity, as discussed above.  - 31 - To a certain extent, of course, a wider tax base and higher tax rates are substitutes, and the government can continue to add new taxes and raise the rates of existing ones to compensate for measures reducing the base for different taxes. From a tax.administration point of view, however, the two approaches are not equivalent. Higher tax rates increase the risk of creating serious inequities within the tax system, and also increase the incentives to tax evasion. At the same time, the many exceptions to the general tax rules make the system difficult to comprehend and administer, and also create difficulties of analyzing the probable effect of contemplated new tax measures, thus making the formulation of a rational future tax pplicy more difficult. The above considerations of principle apply primarily to the longer- range need for a thorough re-examination of the Peruvian tax system. For the shorter-run, the government has already adopted new tax measures for 1973 and indicated some further ones for 1974. As it appears likely that the increased public investment target will require even further revenues, the most obvious tax fields for short-run action would be the income tax and he excise tax on gasoline. The possibility of raising the latter has long been discussed by Peruvian authorities (see the 1972 IBRD report, WH-212a), and it can be noted that Peruvians currently enjoy one of the lowest gasoline prices anywhere as a result of the low tax rate. There is not sufficient material to enable a conclusion as to whether higher gasoline• prices could be advocated on the grounds that the existing level of road-user charges is inadequate, but from the fiscal point of view the case appears in inviting: as the motor vehicle stock is rapidly growing this should be a smartly growing tax base, and, in addition, it may be presumed that the burden of the tax would fall mainly on higher-income groups; if necessary, a rebate for public transit could be permitted. The Consolidated Public Sector It is the government's intention to entrust commercial activities of the public sector to enterprises as much as possible, and a large number of new public enterprises have accordingly been created in recent years, and others have been reorganized or given wider responsibilities. While their operations have hardly begun, several enterprises are already very important in terms of cash flows and resource use. In the future, public enterprises as a group may overtake the central government in this respect. In recognition of this, several IBRD missions have made efforts in cooperation with Peruvian authori- ties to compile fiscal accounts for the public enterprises on a uniform basis. These efforts have now reached such a stage that some results can be presented. Tables 5.8 and 5.9 of the Statistical Appendix show summary accounts for some of the major enterprises and for all enterprises as a group; a condensation of this information is also given in Table IX.J.'?/ Due to changes in accounting practices, it is difficult to establish figures for years prior to 1970 on a comparable basis; earlier years are thus omitted here.  ' ' '~ 2 ~ " In the past, several existing public enterprises were plagued by financial difficulties and were incurring hea~y losses. The government is now aware of the need to avoid a situation in which subsidies to unprofitable enterprises become a growing budgetary burden. The governments intention is normally to let the enterprises follow sound commercial practices in setting their prices and tariffs. Only in special cases, where an enterprise is designated to be the government's agent for operating specific, socially determined programs, would operating subsidies be considered. Examples of this are EPSA, which manages the support price and import subsidy program for agricultural products, and ELECTROPERU, which receives a subsidy for its rural electricfication program. The government has financially strength- ened several f the older enterprises by taking over all or part of the debt service obligations which had been incurred, notably so or the steel mill (SIDERPERU) and the national shipping line. ~ It would in fact appear, from the information the missiQJ has been able to gather, that most major enterprises are now doing better, although it must be noted that the data made available to the mission are on a cash accounting basis, and thus do not include depreciation and other charges not corresponding to immediate cash flows. An exception is PETROPERU, where 1 the surplus has not kept pace with the volume of operation~, mainly because of rising need to import petroleum and higher prices for such imports. The enterprise is still making a profit, even after depreciation, but a sub- stantially reduced one. As it has by far the largest operations of any public enterprise, PETROPERU's fortunes have a marked influence on the over- all result of all enterprises in Table IX. Tabe IX shows that in the past the enterprises as a group were receiving far more long-term financing than was required for their capital expenditures. This was especially so in 1971, when several of the enter- prises accumulated large bank balances and some even invested in treasury bonds, a practice which the government stopped in 1972. Between 1970 and 1972, these enterprises have been able to cover a substantial proportion of their capital expenditure with their own resources, but in the next few years, when several very large investment projects will be undertaken, this proportion is likely to sink considerably. (See Table XXVI.) Table IX also shows the summary accounts of the social security agencies and of the decentralized institutions. The latter have little revenue of their own, and are the main recipients of the current public sector transfers of the cen~ral government. The nation's two social se- curity agencies, in contrast >:liave been generating a rapidly growing surplus, and as their capital expenditure has not increased, excess funds have become available. There is, however, n6- direct mechanism that makes available such funds to agencies elsewhere in the public sector--in effect, the soical security agencies have in the p,ast been only rather loosely a part of the public sector. Little financial information is available about the local level of public sector agencies in Peru, which comprises local governments (Provincial and District Councils) and local public welfare organizations (Beneficencias  Table IX: SUMMARY OF CASH OPERATIONS OF PUBLIC ENTERPRISES;&socIAL SECURITY AGENCIES-, AND DECENTRALIZED INSfITUTIONS, 1970-72 (In billions of current soles) 1970 1971 1972 Publie Social Decent. Public Social Decent. Public Social ent!:E. sec. inst. ent!:E• sec. inst. entrE· sec. Own revenues 10.4 4.7 0.7 12.0 5.6 0.8 14.8· 6.3 o.8 Direct current expenditures 8.3 4-4 2.1 10.3 4.7 2.7 12.5 4.9 2.7 Operational surplus 2.1 0.3 -1~4 1.7 0.9 -1.9 2 .. 3 1.4 -1.9 Current public sector transfers {net) -0.6 2.0 -0.5 -0.l 2.1 -0.6 -0.1 2.3 w \,J Current account balance 1.5 0.3 o.6 1.2 o.8 0.2 1.7 1.3 0.4 Central government capital transfers (net) 1.1 1.4 2.2 1.1 1.7 Capital expenditures 3.4 o.B 1.0 3.7 0.3 0.9 4.7 0.3 o.4 Overall balance ..o.B ..o.5 1.0 -0.3 o.5 0.4 •L.J 1.0 Net external long term financing 1.6 2.9 1.2 [!_ Non-financial enterprises only. /2 In 1972 the functions FNDE were incorporated , in SINA.MOS, and made part of Central Government operations. FNDE had been the major agent for capital expenditure in the group. _ Source: Statistical Appendix, tables 5 .7 and 5 .~, Central Reserve Bank, and missi~n eatim~tes. I  - 34 - Publicas). Local government in Peru is comparatively unimportant, however, and outside metropolitan Lima there are few Councils with significant opera- tions. It is notable, however, that local governments as a group regularly have achieved an operational surplus, and that their resource to transfers from central government has been very limited. ' Some of the beneficencias have sizeable incomes from lotteries, and can operate hospitals, but as a group t!heir revenues do not fully cover current expenditures. With rough estimates for the operational results for local govern- ments and beneficiaries, Table X illustrates the derivation of the opera- tional surplus of the consolidated public sector. When transfers are carried back, the dominant position of the Central government in generating this sur- plus becomes apparent, although the proportion coming from the rest of the public sector increased in 1972. The total surplus reached its· highest level in 1970, and while the table shows a slight recuperation in 1972, this was not sufficient to offset the inflation. In real terms the surplus declined further. As shown in Chapter VI, the budget for 1973-74 implies a signifi- cantly increased -·s urplus which is also in real terms. Despite the fact that capital expenditures are planned to increase substantially, there would be a somewhat higher level of self-financing of the public sector as a whole. able X: DERIVATION OF OPERATIONAL SURPLUS OF CONSOLIDATED PUBLIC SECTOR, 1970-72 (In billions of current soles) 1970 1971 1972 Central government 8.0 7 .3 6.4 Current account surplus /a (6.0) •(5. 2) (4 .1) + Current transfers to consolidated public sector /b (2.6) (2.8) (3 .1) - Enterprise tax payments (0.6) (0.7) (0.8) Public enterprises (Table IX) 2 .1 1.7 2.3 Social security agencies (Table IX) 0.3 0.9 1.4 Decentralized institutions (Table IX) -1.4 -1.9 -1.9 Local governments (est.) 0.6 0.7 0.8 Beneficencias publicas (est.) -0 .1 -0 .1 -0.1 Total consolidation= public savings 9,5 8.6 8.9 /a Includes miscellaneous capital revenues, but not grants. /b In the case of enterprises and social security agencies, these are the transfers as stated by the agencies. The central government accounts show somewhat higher figures, which may mean that this table understates government surplus and overstates agencies' surplus. Total savings are not affected.  .J V - 35 - Credit Policies Since the recovery of the economy in 1970, the government's credit policy sought to pursue three objectives simultaneously: (a) to improve the mobilization of the financial resources; {b) to increase the public sector share of total available resources; and (c) to direct the credit available to the private sector to those activities that the government considers of national priority. The measures adopted have been quite successful in ac- complishing the first two objectives, but less so. in the case of the third. As described earlier, the government has strengthened its institu- tional· hold over the credit market in several ways: the great expansion of the Banco de la Nacion, the creation of a public development finance corpora- tion (COFIDE), and the acquisition of three of the five largest commercial banks (the so-called associated banks). · The latter have substctntially in- creased their resources through deposits from the Banco de la Nacion, and enjoy discount facilities at preferential rates with the Central Bank. This broader institutional machinery has been supplemented by Central Bank regulations intended to direct commercial bank credit to the private sec- tor in priority fields. This policy first took the form of a selective credit system comprising minimum shares of the commercial bank portfolios for agri- culture and industry, and portfolio ceilings for nonpd.ority activities. As the scheme did not prove very effective, it has been complemented by regula- tions by which the banks must invest in government bonds the amounts by which their portfolios in priority fields fall short of the established minimums. These funds have played an important role in further increasing the resources of the Banco de la Nacion, where the proceeds from the bond sales are de- posited, especially in the last three years. The Banco de la Nacion holds substantial deposits in the associated banks, which in turn extend credit to the private sector for the priority activities determined by the .government. The combined effect of these policies is reflected in the statistics as increased credit extended to the \c;entiaI government-by the commercial banks --among which the associated banks are counted--a corresponding reduction of credit to the-government-from the Banco de la Nacion, and a large increase in private sector -{i~ncing by the specialized public banks. (See Tables 6.4, 6.5 and 6.6 o~ the Statistical Appendix.) Demand for funds from the latter s increased by the establishment of maximum lending rates, and with artic- ularly low rates for borrowing by small enterprises. To make such lending possible for the specialized banks, they too have been given access to Central Bank funds at low cost. While the government's institutional measures, reserve require- / ments, and discount policies have been quite effective in channeling funds a lized from the commercial banks to the public sector--including the speci_ and associated banks-less success is apparent in increasing the total flow of credit to some of the priority sectors. During the 1969-7f' period the credit extended to the agricultural and mining sectors increased at an annual rate only slightly higher than the rate of inflation, so that the increase  - 36 - in real terms was very small. For manufacturing the yearly average increase represented an expansion in real terms just keeping pace with the estimated real GDP growth--and thus somewhat below the sector's growth--while construc- tion credit expanded considerably more, reflecting the boom conditions in the sector (Statistical Appendix, Table 6.8). Limited success in the field of agriculture is probably due to the reticence of independent farmers, despite the substantial expansion of the portfolio of the Banco de Fomento Agropecurario for the demand of ·credit. During the first nine months of 1972, this general pattern appears to have continued, with the exception of an increase of credit to the -manufacturing sector. When the domestic borrowing needs for financing government deficits rose sharply in 1971, the government avoided borrowing from the Central Bank and took recourse instead to issuing treasury bonds. This mode of financing was continued throughout 1972. In total, S/. 18 billion were raised by the Treasury during the biennium. Table XI shows how these bonds were placed (the table refers to initial placement~; there is a secondary market, but little information is available about it). The banking system accounted for 75 percent in both years, but in 1972 placements shifted toward commercial banks, both private and state-owned. It should be noted that treasury bonds can be monetized easily since they may be counted by the bank as part of their reserves for fulfilling the marginal reserve requirements, This type of placement can give rise to a secondary round of credit expansion. Table XI also illustrates means by which excess capital transfers from central government to public enterprises in 1971 were channeled back in part through bond investment. Since 1972, the government has been able to broaden the market for treasury bonds outside the banking system substantially. This is an effort which it intends to continue, and in early t1973 a decree was passed that requires insurance companies to place a minimum of 30 percent of their funds in government paper,i.e., treasury bonds, public investment bonds, or shares of ·public enterprises. While the companies are given a two-year period in which to achieve the . change in composition of their holdings, this measure should help substantially in the government's aim of increasing the proportion of its domestic borrowing outside the banking system.  - 37 - Table XI: PLACEMENT OF TREASURY BONDS, 1971-72 (In millions of current soles) Type of institution 1971 1972·- Banking system 5,981 7,241 Banco de la Nacion 1,900 500 Specialized banks 2,486 1,570 Associated banks 795 2,617 Private banks 800 2,554 Private nonbank sector 690 2,302 Nonbank financial interm. 153 355 Households 231 198 Other (mainly enterprises) 306 1,749 Public nonbank sector 1 z 663 126 Total placements 8,334 9,669 Source: Ministry of Economy and Finance. External Accounts The current account changes in the balance of payments during recent years initially reflect the import contraction brought about by the 1967 devaluation and the subsequent stabilization policy. Then, in 1970, came an exceptional year for exports and a record year for surpluses on trade and current accounts, despite resumed growth of imports. After that, imports have continued their growth, while export levels fell. Among the capital accounts, net long-term private capital shows a negative total for the period, while heavy amortization payments led to a falling net inflow of public capital, despite two rounds of renegotiations with creditors. In the latter respect 1972 appears to mark a change in the earlier trends. Finally it should be noted that in 1970 a significant inflow of short-term capital contributed to the very large increase registered in international reserves--this reflects a compulsory repatriation of capital held abroad by Peruvian nationals. (See Table XII.) The underlying changes in the volume of exports and imports (of goods and nonfactor services) are shown in Table XIII, where the essential stagnation of exports throughout the period stands in marked contrast to the resumed growth of imports after 1969. The initial improvement of the resource balance is seen to have been mainly an effect of a dramatic shift in Peru's favor of the terms of trade from 1968 to 1970, while the deterioration in 1971  - 38 - was increased by a partial shift back of price relations. Import prices have remained fairly stable over the period. Some increase in 1972 probably reflects the de facto devaluation of the Peruvian sol in December 1971 as a resuit of Peru's decision to follow the dollar in the currency realignments of the Smithsonian agreement. Export prices have been much more volatile, despite Peru's quite diversified exports, with the peak in 1970 being almost ex- clusively accounted- for by fishmeal and fishoil; mineral prices hit their highest level in 1969. Table XII: SUMMARY BALANCE OF PAYMENTS (In .millions of US dollars) Estimate 1968 1969 1970 1971 1972 Exports of goods and NFS 998.9 1,049.6 1,223.8 1,081 .o 1,126.4 Merchandise f.o.b. (850. 2) (879.5)(1,034.3) (889 .4) (930.2) Imports of goods and NFS 909.2 894.7 971.6 1,042.2 1,129~6 Merchandise f.o.b. (672.9) (658.8) (699 .6) (763.9) 832. 2) Resource balance 89.6 154.9 252.2 38.8 - 3.2 Net factor payments -149.0 -184.7 -132.7 -104.7 -131. 1 Net transfers 36.8 31 .5 82.0 39.1 33.3 Current account balance - 22.7 1.7 201.5 - 26.8 -101.0 Net capital to private sector - 10 .1 7.0 - 77 .3 9.3 32.1 Net capital to public sector/a 94.1 102.8 58.7 31.2 112. 9 Disbursement (230. 3) (203. 7) (220.2) (230.4) (300. 9) Amortization (136.2) (100.9) (161.5) ( 199. 2) (188.0) SDR 14.3 14.2 14. 1 Errors and omissions (including short-term capital) - 50.9 - 69.8 59.9 - 89.5 - 16.0 Changes in reserves (- increase) - 10.5 - 41.7 -257.1 61.6 - 42 .1 /a Including loans to private sector with government guarantee. Source: Statistical Appendix, Table 3.1.  - 39 - able XIII: DEVELOPMENT OF EXPORT AND IMPORT VOLUMES, AND TERMS OF TRADE Cumulative Estimate change, percent 1968 1969 1970 1971 1972 1969-72 Export volume change,% -4.7 3.2 -4.8 2.5 -3.9 Import volume change,% -1.7 7.1 6.2 - 4.5 17.0 Index of terms of trade, Exp/Imp. 82 90 100 92 91 12.3 Source: Statistical Appendix, Tables 2.4 and 2.5. Of the main groups -of export commodities, agricultural products have shown the most consistent trend: a steady fail in volume from the high of 1968, but essentially maintained value (see Table XIV). The fall in volume mainly reflects the substitution of maize for cotton on substantial crop areas, but also rising domestic consumption of both cotton and sugar. Exports of fish products reached record volume in 1968 and have been much lower ever since; in 1969 and 1972 the low volumes were caused by limited supply, but in 1970 and 1971 all the production could not be sold. Prices improved sharply from their previous depressed level in 1970 and have essentially remained at the higher level since then. With the disappearance of Peruvian supply from the market in the second half of 1972, fishmeal prices have soared, but _EPCHAP is committed to deliver some uantities under earlier contracts at the precrisis prices when production starts again. Mineral production has increased only marginally during the period and exports have shown little growth. Price movements have differed between the individual metals, but the downward movement of copper prices from the 1969 high dominates the picture, reducing the tota~ _grow,rh over the period to virtually no gain in value. Stimulated by a tax-rebate system (CERTEX), so-called nontraditional exports have increased very rapidly during the last few years. The total value for 1972 was still only $34 million. They represent a very diverse group, with handicrafts, canned fish, and some processed agri- cultural products among the more prominent products. During 1972 Peruvian shipyards have been able to obtain a number of foreign orders for fishing boats; these boats appear likely to become one of the leading nontraditional export products.  - 40 - Table XIV: INDEX F EXPORT BY MAJOR COMMODITY GROUPS (1970 = 100) Estimate 1968 1969 1970 1971, 1972 A. Value index Mineral products 88 100 100 77 89 Fish products 67 63 100 95 83 Agricultural products 99 91 100 95 100 Other /a 77 75 100 80 110 All Commodities 82 85 100 86 90 B. Volume index ( 1970 prices) Mineral products 94 94 100 92 100 Fish products 117 87 100 99 93 Agricultural products 114 102 100 93 93 c. Unit value index (A/B) Mineral products 94 106 100 84 89 Fish products 57 72 100 96 89 Agricultural products 87 89 100 102 108 /a No volume index is available for this category 9 which is very heteroge- neous (and includes exports of minor mineral and agricultural products, which are not separated in the source table). Source: Statistical Appendix, Table 3.2. When merchandise imports are analyzed according to their economic destination, a pattern of recent economic development emerges. (See Table XV.) Thus, the manufacturing growth and expansion since 1970 is clearly reflected, as is the fact that this expansion was achieved mainly through increased capacity utilization, with little new investment taking place. The 1972 figures appear to indicate the onset of capacity restrictions and, possibly, some.increased pace of industrial investment. 16/ The very limited increase in the consumer goods category--which mainly consists of food~~uffs--is explained in part by the fortunes of the domestic production subsector of 70 output expanded considerably, and food imports agriculture; in 1969 and 191 were cut back from the high 1968 level. In 1971, and particularly in 1972, jj_/ It is somewhat circular to compare development of private investment in the national accounts with capital goods imports, for one of the main inputs for the national accounts is the import figureo  - 41 - when food imports increased, imports of other consumer goods were increasingly restricted. The rapid growth of fuel imports from 1970 was caused by a drop in domestic production. The unusually high value in 1970 of the "unclassifed" item shows the influence of the earthquake of that year, for all imports that correspond to foreign grants are included. Table XV: MERCHANDISE IMPORTS, F.O.B. (Millions of U.S. dollars) Estimate 1968 1969 1970 1971 1972 Consumer goods and food products/a 143.0 143.8 135.7 146.7 150.9 Raw materials and intermediate products/a 192.0 172 .o 185.0 266.9 288.3 Fuel and lubricants 19.4 15.7 10 .1 20.6 40.0 Capital goods 172 .1 170.2 186.8 189.0 210.5 Miscellaneous and unclassified 148.4 156.9 182.0 140.7 142.5 /~ Wheat and meat are included with consumer goods; the source table in- cludes these with intermediate products. Source: Statistical Appendix, Table 3.3. During 1972, control over imports was tightened considerably. The concept of foreign exchange budget, introduced in 1971, was developed so that everybody--whether a legal or a physical person--who saw the need for foreign exchange could submit an application. If an individual received an allocation, he could buy foreign exchange to the limit. It should be noted, however, that there is no automatic connection between the granting of an import license and the allocation of foreign exchange. In addition, it is now required that as the import value increases, all capital goods imports above a minimum value be financed with foreign credits of increasing minimum maturity. It does not seem that these new instruments were used during 1972 to slow down anything ~ppreciably but consumer goods imports, but the tools for a detailed import regulation are certainly there f~r the future. While the trade balance has always been positive, the balance of (nonfactor) services is traditionally a negative item for Peru. The deficit shows an increasing trend from $66 million in 1969 to $101 million in 1972, and has thus contributed to the swing in the resource balance after 1970. Interest on public debt has remained fairly stable at a high level throughout the period; other factor income payments--while also high--have varied sub- stantially between years. The major explanation for these variations is the  - 42 - changing level of profits in the mining sector. In 1969 exceptional prices gave rise to high profits while, in 1971, the drop in prices oincided with a wave of strikes that resulted in reduced output. The transfer item con~ains the counterpart to the earthquake relief figure mentioned earlier. As noted above, Table XII shows a net outflow of private capital over the period, bu·t more disaggregated figures show th~ t this is primarily the effect of disinvestment caused by government purchases of a number of foreign-owned companies . . Private direct investment apart from this has been rising every year, with investment in mines (Cuajone, Marcona) and oil ex- ploration being prominent in 1972. Finally, it should be noted that Peru made use of the IMF's export shortfall compensation facility in 1972 with a drawing corresponding to SDR $30.75 million, justified by the 1971 drop in exports. Public Capital and External Debt Peru's external debt difficulties began with extensive borrowings in the 1965-67 period, when large amounts of supplier's credits were contract- ed to finance the public investment program. External debt butstanding, re- • payable in foreign currency, more than doubled during the period 1965-67, reaching $634 million by December 1967 ($1 billion including undisbursed). The debt service obligations increased from $54 million in 1965 to $146 mil~ lion in 1968; expressed as a percentage of exports, the debt service grew from 7 percent to nearly 15 . percent,. The government took up negotiations with the creditor courttri·e s ., and some ' $100 million of debt relief was. obtain- ed in 1968. Banks and other private financial institutions accounted for the major part of this, but the terms did not provide any l~ng-lasting re- lief. Debt service continued _to rise as loans already contracted were pro- gressively disbursed. With grace periods . expiring, the first repayment on the previous debt refinancing came due.. In 1969, another limited debt refinancing agreement was made for some $50 million, this time with govern- ments contributing the main share. From 1968 to 1971 new borrowing remained restricted in comparison with the earlier period. New commitments were running at an annual average of about $200 million, including the refinancing operations, compared to . a peak of over $300 . million in 1966. Within this tota_ l._t~nt o.LsJJ.P..P-1.ie.-r s ' credit --~ng__other _har.d=-t-erm- b.o_ · .was st il l_in___the_.fQ..t:m..._ r_t:o.N.i.ng.;__ the contrib~ti_ o n from governments and international lend:i,ng_agencies remaJn- ed below 40 percent (see Tabie-XVi). Amoit:Tza- tion payments werelifgh-through- out the period, and tlie net inflow of capital was restric·ted to · an annual average of only about $75 million. The total debt outstanding and repayable in foreign currency (including the undisbursed portion) increased by a mode- rate 20 percent.  - 43 ... Table XVI: COMMITMENTS OF PUBLIC AND PUBLICLY GUARANTEED EXTERNAL LOANS (Millions of U.S. dollars) · 1968 1969 1970 1971 1972 Repayable in local currency 4.9 12.6 35.2 35.1 12.0 Repayable in foreign currency 214.0 102.0 194.3 203.3 407.9 Suppliers' credits 9.9 8.4 14.8 115 .6 66.9 Private banks 69.7 6.2 2. 1 25.0 196.2 Other financial institutions 7 .1 10.3 21.0 1.3 Other hard-term borI\owing 54.8 7LO 72.7 15.3 International organizations 6.5 39 .3 0 .1 Governments /a 66 .1 16.4 55.1 26.3 143.4 Total 218.9 114.6 229.5 238.4 419.9 /a Includes government lending agencies. Source: IBRD debtor reporting system. The Consultative Group . for Peru was ,,,.-•· _reconvened in February 1972 after being inactive for six years. The country presented to the creditors its public investment program and the requirements for foreign financing in support of the program. Commitments of government assistance increased from $26 million in 1971 to $143 million in 1972. In addition, there were preliminary agreements with several countries for further substantial assist- ance for which the final loan agreements could not be signed before the end of 1972. Total commitments increased to well over $400 million, and several major projects received firm financing during the year, including the Cerro Verde copper mine, the Ilo copper refinery. and a fertilizer plant. It is significant to note that the proportion of commitments from governments and international lending agencies still remained below 40 percent, as there was a large expansion in borrowing from private banks. Part of this is tied to the Cerro Verde project, but over $150 million represent nonproject as- sistance, including direct refinancing loans. ----- •  - 44 - . , Table XVII: TERMS OF LOANS CONTRACTED OVER THE PERIOD 1969-72 (Committed amounts in million US dollars) Loans repayable in foreign currency Maturities Interest Over rates 1-5 5-10 10-25 15-25 25 Unknown Total 0-3 8.0 4.5 15.5 39 .1 67.1 3-6 6.9 14.4 75 .1 57.1 153.5 6-7 8. 1 17. 1 98.8 1.7 125.7 7-8 8.8 41.6 34 .1 9.0 30.0 123.5 8-9 17.3 195.4 212.7 9-12 2.0 30.0 6 .1 38 .1 Unknown 1.0 0.5 21.0 164.3 186.8 "Total 52 .1 303 .5 250.6 67.8 69. 1 164.3 907.4 Source: IBRD debtor reporting system. After a moderate contraction in 1969, the debt service rose again to $169 million in 1970 and . to $209 million in 1971. Preliminary figures for 1972 indicate that the level is still about $200 million, and this re- presents:.;~pproximately 18 percent of export earnings ll/. The increase from the previous level, associated with the crisis in 1968 ($153 million), has resulted partly from the service of the substantial loan amounts which were already contracted but not yet disbursed at that time, and from the unfavor- able terms of the new borrowing .since then.· (See Table XVII.) The average ~ terms over the 1969-72 period thus correspond to 12 years maturity, 3.5 years of grace, and an interest rate of 6.7 percent. Using ·a 10 percent discount rate, the grant element of the total borrowing is just over 17 percent, which reflects the low proportion coming from governments and in- L ternational lending ~gencies. QI This refers to the official foreign-currency debt reported to the IBRD debtor reporting system.  - 45 - Table XVIII: NET CAPITAL INFLOW ACCORDING TO SOURCE, 1969-72 (In millions of US dollars) Prelim- Total Share 1969 1970 1971 inary 1969-72 of total 1972 (percent) Repayable in local currenc_y 6.9 13.6 12 .9 27.2 60.6 19.2 RepE-ahle in foreign currency 104.4 16 .o 34.6 100.5 255.S 80.8 Supplier's credits 38.6 -1.2 18.7 -11. 6 44.5 14. 1 Private banks 18.0 -18.7 -21.4 73.6 51.5 16.3 Other hard-term borrowing 13. 1 3.5 14.6 17.8 49.0 15.5 International organizations 6.5 2.7 10.9 11. 7 31.8 10.0 Governments 28.2 29. 7 11.8 9.0 78.7 24.9 Total, •reEorted 111 . 3 29 .6 47.5 127.7 316.1 100.0 Other /a - 8.5 29 .3 -16.3 -14.8 -.10. 3 /a Flows not covered by debtor reporting system. Source: IBRD debtor reporting system; Statistical Appendix, Table 3.1. While supplier's credits and private banks have been dominant as sources of new loan commitments, it is significant to note that much of this borrowing has had the c@racter of replacement for funds repaid, as net inflow . (disbursements minus amortizationsT has- Eeen fairly limiteacluring ...the last-- four years. (See-Table XVII1:, Over-nan·-of --·th"e-ne~t~fiiflow-nas_ h.ee°~T~~m governments-and international organizations (including the loans repayable in local currency). As a consequence, the proportion of the total outstanding debt which is held by governments and international organizations has increas- ed. In a parallel manners, there was an improvement of the debt profile, as be repaid within the next five years dropped from 61 percent the proportion to _ at the end of 1970 ta. 55 percent at the end of 1972. ~ early 1973, J;_he gov- ernment was able to begin preP.!!Y.._;_Qg some earlier_J-.Q e~~~--pa_ ~cularly . un- :_E_ ravorable terms, to substit.u te new loans instead--atill in the medium-term ~ , b~ witn-l!'ng~_ ~!'.:i.tJgs __~i,.~ci_ g~,!!<;.·~ -P-~.E_!.o~. This was done in ':.. ~at_ order to bring somefurther improvement to the debt structure. Unfortunately, this remains unfavorable, with 80 percent to -be repaid within ten years, and with service of comparatively short-term loans substantial part of the total for the next few years. An urgent task for Peru and its creditors must be to find ways to improve this situation by increasing the share of longer-term loans extended. \ - 46 - V. SECTORIAL ISSUES AND POLICIES The implementation of the government's development strategy through the,legislation and policy measures adopted during the last four years, makes it desirable to identify the nature of several of the main problems and issues of public policy as they affect the different sectors of the economy. In some sectors, such as electric power, transport and the development of fish processing for human consumption, government policies do not raise special issues, and their discussion is limited to describing the policies and pro- gress made in implementing them. In- other sectors, notably agriculture and industry, government policies do raise issues; here the dicussion is intended to contribute to an understanding of the problems and, where possible, to offer suggestions for their solution. A. Agriculture Agriculture poses some of the most difficult problems to Peru's development. Its present condition constitutes a weakness in the economy, the alleviation of which is of great importance for the success of Peru's development efforts. The factors of the situation are, first, that the sector employs close to one-half of the labor force and exhibits the great- est economic disparities and, second, that for many years output--including ss some essential items of the country's food supply--has been growing le. rapidly than population. The first of these factors concerns the problems of widespread underemployment and poverty in the rural areas; the second results in pressures on prices and the balance of payments and in the leak- age through food imports of resources needed for investment and growth. The basic problem is land. At present, Peru simply lacks the agri- • cultural land base to sustain adequately its population of over 14 million, growing at about 3 percent per year. Only a little over 2 percent of the total area--the lowest proportion in Latin America--is under cultivation. More land can be made available only at a high cost, either by expanding irrigation in the coastal areas, or by colonization in the Ceja de Selva, in the higher eastern slopes of the Andes almost isolated from the rest of the country and lacking most essential infrastructure. Peru thus lacks the advantage of many other Latin American countries, where the increases of agricultural output during the last twenty years have been largely attained by expanding the area under cultivation. Table 7.3 of the Statistical Appendix summarizes the performance of the agricultural sector during 1960-72. According to official statistics, production as a whole increased at an average rate of less than 2 percent annually. This average for the whole sector inciudes an expansion of about 3 percent annually in domestic consumption crops (if one excludes the result in 1972 which was very low as a result of unfavorable climatic conditions), and a drop in the production of export crops by an average of 0.9 percent per year. Livestock production has increased rapidly in recent years, with  - 47 - an average of about 6 percent annually over the last four years. About half the production increase of crops for domestic consumption has been attribut~ able to increases in area, and the rest to a limited increase in yields. In contrast, the area devoted to export crops has been reduced significantly over the period, and the result on output has only been partly compensated by the increase in yields. Of the three major export crops--sugar cane, coffee and cotton--only coffee shows a sustained and significantincrease, reflect..: ing both an expansion of the cultivated area and higher yields. The area planted to sugarcane has remained virtually unchanged, but yields show a rising trend. Although the cotton yield per hectare increased appreciably during the period, the area planted has dropped by. almost one-half. Most of this reduction has come in recent years, when rice has been replacing cotton in many areas. As mentioned earlier, one important characteristic of. Peru's agri- cultural performance is its instability, caused by variable climatic con- ditions. This makes agricultural production precarious and investment in the sector particularly risky. Such characteristics contribute to the per- sistent stagnation of the sector, and gives special relevance to the type of infrastructure designed to reduce the effects of climatic changes on output. The instability of crop production, resulting in alternating bumper crops and shortages, with equally harmful consequences for producers and consumers alike, is aggravated by the absence of adequate storage facilities to regulate the flow of supplies to the urban centers and make farm incomes more stable. Given the conditions briefly described above, the problems of Peru's agriculture may be better discussed by distinguishing between the short-term and the long-run questions and policy issues. Its limited resource base and precarious production conditions set a constraint on the extent to which agri- culture can play a dynamic role in.the country's overall economic development. This is not to say, however, that that sector does not merit a high priority in the development effort. Unless its persistant stagnation is broken and output performnace of domestic consumption crops·improves quickly, the demand for food arising from the high population growth rate and rising incomes, would either sharply increase food imports or accelerate the rate of inflation, or both. The quick expansion of domestic consumption crops is thus of crucial importance--in fact a most urgent priority--in the short-term for removing the obstacle that the -lagging agricultural sector already represents to the over-all development effort or at least prevent the further aggravation of its negative effects. In the longer run, raising agricultural productivity and expanding the agricultural frontier appear also indispensable for Peru if the country is to have any hope of appreciably alleviating the problem of severe underemployment and widespread poverty of the rural population. In discussing the problems of Peru's agriculture it is sometimes convenient to distinguish between the export-oriented sector and domestic crops production. This distinction should not be carried too far, however, because the relative scarcity of land and the high cost of expanding the area for crops are common to both segments of the sector, and also because recent experience has demonstrated a strong competition for the available"  - 48 - land and a high degree of substitutibility between export and domestic con- sumption crops. Nevertheless, as a general characterization, the export seg- ment exhibits a relatively developed infrastructure and greater utilization of modern inputs, resulting in higher land and labor productivity. In con- trast, the bulk of crop production for domestic consumption takes place in very large numbers of extremely small individual units or crowded peasant communities, producing mainly for their own subsistence. Until the advent of the agrarian reform, the problems arising from the widespread minifundia were aggravated by a system of land tenure that perpetuated the existence of large plantation-type haciendas operated by hired labor. The Agrarian Reform In such circumstances, the present government's first priority was to accelerate the program of agrarian reform. As noted in Chapter III, the government has in fact accelerated the process considerably, enlarging the area subject to expropriation and extending the process to the whole country. Even so, it was faced with the fact that there was not sufficient land available to provide every landless family with economically viable in- dividual units. The government therefore, besides accelerating the process, increasingly has reoriented reform towards cooperative forms of farm organiza- tion for which there was a long tradition in the country. (Table 7.5 of the Statistical Appendix.) Under a law passed by the government in 1969 replacing the legisla- tion of 1964, the rate of expropriation and of settlement of rural families is proceeding at a much faster rate than before. Table XIX summarizes these development over the period 1964-72. Table XIX: EXPROPRIATION AND SETTLEMENT UNDER AGRARIAN REFORM, 1964-72 (Area in thousands of hectares) Pending /a Total as of 1964-68 1969-70 1971 1972 1964-72 12/31 /72 Area expropriated 1,470 1,527 783 916 4,696 7,984 Area settled 570 310 958 982 2,820 9,860 Families settled 19,822 22,921 35,704 28,062 106,509 225,491 /a Based on the size criterion for expropriation only. There are 25 other, subsidiary criteria which can be applied later; there is no absolute 11 total to be expropriated." Source: Ministry of Agriculture, various progress reports elaborated for IBRD missions. Settlements have acclerated sharply in 1971 and 1972; more than doubling the area settled in all the preceding years. During these two years the num- ber of families settled in reformed areas also increased sharply--by about  - 49 - 50 percent--- over the number settled since the start of the reform in 1964. Even if the fast rate of expropriations achieved in 1972 were maintained, ·it would still take more than eight years to complete, and about ten more years to complete the process of settlement. This assumes all the land still legally subject to expropriation--8 million hectares--are in fact expropriated and settled. The sharp acceleration of the process has been possible by devoting most of the manpower resources of the Ministry of Agriculture. This reflects the interest of the government in completing the reform as quickly as possible. It seems likely that, by 1975, the larger holdings will be expro- priated. The implementation of the reform with regard to all holdings will take longer, for the manpower and time required increases inversely with the size of the unit. Aware of the negative effects that the reform is having on agricultural investment and on the demand for credit by private farmers, the government has recently issued "certificados de no afectacion" which are to guarantee the present title to the land to those farmers whose holdings are excluded from the reform by reason of their size, provided they comply with other criteria established in the agrarian reform legislation. It is not clear to what extent this measure has been successful. Restoring the confidence of the farmers is very important, for though the reform does not appear to have adversely affected either production or investment, a continu- ing stagnation of investment in the rest of the sector cannot fail to have serious negative effects in the not-too-distant future. Under existing practices, expropriated farms continue to be operated by the small farmers and laborers under direct government supervisio.n until it is considered that the cooperative or SAIS is able to operate under its own management, at which time the procedure of settlement (adjudications), i.e., transfering title to the land to the new organization, takes place. The process of expropriation per se thus does not affect production. Under these circumstances, there- fore, the formal transfer of title to the land, while policially important, does not need to proceed in complete parallel with expropriation. If the cer- tificates of "no-afectation" do not prove sufficient to restore confidence to the farmers that under the law are not in principle subject to expropri- ation, the government could accelerate the expropriation process, even at the price of a slower pace of settlements, in order to-complete the process and remove any uncertainty concerning the remaining private holdings. Creating conditions conducive to the reactivation of agricultural investment appears even more essential when it is taken into account that the agrarian reform results in a transfer of resources from agriculture to the rest of the economy, and that the increased lending of the Banco de Fomento Agropecuario has not sufficiently offset the contraction of credit to farmers from the commercial banks. As noted in the preceding Chapter, credit to agriculture has increased only slightly in real terms, especially since 1968. In addition, it is in the agricultural sector that the public investment effort in the last two years has been least successful. Under the agrarian reform legislation the bonds issued to compensate expropriated landowners may be redeemed in cash provided they are matched with equal  - 50 - amounts of additional funds invested in industry. Agro-industries are not excluded from that possibility. It seems unrealistic to the mission, however, to expect that the expropriated landowne9 would be inclined to invest new funds in agriculture. It could be wor.thwhile for the government to waive the requiremert't of matching funds in'the case of investments in agro-indus- tries loc~.ted in the countryside. Testing the effects of such a measure does not seem to involve any significant risk for the government, while it is possible that it may retain in the sector at least some financial resources as well as managerial capabilities which otherwise would be lost for agri- cultural development, both in the coastal valleys and in the Sierra. The nature of Peru's agriculture problems suggests the main thrust of a two-pronged policy approach required to solve them as well as a choice between the investment alternatives that exist. · For the short-term, a con- certed effort is required to expand output of domestic consumption products quickly, especially the deficit items being imported in increasing amounts and at higher prices, i.e., beef, milk and vegetable oils; Peru should be able to produce these products with reasonable efficiency. Up to now the agriculutral production program has been in themission'sview too diverse, too scattered in small programs incapable of having immediate and significant impact. Just recently the government formulated a program which is better articulated in terms of the crops .and selected areas. Efforts will concen- trate simultaneously on several elements of selected seeds, fertilizer, credit and technical assistance required to increase yields and output. Clearly, implementation of this program should be given the highest priority. The efforts to expand agricultural output rapidly cannot fail to give· considera- tion to the effect of present price policies on production. While there is no evidence that existing_price ceilings on farm products are having a de- terrent effect on production, the fact that some basic foodstuffs are being imported by the government in increasing amounts and some others, like beef, are subject to rationing to reduce the need to import, _seem to indicate that, under existing general technology, agricultural supply is not sufficiently elastic to satisfy the increased demand arising from population and income growth. · A reexamination of present price policies seem in order, therefore to effect whatever adjustments may be found to be necessary to support the other government efforts for expanding production. Another high priority for the immediate future calls' for rehabilitat- ing irrigation works i~ numerous coastalvalleyswhich have fallen in disrepair, and where relatively small investment may pay high returns in a short time. Such measures could not only expand output rapidly, but would also reduce the sensitivity of ·c rop production to climatic conditions and make returns to credit and technical inputs more certain. These efforts in the field of production should be complemented with the expansion of crop storage facilities to provide the physical infrastructure required for regulating the flow of supplies to markets. This in turn would make the operation of price support schemes to stimulate production possible and give greater stability both to consumer prices and farm incomes. The large irrigation projects contemplated in the Government program not only require large amounts of investment funds  - 51 - and scarce technical personnel, but, ·because of their long gestation period, cannot have any effect on agricultural output in the years immediately ahea4. Clearly, large ongoing irrigation projects cannot be interrupted; additional ones should be undertaken only to the extent that they do not affect more urgent short-term projects. • The problem of reducing in a significant way the severe underemploy- ment and widespread poverty in the rural areas can be approached on a long- term basis. Agrarian reform, once ·completed, will probably provide a sounder institutional basis for rising productivity in the Peruvian Sierra by creating a better relationship between the people anq the land and by stimulating co- operation. It is clear, however, that even after the reform is completed, about 300,000 landless families will remain in Peru. Whatever allowance is made for expansion of productive and employment opportunities in the cities, it will still be necessary to expand the country's agricultural frontier by stimulating and supporting the colonization and settlement, this is already taking place in the best lands of the high eastern slopes of the Andes. The SAIS organizations discussed in Chapter III seem to offer an excellent basis for carrying out such a policy. They have capable and accepted leadership. The mission found in some a growing feeling that a good part of their economic surplus could be devoted to frontier opening and settlement, rather than wholly to providing social services. Such services are no doub~ much needed, but, by not making an innnediate contribution to increased pro- duction, they do not offer a promising solution to the population congestion in the rural areas. The mission also noted in the SAIS a growing desire to be exempted from income tax, subject to the use of funds in colonization and settlement projects. The fiscal loss that would result from such exemption could probably easily be compensated by tightening generous exemptions else- where. As noted in Chapter II, the agricultural labor force, despite the strong migration from the countryside to the urban centers, has been growing rapidly and will continue to grow in absolute terms for quite a long time yet. Even if the efforts to raise the productivity of the existing produc- tive lands and to expand agricultural frontier were reasonably successful, it is difficult to see how significant improvement in the living standards of Peru's broad masses of rural poor could be achieved in the foreseeable future. Only by determined efforts to stimulate rural migration from the most congested areas to selected locations apt for agricultural production, and to support the farming population thus relocated with necessary inputs and assistance, could Peru alleviate its existing problems of low productivity and widespread poverty.  - 52 - B. Industry and Mining Manufacturing The performance of Peru's industrial sector and its contribution to over-all economic growth have been reviewed in Chapters II and IV. The present discussion will center on issues of public policy and their effect on further development. 127. The first question concerns the nature of struc.tural changes in the industrial sector contemplated by the national development plan, both with regard to the main lines along which further industrial development will be sought and to the institutional framework within which such development is to take place, The ge~eral Ind~strial Law of 1970 and its Regulations (1971) provide the framewo1;k of the government's plan for development of "priority" industries, There are three priority categories. are In the first there _ six groups of "basic" industries reserved for state ownership or joint state- and-private ventures, namely steel, nonferrous metal industries, basic chemical industries, fertilizers, cement and paper. This first group also contains a number of other industries open to private enterprise, including a wide range of electrical and other machinery and transport equipment. In the second priority category there is a wide range of industries (about 250) which "support" production of basic materials--agriculture, animal husbandry, fishing, mining, transport, construction, etc.--and produce food, textiles, and requirements for health and education. The ·third priority category, which may be amended by executive order from time to time, covers over 200 "complementary" industries. Though under current legislation "basic" industries may be developed by joint state-private ventures, they in fact have been reserved for state ownership and operation. Public enterprises already exist for some basic industries, as is the case of SIDERPERU for steel, or copper refining--declared a state monopoly--and petrochemicals under MINFROPERU and PETROPERU respective- ly. Other projects ·are developed by the State because of their high priority in the development plan and public investment program; such is the case con- cerning the expansion of existing capacity in fertilizers and cement and the development of pulp and paper production. This distribution of industry between the public and the private sector leaves for the latter a very broad field of initiative, while at the same time places a heavy responsibility on the State. The outcome of Peru's development effort in the industrial field will depend on the extent to which private business will accept the challenge and demonstrate its willingness to play a positive and important role in the country's development and on the extent to which the government, in turn, proves itself capable of maintaining reasonable conditions for the reactivation of private investment, on the one hand, and of actually carrying out and operating efficiently the industrial plants it intends to build and administer, on the other.  - 53 - With regard to the reactivation of private investment in industry, the government has gone almost to extremes in providing fiscal incentives through exemptions of tariffs duties on capital goods, raw materials and intermediate inputs, and tax exemption on the reinvestment of profits~ De- pending on the classification of industries by priority rankings, mentioned earlier, the proportion of regular tariff duties on capital goods and raw materials to be paid by the imports of different industries range from a low of 10 percent and 20 percent for first-priority industries, 30 percent and 50 percent for second-priority industries and 60 percent and 80 percent for third-category industries. In addition, income tax exemptions are al- lowed to the extent of 85 percent, 75 percent and 65 percent of profits reinvested for the first, second and third priority industries respectively. Firms and individuals whose income is not derived from any priority indus- tries may invest in any priority industry, free of income tax, 50 percent of their profits. These incentives are even greater for industries established outside of Lima-Callao. These generous tax incentives are gradually proving successful in stimulating reinvestment of profits, largely in plant expansion, but with sub- stantial loss of fiscal revenues. The success of such policy is important in the light of the growing indications that full plant utilization has been or is being reached in several industrial branches. The fiscal sacrifice, though severe, should pe temporary to the extent that the reinvestment taking place contributes to the growth of the economy and broadens the base of the income tax in the industrial sector itself. One possible alternative to the present complex array of incentives could be to overhaul the system by eliminating the differential tariffs rates and income tax exemptions and replacing them by scheme of accelerated depreciation. This would not only eliminate the distortions that arise from the differential tariff duties among different industries and remove the special incentives to capital intensive investment that the low tariff levels for capital goods represents--which runs contrary to the government's intention to create employment--but would also eliminate the lag between the loss of fiscal revenues and the operation of the expanded plants. As noted earlier, fiscal incentives appear to be having some success in stimulating the reinvestment of profits, as indicated by ap- plications for income tax exemptions, which last year covered an amount equal to more than double the estimated S/.5 billion total private investment in industry in 1971. Investment of funds not arising from tax exempted profits, however, continue to be negligible. The reinvestment of profits seems to be based mainly on short-term financial considerations, and does not necessarily reflect a changed attitude of greater ge~eral business confidence. Reference has been made in Chapter III to the redistribution of net profits in cash to the employees of manufacturing, mining and fishing enterprises--10 percent, 6 percent and 4 percent respectively--and the creation of Industrial Communities. These are entities created by the law representing all employess of each indvidual firm; to these accrue a proportion of the firm's profits which is used to acquire equity participation. The intent of this mea.sure is to promote entrepreneur-employee partnerships gradually, thus reducing  - 54 - labor conflict, and to increase investment by devoting a share of the profits accruing to the employees rather than distributing it in direct cash payments. It could be expected that given the marked differences in profita- bility among industries, and even among firms within the same industry, legislation providing for equal percentage shares for the employees--both in cash payments and in equity investment--would result in wide disparities of the amount of profits received by the employees of individual firms. • The risk involved here was that such disparities could bring pressures for equaliz- ing the absolute amounts to be distributed or capitalized by the employees of every firm. The social motivation of equalizing employees participation in the profits is obviously well inspired. However, to the extent that such an equalization would take place, it would result in a subsidy transfer from the most efficient enterprises-usually also the more capital-intensive--to the less efficient ones and would erode the basic economic objective of increasing productivity both in the enterprises which receive the subsidy and in those that pay it. This has already materialized to a certain extent in the fisheries and mining sectors. The legislation applicable to them--adopted after the initial General Industrial Law--provides that 50 percent of the net profits of each firm that would otherwise accrue to the firm's employees, go instead to finance a compensation fund out of which payments are made to other firms in order to reduce the disparities that would otherwise result. It is the impression of the mission that the nature of the reform measures in themselves should not justify a continuation of the_past. reluc- tance of the private sector to make new investments. After all, it suffices that the entrepreneurs do actually reinvest a certain proportion of their profits, to make the employees' acquisition of 50 percent of the equity-- the maximum established by the laws--a very gradual and slow process. Also, the firms cannot fail to appreciate that, barring a general and total equalization of the employees' shares, the legislation does contain a very important element of stimulus for raising the productivity of labor and with it the absolute amount of the capitalist's shareholders own profits. If the government succeeds in inspiring, through whatever means it deems appropriate, confidence in the stability of the reforms already made as fixed "rules of the game," it would be reasonable to expect an early resumption of private investment in the productive sectors. Mining As stressed in earlier Bank reports, a basic issue for Peru's present development efforts is to bring into operation new investments in the mining sector which could substantially increase mineral exports and provide a basis for growth in the next several years. In this connection, it was most important to ensure the execution of the large Cuajone copper project, that started in 1970 by the Southern Peru Copper Corporation, was not affected by legislation under which unexploited concessions reverted to  - 55 - the State. Of the latter, the Cerro Verde project was in advanced stage of preparation and was selected by the government for immediate execution. Though no complete financing program could be arranged for Cuajone in 1971 as originally intended, investment in the project has been taking place. During the last two years, it has been financed with SPC profits from the Toquepala mine and its smelter at Ilo, under an arrangement with the government. By the end of 1972 some $90 million have been invested in the project and another $48 million was planned for 1973. Negotiations for external financing made further progress in 1972, but have not yet been completed as of this writing. If sufficient additional financing is ar- ranged soon, the mine could be brought into operation by the end of 1975. Without such an arrangement, completion of the project will take longer, but it still appears likely that mine production could begin by the end of 1976 on the assumption that copper prices average about 5 percent to 10 percent above the 1971-72 levels. Through 1976 total investment under the present financing scheme will reach about $300 million. It does not seem unreason- able -to assume that the remaining $50-60 million could be secured in 1975-76 once the project would be so close to completion. • The Cerro Verde copper mining project, which is being undertaken by MINEROPERU, and which represents 100 percent public ownership, made decisive progress during 1972. Financing arrangements were securely made during that year. Of the total financing requirements of $90 million, $35 million will come from MINEROPERU while the remaining $55 million will be met by two loans of $21.2 million each from the Royal Bank of Canada and Williams & Glyns Bank for the United Kingdom (both loans guaranteed by Canadian and British governments) and by a Eurodollar loan of $12.7 million. The foreign partner in the project is a joint venture involving Wright Engineers Ltd., Vancouver, and British Smelters Construction Ltd. Construction of roads, operation of a of pilot plant (hydrometallurgical process), and engineering and designing of the entire mining and metallurgical operations_ are well under way. The mine is expected to be in full production by the latt_er half of 1975, with an annual capacity of 30,000 metric tons of copper cathodes. The medium to long-term market outlook for the major mineral com- modities that Peru exports is favorable; demand for copper, zinc, silver and iron is expected to experience a continued healthy growth over the next 10 to 15 years, except for inevitable, short-term fluctuations. There is ample evidence that Peru has economic reserves of these minerals in abundance. Therefore, utmost efforts should be directed towards increasing mining ca- pacity. The development of potential mines require large sums of investment, and the bulk of this could only be raised through foreign capital. As indi- cated earlier, the government has been successful in securing external loans for the development of Cerro Verde and the copper smelter at Ilo. Direct foreign investment is not taking place, except for the financing of the Cuajone project. Still, the mining projects which have been identified and could be developed over a number of years in addition to Cuajone and Cerro Verde, would represent an annual additional production, in copper alone, of  - 56 - about 385,000 tons fine content which, at $0.45 per pound, would represent close to $400 million. Existing estimates indicate a required investment of about $1 billion. External financial assistance, technical cooperation, and foreign capital investment have an important role to play in developing such huge re- sources. It seems to the mission that one possible approach to attract part of the needed foreign capital could be to promote in the mining sector a type of contract arrangement similar--with the necessary adaptations--to the one adopted for developing the country's petroleum resources. Such arrangements preserve the state ownership of the resource and provides for sharing the output between the government and the investor in agreed proportions. It thus offers foreign capital assured stability of its investment's .return over a predetermined agreed period of time, while providing for transfer of the facilities to the state after this period. In the petroleum field the arrangement has been considered by the Peruvian government ·a good policy instrument for reconciling a fundamental principle of national policy with attracting much-needed foreign capital. There seems to be no a priori reason why such a policy should not be tried in the mining sector as well. C. Fish Processing During the past fifteen years, Peru has developed a fisheries indus- try that is the largest in the world and accounts for about one-sixth of total world production. Most of the catch consists of anchovy, and is used for the production of fishmeal and fishoil, which in the last few years have made up about 30 percent of Peru's total commodity exports. The development and per- formance of the fishmeal industry during the 1960s and the implications of the situation it now faces, are discussed elsewh~re. The following discussion is limited to the government's efforts in developing fishing and fish pro- cessing for human consumption on a large scale. Peru presents the paradox of being .the world's largest producer of fish and at the same time having a low per capita consumption of animal pro- tein. In order to alleviate this situation, aggravated by an insufficient supply of beef, and also to restore dynamism to the fisheries sector, the gov- ernment formulated a program early in 1971 which is designed to increase the production and processing of fish and fish products for human consumption, both domestic and for export. Of the present total catch of fish, only 2 percent is destined for human consumption. Substantial amounts of fine fish species have even been used for fishmeal and fishoil production. Yet, Peru)has a great variety of fish species suitable for human consumption, some of which are in large and growing demand in foreign markets. Of the 35 species found along the Peruvian coast in commercial quantities, only hake (merluza) has been studied in sufficient detail. Estimates for a sustained yield of hake range from  - 57 - 100,000 to 200,000 tons per year, possibly much more. There are ample in- dications, however, that Peru has also abundant resources of bonito--pos- sibly 80,000 tons--tuna and other valuable species to yield a significant commercial catch on a sustained basis. The government program consists of the construction of four large fishing facility complexes along the coast in Paita, Samanco (Chimbote), La Puntilla (Pisco) and Meca Grande (Tacna) for canning, freezing and smoking fish. The modernization of the fishing fleet, mainly through the conversion of existing vessels or the construction of new ones subject to scraping ob- solete ones , and the development of distribution facilities are also prime objectives. The program calls for an annual processing capacity of about 100,000 tons during 1972-74, to be doubled by 1978. About one-half of the planned production would be for domestic consumption and one-half for export. Total planned investment would amount to $85 million, of which 51 percent would be financed with domestic resources and the rest with external funds. Of the total, some $57 million would be fixed investment in plant facilities and vessels, of which $28 million would be sought from foreign financing. Table XX summarizes the fixed investment, contemplated capacity expected production and domestic and external financial requirements by the end of 1975. Table XX: GOVERNMENT INVESTMENT PROGRAM OF FISH PROCESSING FOR HUMAN CONSUMPTION, 1973/a Processing capacity Product Addition to fleet Project Costs No. of Total External Project Total Export Internal Product vessels tonnage Total Financing (In thousand of (tons) (In millions metric tons) of $) Paita 42 17.0 Merluza 15 1,800 25.8 12.3 42.3 Misc. Samanco 25 7.5 Tuna 5 2,800 16.4 5.6 (Chimbote) 12.5 Bonito 5 Misc. La Puntilla 31 6.7 Anchovy 8 480 7.2 4.5 (Pisco) 6.5 Misc. 18 Misc. Meca Grande 9 (Tacna) 6 .. 7 2.3 Anchovy ·8 480 8.8 5.8 2.3 Misc. Totals 107 56.9 67.6 36 4,760 58.2 28.2 /a Exclusive of the $2.5 .million contemplated for investment in Oquendo. Source: Ministry of Fisheries.  - 58 - The fishmeal and fishoil industry was developed by private initia- tive, but its unplanned development under booming conditions eventually led to the creation of excess capacity and of many poorly equipped facilities. This situation called for increasing government regulation of the industry and more rational exploitation of the resource. Forced partly by government regulations and partly by the need to face competition, the industry is being strengthened, and improvement projects that will total about $243 million by 1975 are being carried out by private capital. The government's policy is to offer private initiative the opportunity to carry out the program. Discussions are going on with both national and foreign interests about several investment projects. The modernization of the fleet and processing facilities in the fishmeal industry and the program for developing human consumption fishing industry, are being complemented with broad and intensive training programs for operating the fishing fleet, improving handling practices and increasing efficiency in processing. Of great importance is the intensification of research on the potential of Peru's fisheries resources and the establishing of a system to determine an inventory of the fish population on a current basis. D. Transport and Electric Power Transport The development of Peru's transport system has been very closely influenced by difficult topography as well as the location of its resources and population. The country's main agricultural and industrial areas are located along the coast, and mining and tourism in the southern Sierra. Some minor economic activity, essentially in agriculture and forestry, takes place in the Selva. Recent explorations point at the northern Selva as an area potentially rich in oil deposits. The main population areas are along the coast; the metropolitan region of Lima has 22 percent of the country's population. The configuration of the transport network substantially reflects the topography and economic geography of its setting. The paved Pan-American Highway running along the coast from the Ecuadorian border in the north to the Chilean border in the south is the main transport link and carries the heaviest traffic flows, most of them around Lima. The major connection to the Sierra is the Central Highway from Lima, while lesser secondary roads connect the Pan-American Highway and the High Sierra at various points. The limited transport services in the Selva are primarily by air and river trans- port. The production from the mines in central and southern Sierra is tra~s- ported by a few isolated railway lines and exported through the ocean ports.  - 59 - The growth of transport demand in the medium-term will be determined largely by the new developments in industry and mining. Since new industrial development will take place mostly along the coast, improvement of transport facilities, i.e., the Pan-American Highway, ocean ports and possibly coastal shipping will be needed. Mining development and some of the most promising livestock developments will require adequate roads linking the Sierra to the coast, as well as improved railway services and the creation of some specialized port facilities. Besides, the recent discovery of oil in the northern Selva will require some basic transport infrastructureal support during the ex- ploration stage, and later for the construction of pipeline to the coast, if sufficient oil reserves are found to justify the outlay. The economy's growth in the next few years is expected to create excessive use of highways, where freight and passenger traffic are expected to grow at annual rates of 8 per- cent and 15 percent respectively. The mission shares the view of the government that, despite its deficiencies, the present transport system is reasonably adequate to satisfy present needs and that rather. than undertake a massive road building program what is needed is to concentrate the effort in well-selected priority projects. Of these, the most important are: (a) Paving the La Oroya-Neshuya road, which in addition to the traffic in its own zone of influence, is also part of the route linking Lima and the Tarapoto area. This project would be a continuation of the ongoing Bank project. (b) La Morado-Puerto Pizana-Campanilla road, linking the Tarapoto area to the La Oroya-Aguaytia-Neshuya road. (c) The northern section of the Pan-American Highway, which in addition to carrying heavier traffic from the north to Lima suffered heavy damage from recent floods. These projects constitute what may be considered a program directed to satisfy the most urgent and obvious needs of transport services for the im- mediate future on the basis of existing demand in the coast and agricultural developments already taking place in the Sierra. From a medium-term point of view, priority should be given to define precisely the Central-Ramales feeder roads program, which covers a vast agricultural area only partially developed, but already important in supplying the Lima market. This could preferably be developed as a joint road-agricultural development integrated project. Basic to the development of Peru's transport sector is the design of the main lines and their future directions to serve as a framework within which specific projects could be identified and prepared in accordance with national priorities. The technical assistance program for strengthening Peru's transport planning capability together with the build-up of the "transport file"' are important steps in helping to lay a sound foundation far future development of the transport sector and the country's economy.  - 60 - Electric Power The electric power sector in Peru grew gradually as entities were created spontaneously over the years to meet needs for electricity in various parts of the country for public or private consumption. The sector today is dominated by one large private company group--Empresas Electricas Asociadas/ Hidrandina S.A.--with 594 MW of generating plants for public service in Lima and surrounding parts of the country. The government had scheduled for ser- vice in mid-1973, the Mantaro hydroelectric plant (342 MW to be expanded to 798 MW by 1977) which will meet forecast system demand in the central region of the country until the late 1970s. Another twelve much smaller private companies serve as many localities throughout the rest of the country with another 6 percent of the power for public use. A second part of the sector is composed of five large and several small mining and industrial enterprises which have their own captive power plants totalling over 800 MW serving their private needs and giving some public service to small communities in their concession areas. There is also a third part of the sector which, prior to the formation of ELECTROPERU, consisted of three large and a number of small autnomous government-owned regional development corporations serving the public in their areas and sup- ,plying industrial complexes_which they have developed. These corporations had an aggregate of about 300 MW of generating capacity. Finally, the small rural communities and localities scattered throughout the country are served partially by some 350 small isolated plants totalling about 100 MW, which were constructed and operated by the government-owned Servicios Electricos Nacionales, which was subsidized for the purpose of providing power in loca- tions where other power entities did not exist. In order to overcome some of the basic problems in the sector and to provide coordination and overall direction for its development, the govern- ment has formulated an Electricity Plan which gives the government's policies for the sector and indicates the steps to be taken to implement them. The first step has been the creation in 1972 of ELECTROPERU, a government-owned power agency which will construct and operate all future major generating plants and transmission lines. After having acquired the state-owned power systems, it will by 1974 acquire also all the municipally owned power sys- tems. Next, the Electric Industry Law is to be rewritten to give the Gov- ernment more effective and direct control of all power entities both public and private. The forthcoming more detailed legislation will be crucial in the development of the sector and ELECTROPERU, in particular with respect to tariff regulations and the capacity of utilities to provide counterpart financing for externally assisted projects. Since 1969 the General Directory of Electricity has been reorganized and strengthened so that it is an effective unit today. With the assistance of foreign and local consultants the government is undertaking feasibility and other studies of power system development on a regional basis with the ultimate goal of creating a national power grid. With the implementation  - 61 - of the government's program for restructuring the power sector the means should become available for its coordinated development. It is clear that the government has moved along the road to creating what ultimately will be a state-owned national power system. The measures adopted are a radical change from the past and for the first time offer the possibility of an orderly development of the sector. The success of the effort will depend principally on the manner in which the change is implemented. An important aspect of electric power sector development in Peru is implicit in the govermnent's plans, but should be given special emphasis. It concerns the indispensable requirement for the joint study of the electric power and water requirements for the coastal regions of the country whic.h are largely desert. As there are increasingly competing claims on water resources for power development, land irrigation and urban water supply, there should be a close coordination between the ministries and agencies concerned for the most efficient utilization of them.  - 62 - VI. THE BIENNIAL PLAN AND BUDGET 1973-74 Under the Peruvian planning and budgeting system, the biennium 1973-74 is covered by a riew short-term plan, and a public sector budget that covers both years 18/. The new planning process implied that first a global total would be fixed for public expenditure and its financing, and that the detailed sectorial assignations and project content would be finally deter- mined only after a second round of adjustments. As a consequence, the budget was adopted .in December 1972 subject to later rearrangements within the given total, while the plan was not yet finalized at the mission's visit in January 1973. The following comments are therefore based .on the budget as originally adopted, and on a draft version of the plan. The responsible authorities stated, however, that the broad lines would not be changed, and it is thus expected that the conclusions drawn will remain valid.· Discussion of the public investment program and its financing is complicated by the fact that there are three different expressions used: the biennial plan, the public sector budget, and the list of projects for external financing. The plan in principle contains a statement of all pro- grammed public investment for the period, while--again in principle--the budget provides for all those investment projects which are to be financed entirely from domestic sources, or for which the external financing has al- .ready been secured, and the project list contains all the remaining projects. In practice, however, the process had not yet reached this stage of complete harmonizat.ion when the mission visited Peru. The draft plan document avail- able contains sectorial. investment programs in e,x cess of what · could possibly be achieved during the biennium, and at t~e same time there are several proj- ects included in the draft project list which are not mentioned in the plan. It thus becomes necessary in the following discussion to compare the differ- ent partial plans and programs, and to derive a likely final investment pro- gram, and also to establish in several steps a corresponding financing plan. The principal steps are: (a) establishing the macroeconomic targets of the plan-, especially for public investment; (b) reviewing the sectorial public investment plans as programmed in the draft plan; (c) reviewing the Central Government budget for the biennium in terms· of revenue and expenditure projections, and the expected surplus; ~ The public enterprises do operate with annual budgets, but they have to make up both the 1973 and the 1974 budget at the beginning of the bien- nium, and for many purposes the two years are simply summed, giving a biennial budget for them too. All other public sector agencies have direct two-year budget periods.  - 63 - (d) reviewing the budgets for the otner public sector agencies, including public enterprises to derive the surP,lus expected on their account; (e) consolidating the public investment plans which are provided for in the public sector budget; (f) deriving the total savings available for the consolidated public sector, and the total requirements of financing for capital ex- penditure according to the budget (including debt amor~iza- tion); (g) deriving the likely composition and size of a total public investment program, taking into account those projects which are not included in the budget, but which are included in .the list of projects for external financing (progranuned in the plan), and also a financing gap to be filled by new borrow- ing - external or internal; (h) projecting the pos.s ible room for domestic borrowing by the public sector, and, finally, deriving a complete financing plan matching the investment program from (g). A. The 1973-74 Development Plan The Objectives of the Plan The function of the short-term plan is to adapt the strategy of the medium-term plan (National Development Plan 1971-7 5) to the actual de- velopments of the recent past and the foreseen circumstances of the next few years. The objectives of the 1973-74 plan thus derive both from the 1971-75 plan and from the conclusions the government draws from the experience of the 1971-72 period. As particularly critical problems and shortcomings of the development during the preceding biennium, the new plan lists the following: (a) the slow growth of employment opportunities in rural areas; (b) the limited popular participation in the social, political and economic development process; (c) only an incipient public sector support for the social mo- bilization process; (d) difficulties in the supply of foodstuffs; (e) the lack of any significant instruments for the regional development policy;  - 64 - (f) the reduced effectiveness of some measures of economic policy intended to eliminate foreign dominance; (g) the limited increase in the operating and financial capac- ity of the public sector for carrying out its role as the main agent of national development; and (h) the lack of dynamism in private investment, despite the incentives offered. Taking these problems in to account, the 197 3-7 4 plan is designed to achieve the following general objectives: (a) a substantial increase in employment opportunities; (b) a consolidation of popular participation in the political, economic and social life~ and support for the growth and development of the 11 social property 11 sector; (c) a strengthening of the instruments designed to reduce ex- ternal dependence, and intensification of activity related to the marketing of basic export commodities; (d) an increased economic and administrative decentralization, and an invigorated development of the various regions; and (e) an active participation by the state in the achievement of the ~roduction targets of the various sectors. The structural reforms, designed to transfer economic and political power from minority groups to the great majority of the people, will be inten- sified during the biennium, and the noncapitalist sector of property, pro- duction, and saving--the "social property" sector--definitely established in Peruvian society. In this process, it is stated, many of the traditional market mechanisms will be rendered ineffective, and the necessity will arise to formulate a price and income policy that is in harmony with the .distribu- tive goals of the reforms and prevents a new p~ocess of concentration and magnetization. Together with tax policy and institutional measures, the new policy must also lead to mobilizing and channeling savings in conformity with the overall development objectives. The employment target calls for the creation of 500,000 additional "full-employment equivalents'' 19/, which would permit a significant reduction of un- and underemployment anda net increase in the labor fo•rce of about As underemployment rather than total unemployment is the main problem in Peru, employment is -discussed in terms not of gross numbers with some kind of employment, b_u t in terms of the equivalent number with adequate employment. In these terms, the reduction in effective unemployment, which the plan sets as a target, is from an estimated 24.4 percent in 1972 to 19.4 percent in 1974.  - 65 - 300,000. The sectors of_most effective labor absorption are domestic consump- tion agriculture, handicraft and cottage industry, and construction, all of which are labor-intensive activities. Within the agricultural sector, the integrated rural development programs (PID-Planes Integrales de Desavrollo) and the concentrated agricultural development projects (PL\R-Proyectos inte- grales de Asentamiento Rural) are expected to give rise to new jobs. It is also here that the "social property' ; enterprises are to make their greatest mark in the biennium. Finally, it may be noted that the growth in factory employment is set at 27,000 for the period. In global terms, the plan has a real growth target of about 7.6 percent annually for GDP, while the general rate of price increase is not to exceed 8.5 percent per year. Table XXI summarized the growth targets for im- portant sectors, from which it can be seen that the increase mainly is comes from a renewed upsurge of manufacturing, the gradual return to normal in the fishing sector, and better performance of mining and agriculture. Within manufacturing, the factory subsector h,iis a growth target of some 10.6 percent annually, au annual average of 9.7 percent for consumption goo<ls, 10.7 percent for intermediate goods, and 13.5 percent for capital ~oods. Table YJ{l: ACTUAL AND-REAL GROwTH RATE TARGETS, 1971-72 AND 1973-74 (percent) 1971-72 1973-74 Sector annual aver. annual aver. Agriculture 1. 1 4.5 Fishing -29.3 23. 1 Mining 0.4 5.2 Manufacturing 7.9 9.7 Construction 20.2 16.2 Other 7.4 6.2 Total GDP 5.9 7.6 Source: Plan Secretariat. Although the overall growth target is high, it is still possible to achieve. Its achievement would appear to require the simultaneous success of several different policies, as well as some luck with factors beyond control. Th~ assumptions about the speed of recovery in the fishing sectormust remain uncertain. In agriculture, while the target can be loosely translated as "two pretty good years in succession, after one poor (1971) and one very poor (1972) 11 , achievement·will oath call for more successful production promotion, and depend on better climatic conditions. In mining, the target requires the avoidance of major strikes during the period which will put the government's labor policies to a test. Finally, the hoped-for higher growth rate in manu- facturing would, of course, be aided by a recovery of fishmeal production, but  - 66 - but may still be difficult to attain in view of the fact that many industries were working close to capacity during 1972. The relative sluggishness of industrial investment during the last few year would ~lso indicate ·only mode.r- ate additions to this capacity. On balance, while it appears realistic to expect an·actual growth rate of .GDP to be somewhat lower than the targeted one, it would not be unreasonable to suppose that there will be some improve- ment over the 1971-72 figures. Fixed investment is assumed to grow at about 12.5 percent annually in real terms, with public investment growing on the average about twice as rapidly as private, 18 percent and 9 percent respectively.20/ This ~s clearly an ambitious target for public investment, and -well above the 1971-72 average, but is in line with the actual achievement during 1972. In view of the fact that 1971 was the first year under the new National Plan, and that many of the project preparation and implementation agencies were new to their tasks, it may be reasonable to discount somewhat the problems encountered that year, and to accept the physical feasibility of a public investment growth of the order indicated (i.e., 18 percent annual real growth). Its financial feasibility will be discussed later in this chapter. For private fixed investment the assumed rate implies not only a moderate increase over the past two years, but the hopes for a somewhat greater success in stimulat- ing private investment. Direct foreign investment in the future is expected to be significant only in mining and petroleum exploration. The Programmed Public Investment by Sectors Besides the macroeconomic investment target, the plan also contains a sector-by-sector discussion of investment by public sector agencies "pro- gramed" for 1973-74. If these are all added, the resulting figure is very much higher than indicated by the global growth target and should accordingly be interpreted as indicating a level of project preparation activities which includes an ample margin for delays in the finalization of financing arrange- ments, project execution, etc. Further additions result if one takes into account the list of projects for external financing to be submitted to the consultative ·group meeting in 197 3 ( which existed in draft at the time of the mission's visit). The draft plan takes these projects into account only in some of the sectors, ieaving a considerable number, for which commitment and beginning disbursement is hoped for during the biennium, outside the large total just mentioned. 20/ The discussion of investment iu the draft plan is couchecl i .n- lower rates of growth, as the estimate of 1972 investment used there has since been officially revised dovmward; the assumption made here is that for public investment the significant figure is ' the absolute level, an assumption that is corroborated by the levels of public investment for in the budget.  - 67 - The combined information from the sectorial discussion in the draft pla.7., the adopted budget, and the list of projects for external financing is set out in detail in Table 5.11(a) to 5.11(1) and summarized in Table 5.12 of the Statistical Appendix. A further condensation is given in Table XXII, where it should be noted that the plan gives figures for the individual sec- tors in current prices. To compare the total with the macroeconomic target for investment growth, it is thus necessary to convert this into~ current- price value. This is done by assuming a S.5 percent annual rate of inflation, which is the upper limit given in the plan and i_s also the figure used in the budget assumptions. The resulting equivalent of the target of 18 percent annual increase in real terms is some S/. 50 billion for the biennium, or an overall total substantially lower than the addition of sectorial plans (S/. 75. 5 billion) indicatecl in Table XXII. Table XXII: PROGRAMNED PUBLIC INVESTMENT 1973-74 (Million soles at current prices) ProgratTlrned 1973-74 "Ambition Achie\i'ed of which inclexli Sector Total external pro- 1971-72 (2)/(1) ject financing ( !}_ _ _ _(.0. . .2__ - - - - - - - - - - - __ 4__ ) _ _ _('---3'--)_ _ _ _ _(___ ) _ Agriculture 3,300 11,200 5,400 3.4 Fisheries 700 3,300 900 4.7 Industry and Tourism 400 10,600 5,300 26.5 Hining 300 4,500 2,400 15.0 Hydrocarbons 2,300 4,300 3,200 1.9 Power 4,000 7,700 3,000 1.9 Transport and Connnunications 4,500 12,700 5,200 2.8 housing and Urban Infrastructure 2,400 4,100 1,500 1. 7 Health and Sanitation 600 3,100 700 5.2 Education 1,200 4,300 1,800 3.6 Other Programs /a 5,800 9,500 200 1.6 Total /a 26,600 /b 75,500 29,600 3.0 j_5:_ (Total in constant average 1971-72 prices) (26,600) (64,100) (25,100) (2. 5) /a Includes estimates of 2,300 million and 3,500 million respectively for investment in 1971-72 and 1973-74 by local governments and beneficencias which are not included in Table 5.12. /b Includes an estimated 1,100 million of expenditure which falls in 1973 a rried (liquidation period . of FY1971-72) but which covers investment c_ out in 1972. • /c Calculated without adding the ·l,100 million mentioned in note 2, Source: Statistical Appendix, Table 5.12.  - 68 - In terms of sectorial ambitions, the simple "ambition index•·• of the table singles out industry, mining, health and sanitation, and fisheries as the highest, but also education and 'agriculture are above the average. In fact, the very high i·ndices for mining and industry are somewhat statistical as they simply reflect that there was little public activity in these sectors before, while there now are significant projects underway: Cerro Verde in the case of mining, and a fertilizer plant and a copper refinery in the case of industry. Even so, however, the new programs of the industrial sector are very large and easily mark this sector. as the most ambitious one. The high figure for health and sanitation results primarily from the fact that the social security agencies plan to implement heavy investment programs, which they failed to do during the past two years. The fisheries sector plans heavy investment in ports and fishing complexes, but also the purchase of a number of ships for fishmeal transport, while the education sector has an increased school construction program, and expects large equipment purchases with foreign financing. • Four sectors--transport and communications, agriculture, industry . and power--dominate the investment program, representing about 56 percent of the total investment. Of these, the power.sector has been able to realize its programs in the past, and the new program does appear feasible in terms of executing capacity ( the financing, however, has not been arranged .for all intended projects yet).. The case of agriculture is different. In that sector, shortfalls in the execution of past investment programs has been considerable, and the new goals proposed seem entirely too high. ~-Iuch of the intended investment is in large irrigation and settlement projects, which tend to progress slowly. The industry program-also seems to aim above the level of possible execution during the biennium in light of the inexperience of most sector agencies with project implementation. Within the transport aud communications sector, the largest relative increase falls on public enterprises, with major programs for ports development, telecom.munications, and the acquisition of ships. Highway construction remains the largest single program of the sector, but the planned increase is relatively moderate. It is likely that financial constraints rather than lack of executing capacity will limit the implementation of the transport sector investment program. As indicated above, total investraent programmed for all the sectors consider- ably exceeds the amount which is implied by the 18 percent annual rate of growth of public investment in real terms. As already this rate of growth represents an ambitious goal, the implication is that the overall program of Table XXII must be reduced by about one-third in order to form a realistic set of objectives for public investment. This conclusion is based solely on the feasibility to execute the program in physical terms, but it will be seen later that even a program thus reduced presents problems from the overall financial point of view.  - 69 - B. The 1973-74 Public Sector Budget As already stated, the budget for the central government operations was adopted subject to later rearrangemen.,ts within the given total, and the budgets for enterprises and other agencies were not definitive either in de- tails at the time of the mission's field work. The following discussion of the public ' sector budget is therefore necessarily restricted to such broad traits as can be expected to remain unchanged. It should also be explained that the budget for ·all agencies except the enterprises is a true two-year one, i.e., even if it is possible to make some sort of annual expenditure pro- jections, it is only the full total that has any legal status. Actual expend- itures are normally controlled by quarterly authorizations, a device which, if it is used in conjunction with an effective reporting system, obviously introduces a great deal of flexibility in fiscal management. As a conse- quence, the discussion of expenditures, and thus of the financial implica- tions of the budget, must largely be carried out for the two years in com- bination, while most rev;enues of course come on a firmer annual schedule. , The Central Governm~nt Budget Table XXIII shows the central goven1ment budget for 1973-74 in the form it existed at the time of the mission's visit; it should be noted that defense expenditures are distributed among the categories of current expend- iture. The budget figures are not fully comparable with the 1 972 figures, as the budget does not include possible defense expenditure to be financed by external loans, while the historical accounts do include the actual oper- ations as reported. The assumptions underlying the budget projections are a 7.5 percent real growth in GDP per annum, and an 8.5 percent rate of price increase. Table XXIV shows in summary form the budget figures as deflated back to the 1972 price level. From this it would appear that the division assumed between the two years is unrealistic--cspecially so in the case of expenditures, for it is hard to conceive of such a decrease in the real volume of current expenditure as the table shows. The discussion will there- t he fiscal period into two calendar fore largely disregard the division of _ years.  - 70 - Table XXIII: CENTRAL GOVERNMENT BUDGET 1973-74 (Hillian soles at current prices) Estimate Budget /a - - - - - - - - - - - - - - - - - - - - - - - - 1972 -----1973 - - - - - - - 1974 Revenues 45,492 53,198 59,530 -·----·- - Direct taxes 15,462 -¼~468 15,784 Taxes on imports 7,962 8,966 9,321 Taxes on production and consumption 16,082 23,386 26,925 Other revenue 5,986 6,378 7,006 Current Expenditures 40,944 47,865 . 49,045 Consumption expenditure 29,720 32,429 33,880 Interest payments 2,511 6,555 4,908 Transfers 8,713 8,881 10,257 Revenue Su_;.-_El':11!_ 5,333 10,491 ~apital Expenditures 13,929 17,442 17,624 1. Fixed capital fonnation 9,024 ,9,496 11,081 2. Financial investment 1,058 650 667 3. Capital transfers .3, 847 7,296 5,876 Overall Balance ~~_,_3~ -12, 109 ..:.7, 133 /a With 1973 figures adjusted for an estimated liquidation period of FY1971-72. Source: Tables 5 .1 and 5. 3 of Statistical Appendix, Ministry of Economy and Finance, and mission estimate. Table XXIV: SUMHARY OF CENTRAL GOVERNNENT BUDGET 1973-74 (Nillion soles at constant 1972 prices) Estimate Budget 1972 1973 1974 Revenues 45,592 49,030 50,574 Current expenditur~s 40,944 44,115 41,662 Revenue surplus 4,548 4,915 8,912 Capital expenditures 13,929 16,076 14,971 Overall result -9,381 -11, 161 -6,059 Source: Table XXIII. A uniform price increase of 3.5 percent annually has been applied, as is assumed in budget preparation.  - 71 - Table XXV shows the comparison in real terms between 1971-72 and the budget for 1973-74. As the growth assumption implies, a combined GDP in the 1973-74 period is some 15 percent larger in real terms than the one of. 1971-72. It can be· seen that the budget projections are very restrictive. and indicate a reduction of both revenues and expenditures as a proportion of GDP. If one deducts from the current expenditures during 1971-72 the amount which represents the loan-financed defense expenditure, the result would be to increase the revenue surplus to a figure slightly over S/. 13 billion and, as a consequence, a decrease in the overall deficit. The growth of current expenditures assumed in the budget would be somewhat higher than the one cal.culated for revenues. Still, the rate would be significantly lower than the one assumed for the GDP-growth. Table XXV: CENTRAL GOVERllMENT SUHHARY OPERATIONS, 1971-72, AND BUDGET 1973-74 (Million soles at constant 1972 prices) Estimate .!3_udget Percentage 1971-72 1973-74 increase Revenues 90,000 99,600 10. 7 Current expenditures 79,700 85,800 7.7 Revenue surplus 10,300 13,800 (34.0) Capital expenditures 27,400 31,000 31.1 • Overall balance -17, 100 -17,200 Source: Table XXIV, and Statistical Appendix, Table 5.1. For 1971, revenues and current expenditures have been in- flated by public consumption index, and capital expend- itures by public investment index. In order to judge the revenue projection more clearly, some trans- formations have to be made to eliminate the effect of discretionary changes. Thus, on the one hand, the revenue of 1971-72 contains about S/. 4 billion from the tax amnesty, which of course is nonrecurrent. On the other hand, the budget projection·takes into account tax increases decided in 1972, which are expected to bring in over S/. 7 billion (in current terms) of additional revenue for the biennium, and also a further set of revenue measures to be adopted in 1973 and which should yield an additional S/. 3 billion for 1974. Expressing these amounts in constant prices, the figure for discretionary revenue increase becomes about S/. 6.8 billion, and the underlying "automatica revenue growth turns out to be 7.9 percent (3.8 percent annually). Even taking into account the relative inelasticity of the Peruvian tax system noted in earlier chapters, this must i:>e considered low, given the GDP-assumption •. If one were to assume the historic ·value of income elasticity of the tax system to be 0.7, the resulting automatic revenue growth would become about 10 percent (5 percent per year) and the revenues i 1n fixed prices some 2. billion higher.  - 72 - It would thus appear that the budget projection does contain some margin on the revenue side--provided that the included additional revenue measures for 1974 are actually enacted. Such a margin may be needed, since the expenditure projection appears low. Deducting from total current expendi- tures interest payments and transfers and correcting for the difference in treatment of defense expenditure, the real growth implied from the 1971-72 period to 1973-74 is about 8.5 percent (4.2 percent per y~ar). This is only just over half the assumed· GDP increase, .for during the past few years con- sumption expenditures rather have risen at a-rate slightly.over GDP. The government's ambitions to increase the availability of education and health services in areas outside the major urban areas, the continuing move towards • a wider role for the public sector, and the concern for the employment situa- tion, make it seem unlikely that government payrolls can be decreased to com- pensate for higher wages and salaries. The mission thus thinks that the government will find it very hard to keep the increase in current expenditures as small.as the budget projection assumes - unless of course the macro-developments developments differ very much from the plan's assumptions. To indicate the order of magnitude of expenditure pressure, it may be noted that if the assumption is made that the consumption expenditures grow at a rate of assumed GDP-growth, while interest payments and current transfers remain at their bud- get values, some S/. 3.5 billion would be added to the amount of current expenditures. The mission concludes that the budget projections most likely under- state both revenues and current expenditures, under the given macro-economic assumptions. If tllese assumptions prove to be reasonably correct, revenues will be higher than projected, assuming the announced new measures are actually enacted. The government then will want to use these revenues for current expenditures .. In case developments are not so favorable, the government's record of tight expenditure control make it likely that it will be able to restrain expenditures accordingly, but this would have to entail reduced ambitions in important fields. In either case, it appears reasonable to assume that the current surplus will be about the same magnitude as shown in _the budget, and this in turn reflects the government's fiscal intentions. The New Revenue Measures in the Budget Several different revenue measures were adopted towards the end of 1972, and additional ones are to follow during 1973; their revenue is already anticipated in the budget projections. The list of tax changes effective from 1973 is as .follows: (a) stamp taxes are being replaced by a sales tax which basically applies to production and import stages, not retail sales-- official estimate is of an increased yield of S/. 6.4 billion for 1973-74;  - 73 - (b) taxes on corporate wealth and personal property are changed-- official estimate is of a yield of about S/. 350 million for 1973-74; (c) modifications to personal deductions for income tax purposes-- officially estimated yield is some S/. 1,100 million for th'e biennium; (d) Changes to the system of payroll taxes--no official estimate of yield change, but mission estimates that yield may drop by S/. 400 million for the oie~nium; (e) an increase in licensing fees for private automobiles-- with, an .estimated yield of about S/. 300 million for the biennium; and (f) minor changes to the gasoliti.e tax, with little effect on tax yield. The most significant change is clearly ti1e elimination of the sys- tem of many different stamp taxes--which in practice has worked as a cascade type sales tax--and the introduction of a unified sales tax. The new tax in principle applies only once, at the production or import stage. One of the main reasons for the change was the anticipated simplification of tax admin- istration which should fo1low an estimated reduction of the number of paying uni ts to less than half. In addition to ,_this gain, the tax base has been broadened--i.e., the number of exempted products and services decreased. The basic tax rate is 15 percent, but necessities are taxed at 3 perce~t and luxury goods at 25 percent. While these are the main rates, there are several others for different products and types of services; in addition there are rules about different calculation of the actual tax base for firms of different sizes. The tax also applies with a special rate--2 percent-- to traditional export products (including. minerals). Finally, there have also been adopted, as a regional development measure, special rules which give lower tax rates for firms operating mainly in the Selva. All these different rates and special rules contribute to turn what was originally intended to be a straightforward indirect tax into something which is in fact quite complex, and may make illusory much of the hoped-for simplified admin- istration. The greatly increased yield, however, remains as an undisputable advance from the fiscal point of view. The property tax changes have several effects. First, they elim- ina,,te the unequal treatment accorded previously to incorporated and unincor- porated businesses. Second, while the former municipal taxes on business property are eliminated, · the personal property tax is given over to them, which means that they have a better source of revenue than before. Third, a broader definition of corporate wealth for tax purposes, and decreased exemptions from the personal property tax, mean increased· revenues both for central government and for local governments.  - 74 - The changes in the personal income tax deductions are of two types. One is to make the deductions automatically follow the increases in the cost of living, by expressing them as proportions of the legal minimum salary in Lima-Callao, which is adjusted periodically to reflect such increases. The other change affects the actual deductions, and here the most notable are the abolishing of the extra deductions for large families, and an elimina- tion of the right to make earned-income deduction for a certain category. Overall, hpwever, the deductions remain high, and still remains . true that they are ·higher in Peru than in any other Latin American country. As exam- !)les, it may be cited that a married wage-earner with two children will be entitled to a deduction of S/. 172,800 ($4,460), while the deduccion for a single wage-earner is S/. 100,300 ($2,600). While the increase in licensing fees for private automobiles repre- sents some additional charge on road users, and on vrl1at is primarily luxury consumption, it is . notable that the increase in gasoline prices. which had been discussed as a revenue measure for a long time has net been effected during 1972. Some increase in gasoline taxes was foreseen for 1973, but seemingly not of the magnitude discussed earlier. As stressed above, the budget projections assume tax measures to be taken during 1973 which will give S/. 3 billion of additional revenue in 1974; S/. 500 million are to come from the income tax, S/. 300 million from the property tax, S/. 1,700 million from excise taxes and S/. 500 million from improved tax • administration. It must be remembered, l1owever, that such specific tax measures are not the only decisions that will- affect future budgetary revenues; . decisions to change, for example, the various rules affecting investment incentives or the exemptions from impq,rt duties, may be of equal fiscal importance, although their primary .aim may not be fiscal at ali. The overall effect of the tax changes in the budget is to shift the tax burden dramatically towards taxes on production and consumption; their share increases from 35 percent of the total government revenue in 1972 to 44 percent in 1973 and 45 percent in 1974. Taxes on imports fell sharply as a proportion of the total in 1972, and are expected to fall further. Di- rect taxes decrease their share dramatically, from 34 percent in 1972 to 27 percent in 1973--largely a continuation of an earlier trend, which was hidden in 1972 by the high yield of the tax amnesty (Statistical Appendix, Tables S.3 and 5.4). From the point of view of stability of revenues and income responsiveness of the tax system these structural changes should be welcomed. The sales tax should be much less prone to variations with the fortunes of the export sector than is the income tax, and similarly the past evidence indicates that under Peruvian circumstances the taxes· on production and consumption are more likely to produce increased revenues in line with GDP- growth than many others. From the income distribution point of view, the changes in the tax system are raore of a doubtful nature. Oh the one hand, general indirect taxes such as the sales tax must be expected to weigh more heavily on the lower income brackets than the direct taxes, even if the Peruvian system has  - 75 - elements which make it progressive to some degree. Increases in automobile licensing fees and property taxes on the other hand, do not hurt those who have no automobiles and own little property directly. Similarly, the elimina- tion of extra tax deductions for large families does not affect individuals whose incomes are far below the personal deducti.on level--which still is equal to at least 1.75 legal minimum salary. On balance, however, the presumption is that because of the very large increase in the sales tax, the redistributive effect of the tax system nas been decreased rather than increased. For the future, it would thus be logical to seek additional revenue by way of taxes that would counter this effect. The increase in gasoline tax would appear to satisfy both this criterion and that of giving increased stability to the tax system. The Budgets of Other Public Sector Agencies As detailed in Chapter IV, puulic sector agencies at the national level consist of central government ministries, decentralized institutions, social security agencies, and public enterprises. The budgets for .all these agencies are formally part of the national public sector budget, and, while the .budget process for the enterprises was not quite finished at the time the central government budget (to which the budgets of the decentralized institu- tions are an annex) was adopted, there had been coordination. The Peruvian fiscal authorities have been aware of the need to establish a system which gives the policy-making bodies better information about the actual performance of the autonomous public sector agencies,' and which also enables them to ex-- ercise effective control on major matters. Progress has obviously been made, and the mission considers the greatest need now is for improvements in the quality of data submitted by some agencies, and for more efficient and timely utilization at the central level of the information already provided. A summary of the operations of the autonomous national public sec- tor agencies is given in Table XXVI; more details on the budgets for the en- terprises can be found in the Statistical Appendix (Tables 5.8 and 5.9). This shows the decentralized institutions as essentially a spending arm of the central government, drawing heavily on transfc::rs for revenue. The substantial surplus generated by social securities will be used to finance capital expendi- tures of their own during the biennium. The enterprises as a group show a considerable operational surplus, some of which goes as net transfer payments to the central government, mainly as tax payments from some enterprises. Large capital transfe•rs from the central government are budgeted for the enterprises, but even so, about half of their capital expenditures--which is almost exclusively fixed capital formation_2t/ I.as to be financed by domestic '!:J_/ Only the nonfinancial enterprises are included in the consolidation here, leaving the four deyelopment banks, the Housing Hortgage Bank, Barico de la Nacion, and CO'FIDE outside.  - 76 - or external borrowing. It is notable, that the investment budget.ed for the public enterprises is about half the total for the public sector as a whole, and also that the increase over the 1971-72 period is higher for them than for central government. This reflects the increased emphasis on investment in the productive sectors, and puts a great responsibility on agencies which in sev- eral cases are comparatively new. A close monitoring by the government of the progress made is clearly in place. Table XXVI: SUMMARY OF 1973-74 OPERATIONS OF PUBLIC ENTERPRISES, SOCIAL SECURITY AGENCIES AND DECENTRALIZED INSTITUTIONS (Million soles at current prices) Public Social Decentralized enterprises j a secu_r. agenc. institutions/b Own revenues 45,360 20,241 2,809 Direct current expenditures 39,918 16,446 6,944 Operational surplus 5,442 3,795 -4, 135 Current publit sector transfers (net) - 644 1,067 4,837 Current account balance -~2__798 4,862 702 Central government capital transfers f.s:.. 7,456 666 Capital expenditures 24,577 4,659 -1, 380 Overall balance --:12,323 203 12 /a Non-financial enterprises only. Excludes also railway enterprise for lack of information. /b Approximation only, based on administrative rather than economic con- cepts. f..!:.: Includes 1,935 million to be transferred via COFIDE. Source: For enterprises, Table 5.8 of Statistical Appendix; for social security agencies, draft budgets; for decentralized institutions, National Budget Law for 1973/74. It is notable that out of some thirty enterprises, two_.thirds of all investment falls on just three of them: ELECTROPERU, JYIINEROPERU and PETROPERU. The first two of these do not generate any ~urplus from their operations. Neither of them has been working long enough to have current operations commensurate to their investment programs . . While PETROPERU is the main taxpayer among the enterprises, its internally available funds are considerably reduced (Statistical Appendix, Table 5.8). The largest saving is budgeted for PETROPERU, with about S/. 2 billion of operational surplus during the biennium, followed by SIDERPERU, which is expected to show savings of over S/. 1 billion. Other significant savers are expected to be ENAPU (ports), ENTEL (telecommunications) and EHADI (housing). EPSA is the only enterpr:i:se for which a significant deficit is foreseen; most enterprises are  - 77 - in fact expected to show a cash surplus from their operations. Virtually all are expected to have some overall deficit, however, which means that they will each be in a position to make use of their own generated funds. Thus, there should not be a problem in that funds are being "locked in" osme enterprises and not directly available to finance investment. Table J:XVI shows that total operational surplus (savings) by these public sector agencies will be S/. :i.4 oillion. While these figures in the table are in current prices, the real increase would still be 70 percent, most welcome in view of the large increase in capital expenditures foreseen by the same agencies. The largest contribution to this increase is expected from the social security agencies and the decentralized agencies (the deficit of the latter is seen as falling in real terms),_while the surplus of the enterprises as a group falls somewhat as a proportion of revenues. Disregarding EPSA, the result is in line with performance in the earlier period.· The budgets for the local level of public sector agencies--local governments and beneficencias--are not readily available, and the figures used subsequently are mission estimates of probable orders of magnitude, based on the available information about past operations and qualitative = indications about the future. The Budget and the Investment Program Drawing on the budgets for the central government and the various agencies, it is possible to compile a total list of such public investment for which budgetary provisions have been made. As noted earlier, this is.only part of the programmed investment in the draft plan for 1973-74. The result is shown in Table XXVII, which reveals the composition hy sectors of all investment programs included in the budgets of the national public sector agencies for 1973-74. For comparison purposes the table also repeats the earlier figures for the 1971-72 period, and the total progrannned in the plan as shown in Table XXII (note that the table now excludes the estimates for local governments and beneficencias). The table shows only the invest- ment under particular investment programs of the national level agencies. To get a total budgeted public investment, it is necessary to add some fig- ure also for local governments and beneficencias. A reasonable estimate may be S/. 3,500 million for the biennium. There is also always some capital •formation taking place outside the investment program proper, as part of operational programs, possibly of the order of S/. 1,000 million. Adding finally a notional S/. 195 million for the newly-formed railway enterprise the total for budgeted capital formation becomes about S/. 51,800 million for the biennium.2.2/ This, however, is slightly more than the about S/. 50 billion which earlier was found to be the current price translation of the 22/ The enterprise was set up when the State took over the former Peruvian Corporation's assets, including Peru's main railroads, at the end of 1972. Its budget was not available, and the 195 million are simply chosen to match the capital transfer included in the central government budget.  - 78 - macro-economic plan target for public fixed investment (18 percent annual increase in real terms). As this target was already found to be ambitious, it is not likely that any program even larger in volume than the one of the budget can be accomplished. These then, are some of the hard choices the Peruvian authorities have made, faced, with · the obviously too large programmed total in the plan. The budge~ed investment program of Table XXVII is not the final word regarding government intentions, however. Peruvian budgetary practice is not to include in the original budget projects which are intended to be executed during the budget period, but for which external financing is being sought and has not yet been firmly secured; instead supplemental budgetary allocations are made when the external loan has been signed. In this case there are on the list of projects for external financing several for which it is realistic to count on some start during the biennium. On the other hand, of course, it is also realistic to count some slippage in the execution of projects which are in- cluded in the budget, so the case is not one of simple addition. To the extent, however, that this does not release sufficient Feal resources to meet the re- quirements for the new projects to be included, the government may have to undertake some reevaluation of its investment priorities during the biennium.  r - 79 - Table XXVII: SECTORIAL INVESTMENT PROGRAM IN 1973-74; NATIONAL PUBLIC SECTOR BUDGET (Million soles at current prices) Achieved Programmed To Budgeted /b "Ambition 1971-72 in Plan /a Total Financed by index" 1973-74 external (3)/(1) proj. loans ( 1). (2) (3) (4) (5) Agriculture 3,300 11,200 6,640 2,713 2.0 Fisheries 700 3,300 1,611 2.3 Industry and Tourism 400 1o, 600 5,544 3, 141 13. 9 Mining 300 4,500 4,213 2,150 21.1 Hyd~ocarbons 2,300 4,300 2,902 1,155 1. 3 '--- Power 4,000 7,000 5,433 2,513 L4 Transport and Connnunica- ti·o ns 4,500 12,700 6,951 l,610 1.5 Housing and Urban Infrastructure 2,400 4,100 3,547 1,288 1.5 Health and Sarnltation 600 3,100 2,517 350 4.2 Education 1,200 4,:300 2,031 407 1. 7 ' ,.__,, Other programs 3,500 6,200 5,701 246 1.6. t All Programs 24,300 /c 72,000 47 , .090 15,573 1.9 /a From Table X,~II. /b Excludes railway enterprise (ENAFER) for lack of information. /c Includes an estimated 1,100 million of expenditure which falls in 1973 (liquidation period of FY71-72) but which covers investment carried out in 1972. Source: Statistical Appendix, Table 5.12 and enterprise budgets. Note that the table here includes all external loans counted upon in the budg- et, while Table 5.12 (and 5.11) leaves those out that were not signeg_ at the end of 1972. Turning to the sectorial composition of the budgeted program, it becomes evident that this is similar to the list of programmed investment from the plan (Table XXII). The ::ambition level" is n,pw reduced and centers around the average, with the exception of the mining and industry sectors, where the combination of low base and large projects just started explains most of the effect. The high value for health and sanitation reflects the intended sharp pick-up in hospital investment by the social security agencies. Fisheries have an index somewhat over the average, but a large part of the budgeted investment is intended for the purchase of ships, and this part would hardly put any claim on the project 'implementation capacity of the sector; the remaining program would give an index under the average. The optimistic. budgeted amount in this sector must be considered _  - 80 - Financing of the Budgeted Public Investment Above it has been noted that the investment program included in the public sector is at the outside of what in real terms can be considered a realistic global increase in public sector fixed investment. The next step is now to study the financing of the budgeted program and to judge its finan- cial feasibility. To this end, Table XXVIII· shows the deriyation of the oper- ational surplus 23/ of the consolidated public sector for the period 1973- 74 as projected in the budgets. In the interest of showing where the savings originate, major transfer payments within the public sector are carried back; the result is that the dominant role of the central government appears more clearly than in the usual budget presentation. Table XX.VIII: DERIVATION OF OPERATIONAL SURPLUS (PUBLIC SAVINGS) OF CONSOLIDATED PUBLIC SECTOR 1973-74 (Million Soles at current prices) Central government 22,397 Revenue - surplus from budget (including liquidation period 1971-72) (15,824) + Current transfers to consol. public sector ( 8,512) - Enterprise tax payments ( 1 ,569) - ~nterprise profit transfers ( 370) Public enterprises /a 5,642 Social securities agencies 3,795 Decentralized institutions -4, 135 Local governments_ 2,000 Beneficencias publicas - 200 Public sector total 29,499 /a Includes 200 million for financial enterprises, so as to offset their capital formation, which is included in the public investment program. Other operational surplus of these enterprises is either transferred and becomes central government revenue, or remains outside the con- solidated system here. Source: Tables XXIII and XXVI; Statistical Appendix, Table 5.10; enterprise budgets. Figures for local governments and beneficencias publicas are mission estimates. 23/ The term is slightly inappropriate in the strict sense, as it takes into account all revenue--even capital revenue--and also transfer payments such as interest and pension payments. Cash generation might be an alternative term, although that is not quite·appropriate either.  - 81 - Total public sector operational surplus having been determined, it is possible to construct a table of requirement and availability of funds for financing public sector capital expenditure. The result is illustrated in Table XXIX, where the first two entries on the requirements side are the public fixed capital formation total derived above (which however does not include all projects from the project list1 Financial investments comprise agrarian reform cash payments, purchase~- o-f real estate, financing of some housing and office construction, and similar items. Capital transfers from the central government budget to the development banks and certain lending funds which are operated by these banks represent the fourth item (these banks are outside the consolidation as stated earlier). While capital expenditures during the liquidation period of the 1971-72 fiscal period represent investment carried out during 1972, the payments fall in 1973 and have to be financed. In the same way, ·the operational surplus from the liquidation period is included on the availability side. Finally, there is the amortization of external debt by public sector agencies which has to be covered; in contrast, the table treats domestic· borrowing on a net basis as part of the residual item. Total requirements of funds for the biennium then are 75 billion soles at current prices. It should be reraembered, however, that this refers only to items included in the budget, which means, e.g., that any expenditure for defense which is financed from external loans is ad4itional. Table XXIX: REQUIRED AND AVAILABLE FUi.mS IN CONSOLIDATED PUBLIC SECTOR BUDGET 1973-74 (Hillian soles at current prices) REQUIRED FUNDS 75,000 1. Investment program 50,800 2. Other fixed capital formation 1,000 3. Financial investments 3,000 4. Capital transfers to entities outside consolidation 4,800 5. Capital expenditures from FY19-71-72 liquidation period 1,100 6. Amortization of external debt 14,300 AVAILABLE FUNDS 45,900 1. Operational surplus of consolidated public sector /a 2~500 2. Available exten1al financing from project loans signed by December 31, 1972 /b 13,700 3. Available external financing from non-project loans signed by December 31, 1972 2,700 NEW EXTERNAL PROJECT FINANCING ASSUHED IN BUDGET 1,900 DEFICIT, TO BE CONVERED BY NET DOMESTIC BORROWING, OR NEW EXTERNAL NON-PROJECT LOANS 27,200 /a Includes effect of FY1971-72 liquidation period. /b Includes grants. Source: Derived in text, see 11 Financing of the Budgeted Public Investment."  - 82 - On the availability side, the . first item is the operational surplus of the consolidated public sector derived above. Then comes the utilization o·f available external project loans; the sum here represents drawings ·assumed in the budget from loans and grants actually signed by the end of 1972. 24/ Additionally there are available ftmds _from two nonproject loans to central ·government which also were signed by that time. The total .of funds available from these sources is S/. 45.9 billion for the biennium, leaving a gap between required and available of S/. 29.1 billion. There is, however, one further offsetting item which must be taken into account, namely that, despite the Peruvian budgetary practice of not including assumed but yet unsigned external project loans, a few enterprises have done so. It can reasonably be assumed that they will in fact be able to contract these loans for which negotiations are well advanced, and there will then be some S/. 1.9 billion more available from project ioans. The remaining difference, S/. 27.2 billion ($700 million), is the final net which according to the budget will have to be covered either by net domestic borrowing, or by new external nonproject loans. C. Financing a Total Investment Program Slippage and Substitution of Projects The preceding section clarified the financial requirements of that part of intended ·public investment which has been included in the budgets of the various public sector agencies. There now remains to take into account the influence of those .other projects that are also intended for executi6n, wholly or in part, .during the biennium, but which were not inciuded in the budget as their external financing had not been secured. Only after this can a full financial plan for the total likely public investment program be derived. It is necessary, then, to make an·assessment of how much of the project list for external financing can be expected · to receive secured finan- cing, and what amount of work in turn can be expected to be . performed on those projects during 1973-74. It should be remembered that the budget already assumes the signing of loans for a number of projects, leading to disbursements during the period of about S/. 1. 9 billion, or $50 million . . Given the status of project preparation and the lag between signing of project loans and actual disbursements of any sizeable sums, and taking into ac~oUQ.t total commitment volumes, the mission e~timates that the order of magnitude of additional dis- bursements of external financing for projects not included in the budget to be about another $100 million25/, or S/: 3. 9 million, for a total of $150 million during the period. 24/ In fact, there is one loan--for educational purposes--which is included in the external debt tables of the Statistical Appendix as signed in 1972, but which is not considered as available in the budget; it was signed after the budget had been adopted. 25/ This includes the loan mentioned in note 24.  - 83 - As discussed earlier, these projects cannot simply be added to the program already in the budget; rather there will have to be some slippage or rephasing of other projects to make room for the new ones. It is necessary therefore to take into account the locally financed portion of · the projects, which on the average is between 40 percent and 45 percent. • As the counterpart requirements for the S/. 1.9 billion new foreign financing counted in the budget are already assigned, there remains just the requirement for the counterpart to the additional S/. 3.9 billion, which is about S/. 2.9 billion. The total cost of the additional project work to be executed is then S/. 6.8 billion, which toge·ther with the budgeted program would give S/. 58. 6 billion. As the target plan for public investment is about S/. 50 billion, .t he amount to be slipped and/or rephased from the original budget program is seen to be about S/. 3-9 billion, or about one-sixth of the total. This share does not seem unreasonably large, and it may well . be that slippage alone will give that much of a margin, so that a planned rephasing of projects would not be necessary. Table XXX: FINANCIAL IMPLICATIONS OF PROJECT SUBSTITUTION TN BUDGET (Billion soles at current prices) Domestic External Total financinB project financing :3uugeted investment program ·51 . S 36.2 1:;. 6 Additional from project list 6.8 2.9 3.9 58.6 39.1 19.5 Cutback from budget 8. 6° cCo 2.6 Resulting investment program 50.0 33.1 16.9 Source: Derived in text, see "Financing a ·Total Investment Program." To see the implications of a substitution of projects for the financing plan, it is necessary to make an assumption about what type of proj- ects it is that will give way for the new ones. This would be in line with the observation that general slippage can be expected to free sufficient capacity for the additional work, and to assume that the cutback has an average com- position (average for the budgeted program) from the point of view of the sources sources of finance, domestic or external project loan. Using this assumption, Table XXX shows that a substitution and cutback along these lines would result not just in a slight total decrease, but also in a changed composition, with a larger proportion of financing coming from external project loans.26/ The decrease in the requirements for dqmestic financing is S/. 3. 1 billioo. Therefore the total uncovered amount would drop from S/. 27.2 billion to S/. 24.1 billion. 26/ The reason for this is that the average project on the project list has a higher foreign financing component than the average in the total budget.  - 84 - With the assumption that the projected operational surplus of the central government in the budget is reasonable, there are essentially three sources of finance open to cover the deficit that remains after external project financing has been taken into account: increased budgetary saviµgs ti.1rough additional- revenue measures for 1974 (additional to the ones yield- ing S/. 3 billion which are already assumed in the budget), net domestic borrowing, or external nonproject borrowing. In view of the arbitrariness of some of the assumptions made, one might also point to the possibility of carrying further the process of substituting projects with external financing for parts of the budgeted program with a higher claim on domestic financial resources. It is the opinion of the mission that it may be difficult to ·gain much more this way, as there are definite limits to the number of new projects from the list that are likely to be re8:dY for actual _execution dur:i.ng the bien- nuim. It is also most unlikely that there will not be some slippage among the externally financed projects already included in the budget. While the share of external project financing in the final invest- ment program of 34 percent is fairly high, the effecttve foreign financing of the public sector budget is sharply reduced by the large amortization payments, amounting to S/. 14.3 billion during the biennium. When the S/. 2.7 billion available from existing nonproject loans is taken into account, the net inflow to the public sector would only be about S/. 5.5 billion, or.11 percent of the investment volume. It would therefore appear to be a reasonable policy to continue the process begun in 1972, and seek some additional non~ project loans in support of the general development program. In fact, the government, when presenting the budget, indicated its intention to raise some $140 million in this way. In view of the relatively hard terms to be expected and the already high debt service Peru faces during the next_few years, such borrowing should clearly be held as low as possible. A logical alternative might be to plan for a corresponding utilization of reserves. As discussed further in Chapter VII, there are limits to this in a sit11ation where the export prospects for fishmeal are as unclear as they now appear, and. a nonproject borrowing of the size planned by the government is thus taken into account ·in the projections. Although $40 million were contra~ted in December 1972 (and thus included in the S/. 2.7 billion available from existing nonproject loans), there remains $100 million or S/. 3.9 billion. The gap left for internal financing of the investment program is then S/. 20.2 billion. Availability of Domestic Credit To get an idea of what room for maneuver the government is likely to have in financing an ambitious investment program of the size contemplated, it is necessary to project the total credit expansion which is compatible with the macroeconomic assumptions used so far. Table XXXI shows the result of such a projection under the assumption that international reserve losses are restricted to about $25 million for the biennium. The projection further assumes that the relatioi.1 observed in recent years between money GDP and total liabilities of the banking system will exist also during 1973 and '1974,  - 85 - and that credit needs of the private sector will increase by aboµt 20 percent per year, which is somewhat above the increase in money GDP ( 16. 7 percent), but less than the experience of the past few years. In the light of the need for close management of total demand which is discussed in Chapter VII, it appears likely that some such less liberal private credit expansion will be necessary. Table XXXI: ASSETS AND LIABILITIES OF BANKING SYSTEM (In billions of soles, end of year) Actual Estimate Projection 1968 1969 1970 1971 1972 1973 1974 Liabilities Honey ·and quasi-money 36.5 41. 9 55.9 63 .1 74.8 87.8 103. 8 Medium term ext. obl. 1. 1 1.1 1. 1 1.2 1. 1 1. 1 1. 1 Capital and surplus 9.3 10.9 13. 6 15.2 17.6 20. 1 23 .1 Total 46.9 53.9 70.6 79.5 93.5 109.0 128.0 Assets Net intern. reserves 4.3 5 .9 15.8 13.4 15. 1 15. 0- 14. 1 Domestic credit 41. 5 45.9 52.1 66.1 80.0 95.6 115. 5 Private sector ( 31 . 2) (34. 3) (39.9) (48.1) (58.9) (70.5) (84.4) Public sector (net) (10.3) ( 11. 6) ( 12. 2) (18.1) (21. 1) (25. 1) (31.1) Other assets (net) 1. 1 2. 1 2.7 -1.6 -1. 6 -1.6 Source: For 1968-72, Statistical Appendix, Table 6.1; 1973 and 1974 data are mission projections, the main assumption of which are outlined in the text under "Availability of Domestic Credit." The projection shows maximum room for a credit expansion to the public sector of about S/. 10.0 billion for the biennium.QI Quite clearly there is some margin for variations in the projection, by changing some of the assmnptions, but, unless one is willing to make assumptions regarding future monetary developments that are radically different from the past, the conclusion appears inevitable that the domestic banking system cannot 27 / This projection considers 7 .5. percent GDP-growth rate (the plan target). If the growth rate would only be 6 percent per year, total domestic credit expansion would be reduced, but so would the private sector's credit needs. In the absence of a more difficult restriction on private credit than as- sumed in the text, it is unlikely that public sector borrowing could be maintained at the full st. 10.0 million.  - 86 - possibly accommodate all of the needs (S/. 20.2 billion) which so far are uncovered in the financing plan. 28/ Even taking into account the possi- bility of increased borrowing outside the banking system, where the gov- ernment during 1972 actively and with some success tried to broaden the market for treasury bonds, there will remain a substantial gap. It ap- pears unlikely to the mission that such borrowing could yield a net of more than some S/. 4.0 billion. Conclusibn The foregoing discussion points to the existence of a financial gap of the qrder of S/. 6.2 billion. The projections used to arr,ive at this conclusion have a margin of variance. It has already been stated that the budget estimates in particular--both for revenue and current expendi.- ture--appear very conservative. The gap appears so large that the con- clusion is unavoidable that some additional public savings effort will be necessary if it is to be filled, unless slippage occurs in the execution of the investment program substantially in excess of what has already been assumed. While there are many factors influencing total public savings, such an additio.nal effort can only ;be achieved through further revenue measures by the central .government, i.e., measures to be taken in 1973, with effect during the biennium, in addition to the ones already indicated in, the budget. The need for further revenue measures during the bienntum is in- dicated also by longer-term considerations. Current expenditure is likely to rise in the medium-term as a consequence of the past and current invest- ment program. At the same time, the government will undoubtedly wish to continue expansion of public investment, although perhaps at a somewi1at slower rate. This makes it imperative to increase public sector resources. This would have the effect •of reversing the present trend of stagnation and arresting the decline in .government revenue as a proportion of GDP. The proportion was 16.5 percent in 1970, 15.S in 1972, and the budget projec- tion is for 14.S by 1974 (althougi.1 this might appear to be a conservative estimate). In order not to face the need for large revenue increases for ~ 1975 and 1976, it would thus appear wise to lay the base already in 1974. As to the source for such increased revenues, the discussion in Chap,ter IV poil!_ted to the income tax and the gasoline tax as logical candidates. Last, it should be noted that, with the given assumptions about the growth and the rate,of price increase, each percentage increase of GDP in 1974 would be equivalent to approximately S/. 4 billion in revenues. 28/ Throughout, the assumption is that inflation is not to exceed 8.5 percent annually, i.e., the objective expressed in the draft plan.  - 87 - Table XXXII summarizes the rel t,ired arid identified sources of ·funds for the biennium 1973-74. The difference, S/. 3. 2 billion, is within a reasonable margin of uncertainty (less than 5 percent of the total) and thus no d~finite conclusion about the need for reductions in the investment program on financial grounds is warranted. Table XXXII: REQUIRED FUNDS AND IDENTIFIED SOURCES, 1973-74 (Billion soles at current prices) Required funds 73.2 Fixed capital formation so.a Financial investments 7.8 la External debt amortization 14.3 Expenditures in liquidation period 1. 1 Identified sources 70.0 Public secto~ savings in budget 29.5 Disbursements from existing external loans as of December 31, 1972 13.8 (project loans) .(11.1) (nonproject loans) ( 2. 7) Disbursements from new external loans 9.7 (project loans) ( 5. 8) (nonproject assistanc~) ( 3.9) Domestic borrowing (net) 14.0 (from banking system, maximum) ( 10. O) (outside banking system) ( 4.0) Additi.o nal government revenue 3.0 /a Of which S/. 4.8 billion are capital transfers to state development banks. Source: Tables XX.IX, XXX and XXXI; additional assumptions appear in the text, see "Financing a Total Investment Program." It thus becomes clear, from the information available, that additional revenue measures could yield some S/. 3 billion in 1974. However, one must recognize that the investment program is ambitious both in real terms and financial requirements. The preceding discussion remains valid even if the GDP-growth does not fully reach the target of the plan. It must be stated, however, that extreme fiscal prudence and tight financial management would be required to finance an unchanged public investment program under these circumstance. While the 1973-74 target for public investment is much more realistic than was originally the case in the 1971-72 plan, and the planned increase is still large; therefore, , it is possible that the unavoidable slippage of some projects would bring about the necessity for reduction.  - 88 - VII. BALANCE OF PAYMENTS .AJ.'1D EXTERNAL CAPITAL REQUIREMENTS 1973-7 6 Foreign Exchange Constraint Peru's economic growth has been heavily dependent on imports of investment goods, and also raw materials and intermediate goods for the manufacturing sector. This pattern is likely to continue; at least in the medium-term, and thus the development of the capacity to import will remain a crucial factor for the country's growth prospects. This capacity is likely to be constrained by a relatively slow growth of export volume through 1976. _Even if the fishing crisis is only a temporary phenomenon, and the Cerro Verde copper mine is expected to begin production in mid-1975, a significant increase in Peru's export supply capaccity will not come until 1977, when the impact of the large Cuajone mining devleopment will be felt. Export volume in 1976 is projected to be some 20 percent above the 1972 volume. The constraint on import capacity could be alleviated only if Peru's export prices become sub- stantially higher than in the .past. At the time of writing, prices were increasing; but given the experience with conunocfity markets, it would not be prudent to count on a major sustained improvement in Peru's terms of trade · as a solution to its balance of payments problem. Given the foreign exchange constraint, and the fact that Peru will need to import foodstuffs and a great deal of capital goods for those large projects already. started or firmly progranuned, other imports will have to be kept under strict control. Economic development policy in general must be shaped with this need in view. Specifically, this experience cannot be con- tinued wit~out either a . serious loss of reserves, or an undesirable build:..Up of additional external indebtedness. The government will thus have to put more emphasis on management of overall domestic demand than during the period when consumption was rising more rapidly ·than production. This conclusion reinforces the arguments made in Chapters IV and VI concerning the need to raise the level of savings, particularly in the public sector. If the growth of imports is contained-and the government's com- prehensive system of import controls should make this technically possible-- but demand is not sufficiently restricted, the result would be greater pres- sure on domestic prices. In 1972 there were signs of this, as the GDP-deflator increased by over 8 percent after falling steadily since 1968 reaching its lowest level in 1971, below 5 percent . . Contributing to this upsurge was the situation with regard to food supply. A bad harvest for several domestic crops led to repeated shortages of important foodstuffs in the major urban areas and higher prices. Similar price pressure also resulted in some other consumer goods lines, notably textiles, where capacity problems developed and imports were restricted. ·Because of the limited industrial investment, and the persistent problem of slow agricultural growth, physical limitations to increases in the domestic supply of consumer goods will probably continue to be a problem during the next few years. •  - 89 - Peru has long had a system of official maximum prices for important products, e.g., construction materials and basic foodstuffs.. Then, as there emerged a wave of price increases after the introduction of the new sales tax in December 1972, the Government introduced in early January 1973 a general price freeze, under which all prices existing on December 31, 1972, have become maximum prices. Any increase above that level must be justified and requires government approval. Simultaneously, the government has taken steps to make the enforcement of pric·e regulations more effective. The impact of these new measures cannot yet be judged, but as the government has declared that such price increases will be allowed as are justified by documented in- creases in costs--and a good number of price increases have in fact already been approved--it is unlikely that the controls can hold back a general price increase if real demand is allowed to exceed significantly the available supply. Major Uncertainties In addition to the large uncertainties which surround future price projections for Peru's main export products, there are at present two produc- tive sectors in which the future is open to question. These sectors are fish- ing and petroleuti1. How rapidly will the t. ffects of the 1972 anomalies be overcome, and does Peru have major reserves of petroleum in itspart of the Amazon basin? Peru entered 1973 with virtually no stocks of fishmeal or fishoil, and with negative or inconclusive results of trial fishing for anchovy. Even after further trials in .the early months of 1973, the fishing season was offi- cially opened and initial reports indicated substantial shoals of anchovy being encountered, but beyond that no firm answers are yet available. The basic question is whether what has happened will eventually prove to have been a strictly one-time affairJ in the sense that the anchovy population in the long run has not been affected, or whether the estimates of the maximum sustainable catch have to be revised downward. Tne other question, important in the short-run, is how large· catches that can actually be achieved this year and the next, assuming that the longer-run has not been affected. It is clear that the oceanic anomalies of 1972 have been recurring more or less regularly and that current developments have pointed to a funda- mental problem for the fishing sector and for Peru's exports; without warning there can be a loss o.f a major part of the anchovy catch and fishmeal produc- tion. In 1972 only the existence of large high stocks saved the country from a sudden drop 6f at least $100 million in export earnings. Even if there are possibilities--e.g., under the IMF export shortfall compensation facility-- to get international assistance to cover part of such losses, this clearly indicates the advisability for Peru to have a level of international reserves which is high enough to initially abosorb such swings. In the·petrolewn sector, the rate of exploration was stepped up considerably during 1972, and evidence of significant petroleum reserves in the Amazon area is becoming promising. PETROPERU, . which had its first strike in 1971, has continued its program of test drillings at a high pace. During 1972 a further eight holes were completed, of which four were strikes--three of them testing at rates of 2,000 barrels per day or above. In early 1973  - 90 - another well was completed, testing at close to 3,000 barrels per. day, and PETROPERU is still continuing its test program so it can arrive at a basis for an investment decision regarding the trans-Andean pipeline. Meanwhile, five additional contracts were signed with groups of foreign oil companies for exploration and production rights, bringing the total number of such contracts for the Amazon area to eight._ 29/ Most of the contractors are still at early stages in the exploration, but the first one to sign, Occidental Peroleum has begun drilling and reported two good strikes in its area close to the Ecuadorian border. The crude encountered, both there and in PETROPERU's area, has been of high quality, with low gravity and low sulphur content. The short-run objective for PETROPERU is to establish whether the petroleum reserves are sufficient to warrant the construction of a pipeline to the coast. Acting on the assumption that this will indeed prove to be so, the enterprise has already commissioned and received a feasibility study by a consulting firm. The study recommends a pipeline of 211,000 barrels-per-day capacity initially, with provisions for future increases by the installation of additional pumping capacity. The cost for the first stage is estimated at $340 million. The length of the pipeline would be about 900 kilometers, crossing the Andes at a comparatively low altitude in the Porculla pass (2,150 meters), and reaching the coast at Bayovar in the north of Peru. Construction time is estimated at about two years from the actual start of work. The possibilities here are clearly very exciting, as the current production rate of petroleum in Peru is falling--it was about 22.4 million barrels in 1972--and the once exporting country is now a net importer. If the reserves do prove sufficient to sustain production'of 210,000 barrels per day, this would mean more than a threefold increase, and would not only cover Peru's rapidly growing own needs five years hence, but also leave a margin for export within a few years. Higher production rates would increase the amounts available for export correspondingly. The mission's assessment of the current situation, is that it would not be prudent to count upon greatly increased petroleum production. Indica- tions certa,inly are most promising, but the actual extent of reserves is not yet known, and PETROPERU is taking a calculated risk in pursuing the prepar~tory work for a pipeline, a risk which appears warranted in view of the moderate costs noted in the studies done, and the time-saving it will provide if even- tually there is justification for a final decision to go ahead. A year from now it is likely that it will be possible to make a more realistic estimate of the future production potential, but meanwhile the possibility of successful petroleum developments should not be allowed to change the policy prescription for the Peruvian economy. If large scale connnercial development occurs, this The contracts are all of the production-sharing type described in Chapter III. The precise split betwe~m PETROPERU' s share and the contractor I s varies somewhat, but the tendency is for PETROPERU to retain a slightly higher shgre tmder tho mn<>t: ...,,,,,.f3... t- ('f""t- ..... ,.~~ .. 1-..,.., "'.,., ".t.~ "'"'~, "'~,. OT'l.1'!~, 54 percent compared with .50-52 percent earlier. In early 1973 discus- sions were at an advanced stage about nine further such contracts.  - 91 - will certainly be most welcome and would give the government a freec;lom of maneuvre in the field of economic policy ,which does not now exist, but it will not make the fundamental structural problems of the economy disappear, or solve the pressing problems of the agricultural sector. General Assumptions for the Projection For projection purposes, developments up to 1976 will be underscored in some detail, while the period from 1977 on will only be treated on an "order-of-magnitude" basis. The general assumption underlying the balance of payments projection is that the real rate of GDP-growth will average 6 percent, which would be somewhat above the average since the 1967.:.68 crisis. This· assumption is predicated on the continuatio11 of sound economic management by the government and the avoidance of serious imbalances in the economy which would r~quire a deflationary stabilization policy. The earlier discussion about the need for demand management is particularly pertinent in this respect. The projection as set forth here is based on the assumption that the fishing sector will return to normal conditions by 1974, and that no further crisis will occur durii1g the period. This is clearly a key point, and developments up to the publication of this report cast considerable doubt on it. However, in the absence of more definite indications, it has not been thought possible to substitute any other assumption. In the short run, it also appears that the likely shortfalls of fishmeal export~ will be compensateJ by higher than expected prices for other exports (see attachment to Table 3.2 . of the Statistical Appendix). For the mining sector, it is assumed that there will be no major impact of strikes on the slow but consistent production in- crease from existing mines. The petro:1-eurn developments are expected to lead to some increased domestic production, possibly by selling some crude from test.wells in the Amazon area to Brazil, but more are likely from the conti- nental shelf off northern Peru, where a major strike was reported in 1972 and from where it should be easier to use the production. The mission has already stated why it would not be prudent at this time to count upon major petroleum production from the Amazon area in the projections, but in any case it is not likely that any significant impact could be made before 1977 by possible larger finds, as only limited quantities can be used without a pipeline to the coast. Finally, it should be noted that all projections in this report have been made without taking into account possible effects of 1973 monetary developments. Peru has decided to maintain the exchange rate with the dollar, which amounts to some de facto devaluation. It is impossible to foresee clearly what effects these changes will have in the short and long run on commodity prices, world market demand, directions of trade, and so forth, and therefore for the volume and prices of Peru's exports and.imports. Domest1c prices in Peru were projected in official plans to increase in 1973 and 1974 at a rate of 8.5 percent annually (the same as in 1972). There is a question as to whether such a rate of increase would not have adverse effects on the balance of payments in the absence of a 1'crawling peg" arrange- ment for the exchange rate. The government operates an incentive system for nontraditional exports and flexibility in this scheme may· help offset the  - 92 - effect of domestic cost and price increases for the products covered. This does not apply to the traditional exports, where profit margins may be squeezed, or to improts, for which the demand may become heavy. Current Account Projections Peru's merchandise exports are projected to grow over the 1973-76 period at an average annual rate of 9 percent in nominal terms, with about equal contributions from increases in volume and rising prices. Im estimation and projection for major commodity groups is shown in Table XXXIII. Projec- tions for individual commodities are given in Statis.tical Appendix Table 3. 2. Major fluctuations in the trend are expected to be caused by the depressed state of the fishmeal industry and its subsequent recuperation, and by produc- tion of the Cerro Verde copper mine and the copper refinery. The import of these will be felt fully by 1976. Table XXXIII: PROJECTED COMMODITY EXPORTS (In millions of U.S. dollars) Estimated Annual Growth Rate actual (in nominal terms) 1972 1973 1974 1975 1976 1973-1976 :• tlneral products 412.9 460.2 510.3 554.1 669.7 12.9 o.f which copper (188.6) (199. 6) (216.7) (236. 7) (295. 9) (11 .8) Fish products 288. 1 267.2 341.5 346.8 354.8 5.3 Agricultural products 160.2 175.3 173.6 171.4 169.7 1.5 Other 69.0 84.8 92.6 112.2 129.0 17. 0 Total 930. 2 987. 5 1,118.0 1 , 184. 5 1,323.2 9.2 Source: Statistical Appendix, Table 3.2 With marginal increases from existing copper mines and the addtiion of 30,000 tons per year from Cerro Verde, capacity production is expected to permit an export volume of 271,000 tons in 1976 compared with 209,000 tons • in 1972. An upward trend in prices is forecast for the projection period. In fact, the price of copper is expected to rise to 56 cents per pound in 1976 from an average of 49 cents in 1972. The effect of the price increase will be even larger as a result of changes in the distribution of exports between refined metal, blister, and concentrates. Thus the Cerro Verde project will produce refined metal directly, and the refinery now under construction in Ilo will be able to treat the full output from Toquepala (140,000 t.p.y.) which is currently shipped as blister.  - 93 - All price projections for connnodities used in this report are essentially attempts to foresee the trend for the future years. It is inevitable that there will be short-term fluctuations which will make the average price in an individual year depart from this trend, but the hope is that these variations will cancel out over a number of years. In view of the particular instability of connnodity markets currently and the impor- tance to Peru of copper exports, it is worth noting that every variation in the copper price by one cent per pound from the value used in the projection here will mean a change of about $5 million in export earnings in 1973 and $6 million in 1976. To appreciate the net effect on the .balance of payments, however, it is necessary also to take into account the effect of such varia- tion on profit remittances. In the short run, if such a variation happened only in one year, and if the change were not too large, one may assume that costs and tax rules do not change and that the effect will be mainly on com- pany profits. Under such assumption the net effect on the balance of payments·• may be about 60 percent of the gross change in export earnings. If the depart- ure· from the trend were more lasting however, one must assume that wage costs and/or taxes wil~ also be changed, and if profit remittances on the average have been on the order of 10 percent of gross sales in recent years, then. the proportion remaining in the country would be about 90 percent. Iron ore exports are expected to show some growth in volume, and, while most shipments are under long-term ·contracts calling for fixed prices, some price gain is also foreseen as a result of the decision by Marcona to expand the capacity of its pelletizing plant .. A contract for this has been signed with a Japanese group of ore importers, and the new capacity is ex- pected to become operative at the end of 1975. For zinc and lead no new nuning development is reported, and only a gradual growth in export volumes in line with past trends is projected. Some increases are also foreseen in the world market prices for both metals over the period. Among the projects for which the government is seeking external financing is a zinc refinery, and the completion of this should increase the unit value of zinc exports substantially, since Peruvian concentrates (both in the caqe of zinc and lead) are now heavily penalized for impurities. It has been assumed, how- ever, that this refinery will not be operational before the end of 1976. Silver exports, finally, are expected to benefit from rising world market price, which is also expected to elicit some additional Peruvian supply. In view of the unresolved questions concerning the future of the fishing sector, any projection for exports of fish products must be very tentative. It is assumed that there will be a substantially larger catch and production of fishmeal in 1973 than in 1972, and that a normal level will be reached again in 1974. 30/ Unlike 1972, however, there were no stocks available in 1973, and thus exports were ikely to decline somewhat in spite of the larger production; it was assumed that the export volume would reach Latest developments indicate that this appears to be a too optimistic assumption; see attachment to Table 3.2 of the Statistical Appendix.  - 94 - only 1.4 million lvff compared with 1.6 million in 1972, and the nonnal level of 1.8 million from 1974 on. World market prices have recently been increased becaupe of the lack of supply, but this will change as Peru begins to sell substantial quantities again. Existing contracts allow for renegotiations if circums~ances warrant; it appeared unlikely that the average f.o.b, price for 1973 would exceed $155 per ton. For the longer term, any substantial price increase would bring about increased substitution by other products. Thus the projection assumes an essentially stable level throughout the period. However, the price of fishmeal, used in livestock and poultry feed, will exceed its 1973 level if the boom in the world meat market is sustained. Export earnings of other fish products have been projected to in- crease from $50 million in 1972 to $70 million by 1976, as additional exports of canned and deep frozen fish for human consumption more than offset the anticipated effect of a decline in the price for fish oil. Agricultural ex- port volumes are likely to remain the same. Cotton prices are expected to continue their declining trend, while prices for coffee should reach a higher level after the expiration of the coffee agreement. The category of miscella~ neous other exports is expected to continue its increase along the past trend. Projected increases in imports are shown in Table XXXIV. A strong overall demand is foreseen for the period, as increased needs for capital goods as investment are stepped up to sustain the growth rate. In addition, 30 percent of the anticipated major mining investment, and 70 percent of the .investment in petroleum exploration by foreign contractors is expected to correspond to imports. Imports of raw materials and intermediate goods for industry and agriculture are projected to follow the trend of the recent years. Increased domestic petroleum production is expected to result in a considerably lower rate of increase in import value than observed in recent years (from $10 million in 1970 to $40 million in 1972). Finally is assumed that the government will continue to control imports of consumer goods tightly, and manage to limit the growth in volume to about 3 percent per year despite the anticipation of larger food import.  - 95 - Table XXXIV: PROJECTED MERCHANDISE IMPORTS, F~O.B. (In millions of U.S. dollars) Estimated 1973-76 1973~76 1969-72 actual nominal real real 1972 1973 1974 1975 1976 rate rate rate Consumer goods and food products /a 293.4 331 342 351 362 5.4 2.9 Intermediate goods and raw materials 288.3 320.2 358.7 482.0 450.6 11.8 9.3 9.3 Fuel and lubricants 40.0 46.0 53.0 61.0 70.0 15.0 12.5 18.5 Capital goods ib 210.5 251.0 280.4 313.4 350.1 13.6 11. 1 3.8 Imports for mining and petroleum development 66.5 93.0 93.0 91.0 Total f.o.b. 832.2 1,013.7 1,127.01,221.31,324.3 12.3 9.8 4. 1 /a Includes the statistical adjustment item, which has been projected to remain constant in real terms, i.e., to increase in value only by the assumed -inflation factor. £E.. Excluding major mining and petroleum development in the projection period. Source: For 1972 values, Table 1.'V; for 1.969-72 growth rates, data obtained from Central Reserve Bank; 1973-76 figures are mission projections, the main assumptions of which are outlined in the text. As a result of the projected export and import developments, the trade balance shifts from a surplus to a deficit. Although the defic~t re- mains moderate, this would constitute a departure from the historical trade surplus. The balance on services is not expected to improve and is likely to show rising deficits mainly on account of higher interest payments on public debt, and increasing profit remittances. following the growing mineral exports. Hence, the current account balance is expected to show substantial deficit, rising from $253 million in 1973 to $316 million in 1976 (see Sta- tistical Appendix, Table 3.5 for details). However, one should remember that in the period after 1977, a major improvement is expected as a result of new copper production ..  - 96 - Capital Requirements i' In addition to the current account deficit foreseen-~lome $1,150 million over the period 1973-76--amortization of the public ~xt/e{rnal debt will make substantial claims on the available external capit~l .) /. Amortization on existing official loans is thus expected to .amount to soin~ $'.6?0 million for the four years. Adding amortization on account of new ~6rrbwing during the period, and some miscellaneous outflows, the total risefto;: ~855 million; this compares with some $650 million during the past four y~ars~ :;: Total' gross external capital requirements will thus. amount to about $2,qQO ~i\llion for the period, rising from about $450 million in 1973 to $550' itL,11:ii,o'n by 1976. This represents a sharp increase over the past four years, v1cl1ich\ ~s explained first by the need to expand imports while exports will grow tn9re;s1owly, and second by the considerably larger amortization payments. Th~;_proJ.ected capital requirements are not significantly higher than those made for. 'a comparable period last year, however; the annual average for the two ye~rs in 1973-74 works out to $456 million in the present projection compared it::o $410 million in the last year's report. A plausible use of the possible ;qurces of finance would include a net private capital inflow of some $420 mill~b,n, disbursements from official project loans of about $1,340 million, non-proj'~ct assistance of about $100 million and, for the residual, a drawdown of about $145 million from reserves (see Table XXXV). '\  - 97 - Table XXXV: EXTER.i'l'AL CAPITAL REQUIREMENTS, 1973-76 (In millions of U.S. dollars) Estimated • Average actual Total annual 1972 1973 1974 1975 1976 1973-76 1973-76 Use of funds Current account deficit 101 253 263 317 318 1, 151 288 Resource gap ·7 · f4g ·142 181 157 - 629 157 Net factor payments 131 140 156 171 196 662 166 Net transfer payments -33 -35 :...35 -35 -35 -140 -35 Amortization of public debt /a 188 194 202 222 237 855 214 Total= Gross external capital- inflow 289 447 465 539 555 2,006 502 Source of funds Net private capital inflow 32 74 111 116 116 417 104 Gross public capital inflow30'1 370 331 345 397 1,443 361 From existing loans '301 296 161 59 79 535 134 From new project loans 24 120 286 378 808 202 Nonproject assistance • I 50 50 100 25 Utilization of reserves fll_ -44-..£ 3 23 78 42 146 37 Memorandum items Net public capital inflow 113 176 129 123 160 598 149 Net resource transfer on public account 65 122 65 49 70 306 77 /a Includes miscellaneous capital outflows of $26 million in 1972 and a total of $25 million for the 1973-76 period. /b Includes short-term capital. /c Includes SDR allocation, and errors and omissions. Source: Statistical Appendix, Table 3.5. I Net private capital inflow is projected t9 increase from $32 million in 1972, to $74 million in 1973 and $116 million by 1976. Direct investment during the period is foreseen mainly for the Cuaj one project, the Marcona expansion, and petroleum exploration activities. It is assumed that the  - 98 - financing for Cuajone and Marcona will be entirely in the form of reinvestment of profits and external financing arranged by the companies. In the case of the petroleum exploration, the contracts for the foreign companies specify minimum activities within certain periods, but with promising signs they are expected to proceed significantly faster, perhaps at an investment level of approximately $40 million per year. Allowing for disinvestment and purchase by the Government or Peruvian nationals of foreign companies of about $100 million for the period, the resulting net inflow for the four years would be about $420 million. This sum could be increased if some new joint ventures are undertaken in mining or industry during the period, but it could also be reduced if the government decides to take up participation in the ownership of any major foreign mining companies. In any case, substantial gross inflows of private capital is necessary to assure implementation of the planned invest- ment, and to finance the required imports, The mission estimates about $535 million can be drawn from exist- ing official loans (loans signed by the end of 1972) during the 1973-76 period, When factors such as the status of project preparation and the time required for negotiations with possible ·lenders is considered on the one hand, and the project executing capacity of the public sector and the availability of counter- part funds on the other, it is unreJlistic to assume that new project lending in the initial years could make a sufficient additional contribution to the required capital inflow to·obviate a significant drawdovm of reserves. While Peru enters the projection period with quite confortable level of reserves (net reserves at the end of 1972 were $389 million), and in principle could make use of them, it would hardly be prudent to rely extensively on this in the initial projection period when considerable uncertainty still surrounds the export earnings from the fishing sector. The projection therefore foresees nonproject borrowinf in 1973 and 1974 of the order of $50 million per year; as iscussed in Chapter VI, th~s level of nonproject external borrowing is also indicated from the standpoint\of public finance, i.e., to limit the public sector's need for domestic bo1~owing. Even so, the projected drawdown on reserves is considerable; by ;l276 remaining reserves would be equivalent only to about two months of import~ compared with over five months in 1972. The alternative to the projected magnitude of reserve utilization would be a higher level of nonproject b~rrowing. The overall level of possible exten1al borrowing for projects in the projection period has been set at commitments averaging some $400 million annually. · This is quite ambitious compared with the 1972 level of about $26.0 million, but might still be achieved, given sufficient effort in project preparation by Peruvian authorities. Taking into account the fact that the level of commitments will be lower in the early years, and allowing for real- istic disbursement rates (i.e., rates of project execution), the projection anticipates disbursements of some $810 million over the period (see Table XXXVI). The list of projects for external financing proposes commitments aggregating $1,593 million over the 1973-75 period. 31/ This should make it possible acutally to commit the $1,115 million projected above, allowing for a slippage of about one-third. 11_/ Excluding $340 million for the possible trans-Andean pipeline.  - 99 - Table XXXVI: ILLUSTRATIVE PROGRAM FOR .EXTEP,NAL BORROWING 1973-76 (In millions of U.S. dollars) Estimated Average actual Total annual 1972 1973 1974 1975 1976 1973-76 1973-76 Disburssements 289 370 331 345 397 1443 361 From existing loand /a 289 296 161 59 19 535 134 from new loans 74 170 286 378 908 227 (project loans) (24) (120) (286) . (378) (908) (202) (non-project assistance) (50) ( 50) ( -) ( - ) (100) ( 25) Commi trnen ts- 420 345 420 450 470 1685 421 Development agencies 155 155 220 290 290 955 239 Supplier's credits 108 140 150 160 180 630 157 Non-project assistance 157 50 50 100 25 External debt outstanding /b Disbursed only 1018 1178 1306 1439 1617 Including undisbursed 1487 1663 1901 2149 1402 /a Includes loans repayable in local currency. /b End of period. Refers to debt repayable in foreign currency only. Source: For 1972 data and disbursements from existing loans, lBRD debtor reporting system; other figures are mission projections. The list of projects for external financing to the Consultative Group assumes an average of 57.5 percent, including a¥erage local cost finan- cing equivalent to 11 percent of total project cost. If one were to assume that no such local cost financing is granted, the total volume of projects to be carried out with foreign financing in order to achieve the required capital inflow would have to increase by over 20 percent, and this is clearly unrealistic. The project volume that is implied assumes the project" list is already very large, and is likely to strain the project preparating and execu- ting capacity of the public sector agencies to the utmost. The alternative to some local cost· financing in the projects is therefore more of nonproject assistance than assumed in the projection--on terms not more onerous than the average for project loans.  - 100 - While the projection given here is clearly subject t~ many "normal" qualifications, the major ones stem from the uncertainties discussed earlier in this.chapter, viz., the problems of the fishing sector, the chances with regard to petroleum development, and the behavior of commodity prices. If ecological conditions do not return to normal rapidly enough, or if the reproduction rate of anchovy has been more seriously affected, it is not inconceivable that the shortfall in export earnings from fishmeal and fish oil could become so large as to exceed what can be cushioned by Peru's reserves. If this were to happen, there would clearly be a case for speedy nonproject assistance, and the fishing section should thus be followed carefully in case there are indications of such a development.32/ Of major importance to Peru's export earnings fr.om the petroleum sector, is that the results of explorations and test drillings may warrant the construction of a trans-i\ndean pipeline within a year or two. The cost of such an undertaking, and the speed with which construction can be expected to -proceed, means a very substantial impact on the balance of payments and capital requirements. It is possible that most of the $340 million which a pipeline is estimated to cost could be spentwithin the period. If suf- ficient reserves are in fact proven, it will" presumably not be difficult to arrange the external financing--most likely to be repaid with future deliv- eries of petroleum 33/. The debt service implications would in all probability not be a problem. No repayments would be required until there is petroleum to export and, as a whole, the project would automatically generate the foreign exchange required for the debt service. What is unclear, however, is to what extent such a large project would displace parts of the·"normal" program forecast in the projections; this would depend on how construction· would be arra.nged--with foreign contractors bringing in maximum of own staff and equipment, or with maximum local participation. In the latter case it would appear realistic to count on a considerable displacement of other projects now forecast during the projection period. 32/ Latest information indicates that it is indeed likely .that fishing results in 1973 and perhaps also 1974 will fall considerably short of what is assumed in the projection here. However, increase~ earnings from mineral exports appear to be sufficient to compensate for this, at least in 1973 (see attachment to Table 3.2 of the Statistical Appendix). 33/ A prelimary agreement to this effect has been reached in early 1973 between PETROPERU and the Japan Petroleum Development Corporation; the agreement is subject to final approval by both the Japanese and the Peruvian government.  - 101 - As already stated, the export and import projections in this report do not take into account possible effects of the recent currency readjustments on longer run world market prices for commodities. Prices in the past have changed very sharply from year to year, and thus the fact that recent develop- ments have brought about sharp price increases for several commodities does not by itself give an indication of a change in the trend.· Table XXVII pre- sents some evidence of how past and current prices compare with projected prices for Peru's major exports, not including fishmeal and iron ore. For fishmeal, the price is totally dependent on what happens to Peruvian exports, and for iron ore most of Peru's exports are covered by long-term contracts. Table MXVII: ACTUAL AND PROJECTED PRICES OF MAJOR EXPORT COMt:10DITIES 1970-72 1973 1976 Commodity Unit Jan-March average average projected Copper LME wirebar r./lb 53.9 58.1/a 56 .1 PERU, F.O.B. unit value i/lb 44.7 49.5 Zinc LHE good ordinary t/lb 14.8 1 9. 2 19. 2 PERU, F.O.B. unit value i/lb 6.9 12.6 Silver New York, Handy & Harm~n i/oz 166.7 218.7 240.0 PERU, F.O.B. unit value ,t./oz 150.0 222.5 Coffee Santos 4, spot New York ¢/lb 50.1 56.7/b 56.0 PERU, F.O.B. unit value Uqq 41.2 46.6 Sugar nworld" ISA daily price F.O.B. Caribbean port i/lb 5 .1.5 9.19/c 7.5 U.S. Preferential i/lb 7.66 8.85 PERU F.O.B. unit value '/,/qq 7.50 8.0 /a Prices have been. rising from month to month. Mid-April spot price was 71.7 ,}./lb. /b January 1973 only. /c January - February 1973 average. Source: Statistical Appendix, Table 3.2; commodity price reports of early 1973. In several cases the most recent prices are equal to or even above those projected for 1976, and thus substantially higher than the level of the past few years. Particularly so in the copper market, with LME wirebar prices in excess of 70t/lb. Should this be indicative of a new trend level, Peru would clearly stand to gain quite considerably in terms of foreign  - 102 - exchange earnings. However, it is definitely too early to infer that the above projection now overstates Peru's borrowing needs over the projection period. As set forth, it assumes a sharp reduction in the level of interna- tional reserves and any development that makes it possible to reduce this drawdown should be welcome, given the uncertainties surrounding the fishing sector. It is worth noting, that it would take a copper price that is 10 cents per pound above the projected throughout the period to offset completely the assumed utilization of reserves--and that only. if one assumes that the higher · export prices would not also be accompanied by higher import prices. The con- clusion must thus be that the primary effect on Peru's capital requirements for the 1973-76 period of more positive developments for prices will be to reduce the need for utilization of reserves or the need for nonproject assist- ance while the required commitments of project loans do not change. External Debt With the high level of commitments required to achieve a sufficient capital inflow over the 1973-76 period, public and publicly guaranteed debt repayable in foreign currency (including undisbursed) is projected to increase from $1,487 million at the end of 1972 to $2,402 million by the end of 1976. This represents a 61 percent increase as compared with a 24 percent experienced during the past four years. Under these circumstances the debt service pay- ments would rise from an estimated $201 million in 1972 to $304 million in 1976. This increase in debt service obligation is in large part a consequence of the fact that service to the debt contracted at the end of 1972 will account for $206 million in 1976. Despite the assumed substantial increase in lending by officiai agencies (see Table XX.,~VI), suppliers' credits will continue to play a major role over the period. Disbursing more quickly and having shorter maturities, they represent the major part of the debt service on newly con- tracted debt. Expressed in terms of export earnings the debt service burden will be about 19 percent over the period, a slight increase from the 1972 • figure. Looking beyond the projection .period, the corning into full produc- tion of Cuajone copper mine in 1977, with an annual output of about 130,000 Mr, would increase export earnings by some $120 million (this assumes exports of concentrates only), and have an immediate effect of reducing the require- ments of capital inflow, and of easing the burden which the debt service im- poses. This emphasizes the importance of assuring timely completion of this project and related arrangements. Furthermore, to avoid a repetition of the experience of the current period, there must follow with regular intervals new projects so that exports can continue to grow. The,government is aware of this, and negotiations are already underway with potential partners for several further mining projects. There are also advanced plans for new re- fineries which would increase the value-added pf exports and foreign exchange earnings to Peru. A rough projection beyond 1976 indicates that Peru's external position will remain stable, with debt service as a percentage of export earnings remaining at the 1972 level of approximately 1~ percent through the first half of the next decade. This projection assumes an extrapolation of  - 103 - trends from the 1973-76 period and the additional assumption that the mining sector will develop according to plans now considered. As an example of the possible effect of commodity price variations, it can be noted that a projection with the same basic assumptions, but with copper priced at 5 Ulb higher, re- sults in a cfebt service ratio of some 15 percent by 1983; in the same manner a ratio of 22 percent results if one assumes a price level 5i/lb lower. This is based on a continued growth trend of about a 6 percent real increase in GDP annually, and without .c ounting on any major petroleum exports. Should such materialize, ?r other exports--traditional or nontraditional--expand very rapidly, it would be possible to aim for a higher rate of growth without running into balance of payment problems. Conclusion While the projections indicate that the period through 1976 will pose problems for Peru in terms of its external balance and debt management, Fhese problems should not be insurmountable given reasonable external support. Since the Peruvian government has shown considerable flexibility in its economic management and willingness to take the necessary steps to meet prob- lems as they arise, it must be considered capable also of coping with those that lie ahead. To sustain over the next few years an adequate growth rate, and to make it possible for the government to continue its ambitious program of social transformation with economic development, fairly large amounts of external borrowing.will be needed. Lenders should also give consideration to the already high debt service burden during the first few years, and to the need to extend the grace periods, so that amortization does not begiri until the foreseen additional export earnings begin to accrue. On the side of Peru, further measures to increase domestic resource mobilization are indicated to supplement those already taken, as well as continuing efforts to secure external support for activities leading to a sustained strengthening of the balance of payments.  - 105 - STATISTICAL APPENDIX Table Number I, POPULATION AND LABOR MARKET STATISTICS 1.1 Population in Census Years 1~2 Regional Distribution of Population 1.3 Population of Major Urban Centers 1,4 Population Structure in 1970 1~5 Labor Force by Economic Sector 1,6 Number of Strikes, Workers Affected and Man-Hours Lost, 1968-72 II. NATIONAL ACCOUNTS STATISTICS 2,1 Gross Domestic Product by Industrial Origin at Constant 1970 Market Prices, 1968-72 2,2 Gross Domestic Product by Sectorial Origin, Real Growth Rates, 1960-72 2,3 Gross Domestic Product by Expenditure Category at Current Market Prices, 1968-72 2,4 Gross Domestic Product by Expenditure Category at Constant 1970 Market Prices, 1968-72 2,5 Implicit National Accounts Deflators, 1968-72 2,6 GDP, GNP, Savings and Investment, 1968-72 III, BALANCE OF PAYMENTS STATISTICS 3.1 Balance of Payments, 1968-72 3.2 Commodity Exports, 1968-72 and Projection 1973-76 3.3 Imports F,O.B, According to Use or Economic Destination, 1968-72 3.4 International Reserves of the Banking System, 1968-72 3.5 Balance of Payments, Projection 1973-76  - 106 - IV, EXTERNAL DEBT STATISTICS 4,1 External Debt Outstanding as of Decemb"er 31, 1971 4,2 External Debt Outstanding as of December 31, 1972 (Provisional) 4,3 Estimated Future Service Payments on External Public Debt Out- standing, including Undisbursed, as of December 31, 1972 (Pro- visional) 4,4 Average Terms of External Debt Outstanding, 1968-72 V, PUBLIC FINANCE STATISTICS 5,1 Central Government Cash Operations, 1968-72 5,2 Analysis of Central Government Summary Operations, 1968-72 5,3 Central Government Revenue, 1968-74 5,4 Central Government Revenue Stiucture, 1968-74 5.5 Functional Classification of Central Government Expenditure, 1968-74 5,6 Functional Structure of Central Government Expenditure, 1968-74 5,7 Cash Operations of Social Security Agencies, 1970-72 5,8 Consolidated Cash Operations of Public Enterprises, 1970-74 5,9a Principal Cash Accounts of Selected Public Enterprises, 1970 5,9b Principal Cash Accounts of Selected Public Enterprises, 1971 5,9c Principal Cash Accounts of Selected Public Enterprises, 1972 5,9d Principal Cash Accounts of Selected Public Enterprises, 1973 5,9e Principal Cash Accounts of Selected Public Enterprises, 1974 5,10 Central Government Budgetary Transfers to Public Sector Agencies, 1973-74 5,lla Biennial Plan, 1973-74, Public Investment, Agriculture 5,llb Biennial Plan, 1973-74, Public Investment, Fisheries 5,llc Biennial Plan, 1973-74, Public Investment, Industry and Tourism 5,lld Biennial Plan, 1973-74, Public Invest~,nt, Mining  - 107 - 5.lle Biennial Plan, 1973-74, Public Investment, Hydrocarbons· 5.llf Biennial Plan, 1973-74, Public Investment, Power 5.llg •Biennial Plan, 1973-74, Public Investment, Transport and· Communications 5.llh Biennial Plan, 1973-74, Public Investment, Housing and Urban Infrastructure 5.lli Biennial Plan, 1973-74, Public Investment, Health and- Sanitation 5,llk Biennial Plan, 1973-74, Public Investment, Education 5.lH Biennial Plan, 1973-74, Public Investment, Other Prqgrams 5,12 Biennial Plan, 1973-74, Public Investment, Summary VI. MONETARY STATISTICS 6,1 Monetary Developments, 1968-72 (December 31) 6,2 Summary Accounts of the Banking System, 1968-72 (December 31) 6,3 Summary Accounts of the Centr.al Reserve Bank, 1968-72 (December 31) 6,4 Summary Accounts of the Banco de la Nacion, 1968-72 (December 31) 6.5 Summary Accounts of the Specialized Banks, 1968-72 (December 31) 6.6 Summary Accounts of the Commercial and Savings Banks, 1968-72 (December 31) 6.7 Interest Rates and Commissions on Financial Intermediaries' Loans to the Public 6,8 Credit to Private Sector by Purpose, 1968 - June 1972 VII. AGRICULTURAL AND FISHING STATISTICS 7.1 Major Agricultural Products, 1960, 1965 and 1968-72 7.2 Areas Planted and Specific Yields, 1960, 1965 and 1968-71 7.3 Indexes of Areas Planted, Crop and Livestock Production, 1960, 1965 and 1968-72 • 7.4 Progress in Agrarian Reform, 1964-69 and 1969-72 7.5 Land Settlement by Type of Ownership (November 30, 1972) 7.6 Anchovy Catch, 1968-72  - 108 - VIII. INDUSTRIAL STATISTICS 8.1 Index of Manufacturing Production, 1970-72 8,2 Mineral Production, 1968-72 8,3 Electric Power: Capacity Install3d and Energy Generated by Department, 1971 8.4 Fishing and Fishmeal Industry, 1960, 1965 and 1968-72 XI, PRICE AND WAGE STATISTICS 9,1 Changes in Cost of Living Index for Major Cities, 1967-72 9,2 Cost of Living Index for Lima-Callao, 1967-72 9.3 Legal Minimum Salaries and Wages by Department at the End of 1972  vl09 Table No. I. POPULATION AND LAOOR MARKET STATISTICS 1.1 Population in Census Years 1.2 Regional Distribution of Population 1. 3 Population of Major Urban Centers 1.4 Population Structure in 1970 1.5 Labor Force by Economic Sector 1.6 Number of Strikes, Workers Affected and Man-Hours Lost, 1968-72  ..... ..... C) <l Table 1.1: PERU - POPULATION IN CENSUS YEARS Per,ul~tient t,housa.nd. Annu~"[ growth, -percent ~4~ . I~ ! !~72 I~40-ol 1901-7~ 1 Census population 6,208 9,907 13,568- 2.3 2.9 /2 Corrected total pupulation- ?,680 10,319 (14,456) 2.1 (3 .1) Population in urban areas (census figure) /3 2,197 4,698 8,087 3.7 5.1 Population in cities with over 20,000 inhabitants (census figure) 929 2,813 5,544 5.4 6.4 /4 Population in MetropGlitan Lima (census figure) 645 1,846 3,317 5.1 5.5 /1 Preliminary figure after manual tabulation. Final total may be 1-2% higher. 72 For 1940 and 1961 this is the official figure, which includes a correction for estimated underenumeration in the actual census. For 1972 this is the current official population estimate, which.._is not based on the census; rather it is projected on the asswnption of a constant annual growth rate of 3.1%. 13 The definition of "urban"has changed for each .census. In 1972 includes every population center with over 100 households living so that no house is more than 30 meters from its nearest neighbor. /4 Comprises the Province of Lima and the Constitutional Province of Callao. Source: Various publications by Oficina Nacional de Estadistica y Censos.  vlll Table 1.2: PERU - REGIONAL DISTRIBUTION OF POPULATION (percent) 1940 1961 1972 A. Planning regions - 1 Northam region 32 .1 31.3 30.1 Central region 27.0 23.7 21.5 Metropolitan Lima 10.4 18.6 24.5 Southam region 26.3 21.J 18.6 Eastern region 4.2 • 5.1 5.3 100.0 100.0 100.0 1940 1961 1970 B. Natural refiions Coast 28.7 39.5 43.4 Sierra 64.4 .51.7 47.0 Selva 6.9 8.8 9.6 100.0 100.0 100.0 /1 As defined by Instituto Nacional de Planificacion July 24, 1972. Sources: A: Data from Oficina Nacional de Estadistica y Censos B: Plan a mediano plazo 1971-75; Poblacion y Ocupacion  ..... Table 1.3: PERU - POPULATION OF MAJOR URBAN CENTERS ..... I',) <I 1940 PoEulationt thousand 19 1 1972 zr Aver~e annual ~rowth ratet Eercent 1940-bl 19 1-72 /2 /3 Lima-Callao 600 1,693 3,172 5.1 5.9 Arequipa 11 159 306 3.5 6.1 Trujillo 31 103 243 5~o 8.1 Chiclayo 32 96 191 5.4 6.5 Chimbote 4 60 160 13.4 9.3 Piura 28 72 127 4.6 5.3 Cuzco 41 • 80 121 3.3 3.8 Huancayo 27 64 116 4.2 5.6 Iquitos 32 58 112 2.9 6.2 Ica 21 49 74 4.1 3.8 All with 1961 population. over 20,000 1,096 2,814 5,288 4.6 5.9 /1 Estimates based on preliminary census data. 72 This refers to a somewhat di.fferent concept o.f "urban area" than the administrative unit o.f Metropolitan Lima used in tables 1.1 and 1.2. /3 Mission estimate, as sources do not give a figure which is exactly comparable in concept to the ones .for later years. Source: Different publications by Oficina Nacional. de Estadistica y Censos  vll3 Table 1.4: PERU - POPULATION STRUCTURE IN 1970 (percentage) ge Grou:e Men Women Urban Rural Total 0-4 16.3 1.5.0 14.9 16.3 1.5.6 .5-14 J0.4 31.9 27.7 34.4 31.2 1.5-24 17.5 17.1 20.8 14.1 17.3 2.5-64 32.3 32 . .5 33.6 31.2 32.4 65- 3.5 J.5 2.9 4.0 3.5 All 100 100 100 100 100 Relative 48.6 51.4 52.5 47.5 100 Source: Data from a 1970 sample survey by Servieio del Empleo y Recursos Humanos.  Table 1.5: PERU - LABOR FORCE BY ECONOMIC SECTOR, 1961 and 1971 .... .... +" <l 1 9 1 9 71 Estimated . Relative equivalent employment Sector Absolute, Relative, Absolute, Relative, employment; /1 ratio, thousands ;eercenta~es thousands Eercentases thousands ;eercent Agriculture 1,597 49.1 1,936 43.8 ) ) 1,352 69 Fishing 22 0.1 25 o.6 ) Mining 70 2.2 83 1.9 76 92 Manufacturing 429 13.2 648 14.7 550 85 (Factory scale) (155) (4.8) (225) (5.1) •• •• ( Cott.age industry) (274) (8.4) (423) (9.6) •• •• Construction 108 3.3 141 3.2 128 91 Commerce 291 8.9 h90 ll.l 389 79 Serrices 61.li 18.9 950 21.5 743 78 Hot specified 83 2.6 96 2.2 New entrants 36 1.1 46 1.0 Total 3,250 100.0 4,bl.5 100.0 3,238 73 /1 Adequately employed plth .full-time equivalent of underemployed. A person is defined as underemployed if he ei er eams less ·than the legal milwmDn wage (salary), or involuntarily worlcs less than 35 hours/week. The full-time · equivalent is computed by using-the share of minimum wage earned, or proportion of full-time worked. Source: Direccion General del JDnpleo: Situacion Ocupacional del Peru, 1971.  v11s Table 1.6: PERU - NUMBER OF STRIKES, WORKERS AFFECTED AND MAN-HOURS LOST, 1968-72 1968 1969 1970 1971 1972 Number of strikes 364 372 345 377 396 Numbers of workers affected, thousand 108 92 111 161 133 Man-hours lost, thousand 3,378 3,889 5,782 10,882 5,951 Most affected sector •• •• Mining Mining Industry Share of man-hours lost, percent •• •• 69 6o 66 source: Ministerio de Trabajo, Direccion General de Empleo. 116,;;, Table No~ II. NATIONAL ACCOUNTS STATISTICS 2.1 Gross Domestic Product by Industrial Origin at Constant 1970 Market Prices, 1968-72 2.2 Gross Domestic Product by Sectorial Origin, Real Growth Rates, 1960-72 2.3 Gross Domestic Product. by Expenditure Category at Current Market Prices, 1968-72 2.4 Gross Domestic Product by Expenditure Category at Constant 1970 Market Prices, 1968-72 2.5 Implicit National Accounts Deflators, 1968-72 2.6 GDP, GNP, Savings and Investment, 1968-72  Table 2.1-, pmu - GROSS OOMESTIC PRODUCT BY INOOSTRIAL ORIGIN AT CONSTANT 1970 MARKET PRICES, 1968-72 I Soles billion Stru.cturei Eercenta~es of total ,Fetimate ,Estimate 1968 1969 1970 1971 1972 1968 1969 1970 1971 1972 Primary activities 58.7 59.9 64.3 63.9 62.4· 27 .3 27 .3 27 .2 25.5 23.6 Agriculture 34.3 Jo.I ~ 39.1 39.1 16.0 Io.4 16.2 Kb u.B" Fishing 5.o 4.5 6.o 5.2 3.0 2.3 2.1 2.5 2.1 1.1 Mining 19.4 19.3 20.1 19.6 20.3 9.0 8.8 8.5 7.8 1.1 Secondary activities 53.0 54.3 6o.9 67.4 74.4 24.8 24.7 25.8 26.9 28.0 Manufacturing u:o ~ w.r 12.8 5'2:J ~ 20.1 19.7 20.4 20.9 21.1 Construction 10.0 11.1 15.1 18.4 4.7 5.o 5.4 6.o 6.9 Tertiary activities 102.7 105.2 lll.O 118.9 128.0 47.9 48.o 47.0 47.6 48.4 Electricity, gas and water 2.6 2.8 2.9 3,.1 3.4 1.2 1.3 1.2 1.3 1.3 Ownership of dwellings 10.2 10.5 10.9 11.4 11.9 4.8 4.8 4.6 4.5 4.5 Public adm. &t defense 17.4 17.8 18.5 19.4 20.9 8.1 8.1 7.8 7.8 1.9 Commerce 36.9 37.3 40.5 44.3 48.1 17.2 17.0 17.2 17.7 18.2 Other 35.6 36.8 38.2 40.7 43.7 16.6 16.8 16.2 16.3 i6.5 Gross domestic product 214.4 219.4 236.2 250.2 264.8 100.0 100.0 100.0 100.0 100.0 - Source : Secretariado Tecnico del Plan F.conomico de Corto Plazo. As a consequence of the roun4i-ng of the absolute nwnbers above, the ·two tables do not always match in exact detail. <I ..... ..... -....i  .... .... CX> <I Table 2.21 PERU - GROSS DOMESTIC PRODUCT BY SECTORIAL OBIGIN, REAL GROvlTH RATES, 1961-72 (Annual rates, percent) Aver~e Estimate 19~J=-1 1968 1969 1970 1971 12z2 Primary activities Agriculture 3.4 1.9 -5.o -:0:0 2.0 ~ 7.3 p - o.6 2.2 - - .2.3 Fishing 10.1 1.5 -9.0 31.9 -13.1 -4J.O Mining 5.2 -3.7 -0.2 4.1 - 2.8 3.6 Secondary activities 1.1 o.6 2.4 12.2 10.7 10.. 4 Manufacturing 73":b 2':o ~ ll.4 8.1 1.0 Construction 4.8 -12.5 10.5 1,.0 18.3 22.0 Tertiary activities 6.6 2.9 2.4 ,., 7.1 1.1 Electricity, gas & water 11.3 4-9 4.4 --;:o 7f.9 9":o Ownership of dwellings 3.1 3.1 3~1 3.0 4.5 4.6 Public adm. & defense 7.1 1.6 2.0 4.2 4.8 1.5 Connnerce 1.0 8.7 9.4 8.5 Other 6.8 3.1 3.4 4.0 6.5 7.5 Gross domestic product 5.8 2.3 7.6 5.9 5.9 = ==- ===-= -== m::::= = Source: a. 1969-1972 figures from Secretariado Tecnico del Plan Economico de Corto Plazo. Calculated with constant 1970 prices. b. 196o-1968 calculated with shift to 1970 prices from data supplied in 1963 prices by Banco Central de Rese:rva.  'Table 2.3 s PERU - GROSS DOMESTIC PRODUCT BY EXPENDITURE CATEGORY AT CURRENT MARKET PRICES, 1968-1972 Soies billion Structure 2 ;eercenta~es of total: Estimate Estimate 1968 1969 1970 1971 1972 1968 1969 1970 1971 1972 Consumption 156.5 I71.3 197.6 228.4 265.3 8'4.2 83.4 83.7 87.1 '88.2 Public/1 24.7 25.2 2a.s 32.8 36.5 13.3 12.3 12.1. 12.S 12.1 Private 131.8 146.1 169.1 195.6 228.8 10.9 71.1 71.6 74.6 76.1 Gross investment 25.8 21.9 28.8 32.3 35.4 13.9 13.6 12.2 12.3 n.a ·Fixed investment 24.1 2o.o zy'3 TI:2 1io.o 13.0 13.0 12.s 12.7 13.3 Public/2. (7.2) (9.2) (11.6) (13.1) (16.9) (3.9) (4.5) (4.9) (5.0) (5.6) Private (16.9) (17 .4) (17.9) (20.1) (23.1) (9~1) {8e5) (7.6) (7.7) (7.7) Stock changes 1.7 1.3 -0.1 -0.• 9 -4.6 .9 o.6 -0.3 -0.4 -1.5 Exports 39.3 41.4 48.2 42.8 44.4 21.2 20.2 20.4 16.3 14.8 Imports 35.8 35.3 38.4 41.3 44.3 19.3 17.2 16.3 15.7 14.8 Gross domestic product 185.8 205.3 236.2 262.2 .300.8 100.0 100.0 100.0 100.0 100.0 /1 Comprises central government, local government, social securities, decentraJ.ized institutions and local welfare institutions. /2 Includes state enterprises ( empresas publicas) . Source: Secretariado Tecnico del Plan Economico de Corto Plazo. .... <I .... c.o  .... N 0 <l Table 2.4: PERU - GROSS DOMESTIC PRODUCT BY EXPmDITURE CATEGORY AT CONSTANT 1970 MARKEi' PRICES, 1968-72 Soles billion Annual growth rates, ;eercent Estimate E;timate 1968 1969 ,1970 1971 ·1972 ,1969 1970 1971 1212 ConsUlllption 174.2 180.1 197.6 214.0 226.4 3.4 9.7 8.3 6.7 Public /1 21.1 26.9 . 28.5 30.9 31.8 -2.fr ~ 1r.o 2.9 Private 146.5 153.2 169.1 183.1 196.6 4.6 10.3 8.3 7.4 Gross investment Fixed inve_stment. Public L! . 27 .6 25. 7 ( 7.8) 28.4 21.1 ( 9.4) 28.8 31.0 29.5 31.9 (11.6) (12.8) 31.9 35.9 (15.3) --- 2.9 5.6 (20.7) 1.4 B.9 7.6 8.1 3.0 12.8 (23.8) (9.6) (20.3) Private (17.9) (17. 7) (17 .9) (19.1) (20.6) (-1.0) ( :L.O) ( 7.1) ( 8.o) Stock changes 1.9 1.3 -0.1 -0.9 -4.0 • • • • Exports 49.0 46.7 48.2 45.9 47.1 -4. 7 • 3.2 -4.8 2.5 ·Imports 36.4 35. 8 38.4 40.7 42.6 -1.7 7.1 T.2 43· Gross domestic product 214.4 219.4 236.2 250.2 264.8 2.3 - 1.6 5.9 5.9 L1_ For coverage, see notes to Table 2.3. Source : Secretariado Tecnico del Plan Econ6mico de Corto Plazo. As a consequence of the rounding of the absolute numbers above, the two tables do ·not always match in exact detail.  Table 2.5; PERU - IMPLICIT NATIONAL ACCOUNTS DEF.LATORS, 1968-72 Base ~ar 1970 Annual change, percent E:ltimate Estimate 1968 1969 1970 1971 1972 1969 1970 1971 1972 Consumption 89.8 95.1 100 106.7 U6.l 5.9 5.2 6.7 8.8 Public 89.1 93.7 100 106.1 n4.6 p b7{ b.l '8:o Private 89.9 . 95.3 100 106.8 ll6.4 6.o 4.9 6.8 9.0 Gross investment 93.5 98.2 100 104.1 110.8 5.o 1.8 4.1 6.4 Fixed investment 94.o 98.3 loo 104.1 lll.2 7i':o 1.7. 4-1 b.9° Public (93.0) (98.3) (100) (102.7) • (110.4) (5.7) (1. 7) ( 2. 7) (7-5) Private (94-4) (98.3) (100) (105.0) (111.9) (4.1) (1. 7) (5.o) (6.6) ·stock changes 87.2 94.7 1.00 1.04.1. ll4.8 8.6 5.6 4.1 10.3 Exports 80.2 88. 7 100 93.1 94.3 10.6 12.7 '-6.9 1.3 Imports 98.3 98.l> "100 101.3 1.04.o o.J 1..4 1.3 2.1· Gross domestic product 86.6 93.5 1.00 104.8 ll3.6 8.o 7.0 4.8 8.4 =-=== Source: Calculated from Tables 2.3 and 2.4. <I ..... I\J .....  ..... N N <] Table 2,6: PERU - GDP, GNP, SAVINGS AND INVESTMENT, 1968-72 (In billions of soles) Estimate Estimate 1968 1969 1970 191"I. 1972 1968 1969 1970 1971 1972 A, At current erices B. At Constant 1970 erices GDP at market erices 185.8 205.3 236.2 262.2 300.8 214,4 219.4 236.2 250.2 264.8 + Net factor income from abroad L1 - 4.6 - 5.0 - 3,5 - 2.0 - 3,1 - 4.5 - 5.0 - 3.5 :-z.o - 2.0 GNP at market erices 181.2 200.3 232.7 260.2 297.7 209.9 214.4 232.7 248.2 . 261. 9 + Net transfer income from abroad 1.6 ~ 3.6 1. 7 1.4 1.6 l,l1 3.6 1.7 ~ ,.. Consumption 156.5 171.3 197.6 228.4 265.3 174.2 180.1 197.6 214.0 228.4 Gross national savings /l 26.3 30.4 38.7 33.5 -1M 37.3 35.7 38.7 35.9 34.9 + Net factor payments abroad- 476 5.0 7:5" 2.0 3.1 43 5.0 "7:5 ~ °29 + Net transfer payments abroad - 1.6 - 1.4 - 3.6 .,. l.7 - l.4 - l.6 - 1.4 - 3.6 - 1.7 - 1.4 Gross domestic savin~s ~ - 34.0 38.6 33.8 35.5 40,2 39.3 38.6 36.2 36.4 - Resource balance 3.5 6.1 9.8 1.5 0.1 12.6 10.9 9.8 5.2 4.5 (Exports of goods and NFS) (39.3) (41.4) (48. 2) (42.8) (44.4) (49. O) (46.7) (48.2) (45.9) (47 .1) (Imports of goods and NFS) (35.8) (35. 3) (38.4) (41. 3) (44.3) (36.4) (35.8) (38.4) (40.7) (42.6) Gross domestic investment 25.8 27.9 35.4 28.4 28.8 31.0 31.9 ~ 32.3 27.6 Ll Peruvian· national accounts methodology does not recognize government interest payments on external debt as a factor payment; consequently the amounts given here for net factor income do not correspond directly to the net investment income figures from the balance of payments. Source: Tables 2.1, 2,3 and Banco Central de Reserva.  17123 Table No. III. BALANCE OF PAYMENTS STATISTICS 3.1 Balance of Payments, 1968-72 3.2 Commodity Exports, 1968-72 and Projection 1973-76 3.3 Imports FOB According to Use or Economic Destination, 1968-72 3.4 International Reserves of the Banking System, 1968-72 3.5 Balance of Payments, Projection 1973-76  .... 1'l + <l Table 3.1: PERU - BALANCE OF PAYMENTS, 1968-72 (In millions of us dollars) 1968 1969 1970 1971 1972 (est.) Credit Debit Balance Credit Debit Balance Credit Debit Balance Credit Debit Balance Credit De.bit Balance A) CURRENT ACCOUNT 1041.0 1063.6 - 22.7 1090.7 ~ 1.:.L 1ill.:.l ill!d 201.5 1132.8 1159.6 ~ 26.8 1176.3 1277 .3 -101.0 I.Goods and Services 1) Merchandise 1003. 3. 850.2 1062.7 ~ - 59.4 177.3 1058.0 879.5 1087,8 63T.s -:!9.8 220.7 1238.9 1034,3 1119.4 699.6 119.5 334. 7 1091.6 889.4 1157 .5 763.9 - 65.9 125.5 1140.8 930.2 1275.l 83i:2 -134.3 98.0 2) Freight and Insurance 18.3 79.8 - 61.5 20.4 78.3 -57 .9 23.4 83.8 - 60.4 24.6 78.2 - 53.6 26.2 87.3 - 61.·1 3) Investment Income 4.4 153.4 -149.0 8.4 193.l ,184.7 15. l 147.8 -132.7 10.6 115.3 -104.7 14.4 145.5 -131.1 a) Interest on public debt (45.6) (50.5) (49.1) (61.0) (48.3) b) Other (107. 8) (132.6) ( 98.7) (54. 3) (97. 2) 4) Travel 33.9 38.1 - 4.2 39,8 44.0 - 4.2 52.l 60.1 - 8.0 55.3 58.8 - 3.5 62.3 57.7 4.6 5) Other Transportation 35.8 40.0 - 4.2 42.5 41.2 1.3 45.4 47.5 - 2.1 40.3 56.4 - 16.l 33.l 66.4 - 33.3 6) Government NL R 10.0 23.3 - 13.3 9.4 17.5 - 8.1 l0.6 25.6 - 15.0 11.4 25.5 - 14.1 12.6 25.5 - 12.9 7) Other Services 50.7 55.2 - 4.5 58.0 54.9 3.1 58,0 55.0 3.0 60.0 59.4 0.6 62.0 60.5 1.5 II. Transfers ...:JJ....2. ....Jl.....2 ___li& --1.W. -1d 31.5 ~ ----1....!I. ....l!LJl. _il..1. ~ J.2.J. ~ _2.2, ...ll...l B) CAPITAL ACCOUNT 259.7 175.6 84.1 llld 123.3 109,B 269.9 288.5 -~ 296.8 256.3 40.5 386.3 241.3 145.0 I. Private Long Term 29,4 39.4 - 10.0 _llA_ 22.4 7.0 49.7 127.0 - 77.3 66.4 57.1 9.3 85.4 53.3 32.1 1) Direct Investment 20.4 - 20.4 6.1 "TI 27.6 97.2 - 69.6 46.6 29.6 17.0 63.3 24.4 38.9 2) Loans to Private Sector 29.4 19.0 10.4 23.3 22.4 .9 22.l 29.8 - 7.7 19.8 27.5 - 7.7 22.1 28.9 - 6.8 II. Public Long Term 230.3 136.2 94.1 20).7 100.9 102.B 220,2 161,5 58.7 230.4 199.2 31.2 300.9 188.0 112.9 1) Loans to Central Government 89.l 33.9 55.2 60.4 42.9 17,5 69,0 70.8 - t:a 97.1 90.5 6.6 141.6 80.6 61.0 2) Loans to Public Sector 76.3 61.7 14.6 88.8 42.8 46.0 56.0 31.6 24.4 78 , 0 33.8 44.2 71.0 35.4 35.6 3) Loans to Private Sector with Government guarantee 12.2 4) 1967-68 Refinancing 50.4 9.8 0.1 2.4 50.3 7,4 47.1 4.6 2.1 2.8 45.0 4,2 -1.9 4.3 18.2 - 0.1 - 16. 3 6.1 4~2 13.6 1.9 -13.6 7.3 5.5 15.0 1.8 -15.0 5) 1969-70 Refinancing 25.5 2.3 23.2 23.3 14.9 8.4 2.0 25.2 -23.2 6) 1972 Refinancing 67.5 67.5 7) Other Loans to Public Sector 2.3 30.7 ~ 28.4 8.5 - 8.5 63.6 34.3 29.3 25.9 42.2 -16.3 11.5 26.3 -14.8 C) SDR ALLOCATION 14.3 14.3 14.2 14.2 14.l 14.1 D) ERRORS AND OMISSIONS (incl. short term capital) -.50,9 69.B ~ -....!!2..i -)6.3 E) CHANGE IN RESERVES ( - increase) -~ -!11.7 -257.l 61.6 -42.1 Source: Banco Central de Reserva IBRD external debt reporting system  Page l of 2 vl25 Table 3.2: PERU - COMMJDITY .EXPORTS, 1968-72 AND PROJroTION 1973-76 (In millions of US dollars) Projected 1968 1969 1970 1971 1972 I9'73 I9'7Zi I9'75 I9'75 (est.) Copper Volume ( 1000 mt) 205.2 200.8 213.1 195.2 209.0 216.2 220.0 240.0 271.0 Unit Value (,!/lb) 46.o 59.9 52.5 40.7 40.9 41.8 44.7 44.7 49.5 Value 208.l 265.2 246.7 175.2 188.6 199.6 216.7 236.7 295.9 Iron Ore ~olume (Ml.n. LT) 8.95 9.19 9.89 8.87 08 9._ 10.20 10.20 10,20 12.20 Unit Value ($/LT) 7.64 7.44 7,29 6.84 1.53 7.18 7.18 8.10 8L87 Value 68-.4 68.1.i ..1b.L 60.6 . 68.5 73,li 73.4 ~ 108.2 Lead ---Volume ( 1000 mt) 156.0 156.2 162.1 146,3 162.8 172,7 178.8 185;0 191.4 Unit Value (,t/lb) 8 .39 10.65 9,89 a·.2a 9.05 9,69 10.57 10.51 10.19 Value ..1!h2.... ~ 35~3 26:7 32,5 36.9 41~7 42.9 43.0 Zinc -Volume ( 1000 mt) 309.3 310.4 334.1 344.1 367.4 382.1 401.6 422.0 431.1 Unit Value (_c/lb) 5.20 5.85 6~"61 6.32 7.76 9.2 10.7 10.6 12.6 Value 35;5 40.0 48,7 48.6 62.8 9~.e 95.0 99.0 119.7 Silver --"vorume ( 1000 kg) 1.036 1,081 l,178 1,082 1,280 1,300 1,.350 1, .390 1, 41.io Unit Value- ( ,t/tr.oz) 206.3 168.g 161.L.r, 141.3 145,0 173.6 192.5 208.1 222 .5 _ Value 68.5 ~ 6z.3. 49.1 6o .5 72,5 83.5 92.9 102.9 F.i.shmeal Volume ( 1000 mt) 2,083 1,656 J,A7) 1,750 l,6oo_ :i.~4_00 1,890 1,.800 l,.8.00 Unit Value ($/mt) . 1 122.1 99 · 162.0 152.8 J.48.5 155.0 155.o 155 .o .151.• 8 Value 206.4· ~ 303.5 267 .,4 237.6 217,0 279,0 279,o 284~0 Other F.i.sh Products Volume ( 1000 mt) 340_ 16o 218 ?95 327 226 270 -27S 280 Unit Value ($/mt) 79.7 109.J.i 198:2 204.5 151.i,5 222 .0 231.0 250 •O 253-o Value 27,1 17-5 43.2 6o.3 50.5 50.2 62.5 67.8 70.8 Cotton --vai'ume ( 1000 qq) 1,520 1,935 1,456 1,104 14050 1,000 1,000 1,000 l,OQO Unit Value($/qq) 37,9 34.6 35,8 40.5 2.4 39.6 35.1 31.8 32.2 Value 57,7 66.9 52.1 44.7 41.iS 39,6 35·.1 31.8 32.2 Sugar Volume ( 1000 mt) 459 267 403 429 Uo l.l5o 450 450 440 Unit Value ($/qq} 5~90 6.80 6.9..3 7.42 8.14 T~9> a.o 8.o 8.o Value 5&.8 39.5 6o.1 69.1 72.6 78.9 79.4 79.4 77.6 Coffee ~lume ( 1000 mt) 47.4 43.2 44.0 42.5 44.~ 7 50.0 51.0 52.0 .53.0 Unit Value ($/qq) j2~18 33.22 45.76 3e;54 38.90 48.o 48.0 48.o 46.6 Value 33.2 31.2 L":3.8 35,9 ,37 .8 52.0 53,9 22!2. 54.4 Wool --Volume ( 1 000 mt} 7.73 6.65 2.11 1.56 3.20 2.8 3,0 3.0 3.0 Unit Value ($/mt) 1.22 1.28 1.56 1.51 1.65 1.10 1.72 1·~74 l.76 Value 9,4 8.5 3.3 ~ 5.3 4.8 g_ 5.2 5.5 Other Exports (value only) 48,2 46.9 62.6 50.1 69.0 84.8 92.6 112.2 129.0 -== ·-=-== ~ Total MerchandiseJ FOB 850,2 879,5 889.4 =-= 930,2 ===-= 987.5 -==-=-= ™ µe4.5 ™ Source: Banco Central de Reserva and mission projections. Small discrepancies between volumes, unit values and values are due to rounding. 126v Page 2 of 2 Table 3.2: PERU - COMM:>DITY EXPORTS, ATTACHMENT By the time of printing of this report in early May 1973, the most recent information indicates considerable shortfalls in fishmeal production and exports from the above projection, However, taking the likely better mineral prices into account explicitly, latest official Peruvian projections, as set out below, indicate virtually unchanged total expo.r t earnings for 1973-74. The projected capital requirements would thus not be changed, and therefore it has not been considered necessary to delay publication of the report by introducing these changes -in the text. PROJECTED COMMODITY EXPORTS AS OF MAY 3, 1973 (In millions of US dollars) 1973 1974 Copper 240 255 .Iron Ore 79 81 Lead 44 46 Zinc 99 106 Si.l ver 78 82 Fishmeal 178 200 Other Fish Products 24 33 Cotton 49 51 Sugar 78 78 Coffee 46 45 Wool 5 5 Other Exports 97 116 Total Merchandise, FOB 1,017 1,098 Source: Banco Central de Reserva and Institute Nacional de Planificaci6n.  v.127 Table 3.3: PERU - IMPORTS FOB ACCORDING TO USE OR ECONOMIC DESTINATION, 1968-72 (Thousands of us dollars at current prices) 1968 1969 1970 1971 1972 A. Consumer Goods 83,255 75,334 73,543 80,960 85,163 1. Nondurables 66,752 60,508 59,920 64,246 68,282 2. Durables 16,503 14,826 13,623 16,714 16,881 B. Fuels & Lubricants 19,379 15,733 10,137 20,643 40,000 c. Raw Materials & Intermediate Inputs 249,774 240,514 247,151 332,563 354,035 1. For agriculture 12,807 9,388 9,870 10,993 12,092 2. For industry 236,967 231,126 237,281 321,570 341,943 D. Capital Goods 172,081 170,229 186,821 189,038 210,534 1. Construction materials 11,471 10,537 10,826 15,218 13,846 2. For agriculture , 6,404 4,678 6,905 11,916 10,000 3. For industry 113,596 ✓ 109,543 v 113,345 v" 136,918 ✓ 155,456 ,/ 4. Transport equipment 40,610 45,471 55,745 24,986 31,322 E. Miscellaneous 1,640 920 782 3,178 2,701 Total Registered 526.129 502.730 518,434 626,382 692,433 Unregistered & Non-Monetary Gold 146,800 156,045 181,207 137,525 139,802 Total Merchandise Imports !FOB} 672,929 658,775 699,641 763,907 832,235 -16 ./6 . ,t • 17 Source: Banco Central de Reserva  Table 3.4: PERU - INTERNATIONAL RESERVES OF THE BANKING SYSTEM, 1968-72 (In millions of U.S. dollars; at end of year) /1 'Estimate 1968 1969 1970 1971 1972 Gross reserves 225.4 267.0 495.7 470.0 520.7 /2 Net reserves 109.9 151.6 408.7 347.1 389.2 f1_ The change :i.n net reserves between 1970 and 1971 include US$ 13.0 million as an effect of the currency realignments of December 1971. The Peruvian source shows the revaluation effect in 1972 instead. Gross reserves in 1971 are a mission estimate as the exact effect of the currency changes on liabilities were not known. /2 These figures for net international reserves differ quite substantially from the ones included in International Financial Statistics (IFS). The main reason is that IFS only reports holdings of the Central Reserve Bank, and that other banks - now primarily Banco de la Nacion, which operates the draft foreign exchange market - also have substantial foreign exchange holdings. In Tables 6.3 and 6.4 this does not appear clearly, as Banco de la Nacion early in 1972 sold about US$ 125 million to the Central Reserve Bank; however, this sum is not reported in the IFS as part of the latter bank's foreign exchange holdings. Source: Table 6.2  Table 3.5: PERU - BALANCE OF PAYMENTS, PROJECTION 1973-76 (In millions of us dollars) 1972 1973 12Z!t 197:i 1976 Credit Debit Balance Credit Deb.it Balance Credit Debit Balance Credit Debit Balance Credit Debit Bal!DS:ill· ~ 1277,3 -101.0 1238.7 1491.8 -liZ.,.8._ .li5..3...B.. .l6il2...1. I. CURBENT ACCOUNT - ll3...l. ill2..4. WtL1 1.16.U -.Jll..L 1918.2 -318.0 A. Goods and Services 1140.8 1275.1 -lli...J.. 12.lll-1. .1A89.Ji -ZB!lJ. ~ l§.!&...l_ -.l2LL .lilY 1lli...9 -illd ~ ~ ..3~ 1) Merchandise 2) Freight & Insurance 930.2 26.2 832.2 87.3 98.0 - 61.1 987.5 30.3 1013.7 101.4 - 26.2 - 71.1. 1118.0 36.4 1127.0 112.7 - 9.0 - 76.3 1184.5 40.9 1221.5 122.1 - 37.0 - 81.2 1323.2 46.0 1324.3 - 1.1 132.4 - 86.4 3) Investment Income 14.4 145.5 -131.1 13.4 153.5 -140.l 13.8 169.4 -155.6 14.0 184.6 170.6 14.5 210.3 ..195.8 a) Interest on public debt ( 48.3) ( 53.5) ( 64:4) ( 74.6) ( 90.3) b) Other ( 97.2) (100.0) (105.0) (110.0) (120.0) 4) Travel 62 3 67.7 4.6 62.5 60.6 1.9 63.7 62.1 1.5 64.4 63.7 0.7 65.0 65.2 0.2 5) Other Transportation 6) Government 33.l 18.6 66.4 25.5 - 3,3.3 - 12.9 35.3 12.7 69.3 26.3 - 34.0 - 13.6 37.1 12.8 72.6 26.4 - 35.5 - 13.6 39.0 13.0 75.0 27.0 - 36.0 - 14.0 41.0 13.5 78.0 28.0 - - 37.0 14.5 7) Other Services. 62.0 60.5 1.5 60.0 65.0 - 5.0 60.6 70.0 - 9.4 61.0 75.0 - 14.0 62.0 80.0 -18.0 B. Transfers ~ Ll. ~ 37.0 !.!!. 35.0 37.0 2.0 35.0 37.0 b.Q. 35.0 37.0 k.Q. ~ H. CAPITAL AC~ 386.3 Z!tl...J. ID..Q. 468.4 .llJi&Q. 250.4 ~ ~ .2!tl!.,_Q ~ .2!u..Z. .2.l2...L i1Lll. 261,0 ~ A. B. Private L!!!!B Term Public L!!!!,11 Term 1) ExistinJ?: loans 85.4 300.9 289.4 ~ :11~ 32.1 112.9 127.7 98.6 369.8 296.3 24.0 194.0 169.0 74.6 175.8 127.3 135.0 331.3 161.6 24.0 202,3 182.3 111.0 129.0 - 20.7 140.0 ~ 58.6 rlH 173 .7 -ill-4 -115.1 . ~ 18.S ~ 151.8 w - 133.3 2) New project loans 23.5 23.5 119.7 119.7 258.2 i~ Other New non project loans 11.5 26.3 - 14.8 50.0 25.0 - 25.0 50.0 50.0 ?.0.0 - 20.0 50.0 286.2 28.0 20·.0 - 20.0 • 378.5 ~a:cr _·3M:~ HI. ERRORS AND OMISSIONS --1...l!.. IV. CHANGE IN RESERVES -lt.Ll... _1...1. ~ ..B!.:.Q. 42.0 Source: Mission projections ... <l N> lO 13ov Table No. IV. EXTERNAL DEBT STATISTICS 4.1 External Debt Outstanding as of December 31, 1971 4.2 External Debt Outstanding as of December 31, 1972 (Provisional) 4.3 Estimated Future Service Payments on External Public Debt Outstanding, Including Undisbursed, as of December 31, 1972 (Provisional) 4.4 Average Terms of External Debt Outstanding, 1968-71  vl31 Table 4.1: PERU - EXTBENAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31, 1971 DEBT PAYABLE IN FOREIGN CURRENCY ( In thousands of U.S. dollarB) Page 1 DEBT OUTSTANDING DECEMBER 31, 1971 CREDITOR CCUNTRY UNDIS- TYPE OF CREDITOR DISBURSED BURSED TOTAL AUSTRIA 906 906 BELGIUM 1,968 1,968 CA.NADA 10,450 10,4.50 FINLAND 22,441 22,441 FRANCE 12,.508 12,.508 GERMANY (FED.REP.OF) 40,839 40,839 ISRAEL 186 186 ITALY 14.5,879 145,879 JAPAN 33,841 .529 34,370 NETHERLANDS 111 ill NORWAY 1,996 7,996 SPAIN 17,401 17,401 SWITZERLAND 512 357 869 UNITED KINGDOM 3,015 3,015 USA 23,922 29, 75_r:_; 53,691 YUGOSLAVIA 55,282 55,282 SUPPLIERS 313,979 93,939 407,918 CANADA 15,367 15,367 FRANCE 1,083 1,083 ITALY 678 678 · JAPAN 279 279 NETHERLANDS 1,063 1,063 UNITED KINGDOM 3,301 3,301 USA 82,524 23,500 106,024 PRIVATE BANKS 104,295 23,500 127,795 UNITED KINGDOM 3,270 3,270 USA 13,405 13,405 PUBLICLY ISSUED BONDS 16,675 16,675 SPAIN 7,959 738 8,697 USA 8,029 23,644 31,673 VENEZUEIA 3,300 3,300 OTHER PRIVATE FINANCIAL INST. 19,288 24,382 43,670 IBRD 129,268 46,720 17.5,988 IDB 24,928 3,826 28,754 LOANS FROM INTL. ORGANIZATIONS 154,196 50,546 204,742  Table 4.1: PERU - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER Jl, 1971 DEBT PAYABLE IN FOREIGN CURRENCY ( In thousands of ·u.s. dollars) Page 2 DEBT OUTSTANDING DECEMBER 31, 1971 CREDITOR COUNTRY UNDIS- TYPE OF .CREDITOR DISBURSED BURSED TOTAL ARGENTINA 5,006 5,b06 BELGIUM 16,779 16,779 CANADA 9,933 3,046 12,979 CZECHOSLAVKIA 6,050 6,050 DENMARK 3,278 304 3,582 FRANCE 16,452 1,283 17,735 GERMANY (FED.REP.OF) 77,096 6,206 83,302 HUNGARY 10,400 10,400 ITALY 2,277 2,277 NETHERLANDS l,ll.O 1,110 NEW ZEALAND 9,393 9.,393 UNITED KINGDOM 1,814 2.,822 4,636 USA 88,755 36.,594 125,349 LOANS FROM GOVERNMENTS 230,783 67.,815 298,598 MULTIPLE LENDERS 83,734 55,751 139;485 UNCLASSIFIED BJ, 734 55,751 139,485 TOTAL EXTERNAL PUBLIC DEBT 922,950 315,933 1,238,883 NOTE: . DEBT WITH A MAffiRITY OF OVER ONE YEAR. EXCLUDES IMF NET DRAWINGS OF SDR 34. MILLION. ECONOMIC AND SOCIAL DATA DIVISION ECONOMIC ANALYSIB & PROJECTIONS DEPARTMENT MARCH 9, 1973  vl33 PROVISION.AL Table 4.2: PmU - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DIDFl-fBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRmCY (In thousands of U.S. dollars) Page 1 DEBT OUTSTANDING DECEMBER 31, 1972 CREDITOR COUNTRY UNDLS- TYJ>E OF CREDI'IOR DISBURSED BURSID TOT.AL ARGDlTmA 125 125 AUSTRIA 478 478 BELGIUM l,749 1,11.i.9 CANADA 9,405 9,405 FINLAND 18,818 18,818 FRANCE ·11,258 11,258 GERMANY (FED.REP.OF) 25.,658 1.,490 · 27,148 ITALY 142.,283 142.,283 JAPAN 36.,972 34,337 71,309 NOHNAY 1.,773 6.,172 1,945 SPAIN 13,732 13,732 SWITZERLAND 524 524 UNITED KINGDOM 2.,356 2,356 U.S.A. 28.,920 3S,665 ,585 64- YUGOSLAVIA . 8.,293 46,989 55,282 SUPPLIERS 302.,345 124,653 426,998 CANADA 21.,959 2.,800 24,159 FRANCE 6,714 6,714 GERMANY (FED.REP.OF) 15,515 15.,515 IT.AU 6,226 6.,226 JAPAN 217 217 LUXEMBOURG 20,000 10.,000 30,000 NETHmLANDS 971 971 StfITZERLAND 6,365 6,385 UNITED KINGDOM 10.,525 72.,845 83.,370 U.S.A. 89,406 89,406 MULTIPLE LENDERS 36,000 36.,000 PRIVATE BANKS 177,918 121.,645 299,563 UNITED KINGDOM 2.,955 2.,955 U.S.A. 10.,401 10.,401 PUBLICLY ISSUED BONDS 13,356 13,356 SPAIN 8,275 8,275 U.S.A. 30.,030 881 30:,911 VENEZUELA 2.,200 2.,200 OTHER PRIVATE FINANCIAL INST. 40,505 881 41,385 IBRD l.40.,008 28.,303 168,311 IDB 25,880 158 26.,038 LOANS FROM INTL. ORGANIZATIONS 165.,888 28.,461 194,349  13lty- PROVISIONAL Table 4.2: PERU - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF D:IDEMBER .31., 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In thousands of U.S. dollars) Page 2 DEBT OUTSTANDING DECEMBER 31, 1972 CREDITOR COUNTRY UNDIS- TYPE OF CREil![TOR DISBURSED BURSED TOTAL BELGIUM 11.,756 11.,756 CANADA 10.,571 21,259 31.,830 CZECHOSLVAKIA 4.,972 8.,273 13.,245 DENMARK 3,463 3,463 FINLAND 6,098 6,098 FRANCE 15.,649 15.,649 GERMANY (FED.REP.OF) 66,722 4,344 73.,066 HUNGARY 2.,045 25.,253 27,298 ITALY· 2,215 2.,215 JAPAN 9.,474 47,669 57,143 NETHERLANDS 3,190 3,591 6.,781 NEW ZEALAND 9,393 9,393 SPAIN 1.,164 515 1.,679 UNITED KINGDOM 3.,121 1,563 4,684 AID 6,5.,238 49.,640 114,878 EXIMB.ANK 23,794 8.,000 31,794 U.S.A. 89.,031 57.,640 .146.,671 LOANS FROM GOVERNMENTS 234,765 176,206 410.,971 MULTIPLE LENDERS 83,,674 16.,705 100,379 UNCLASSIFIED 83,674 16,705 100.,379 TOTAL EXTERNAL PUBLIC DEBT 1,018,450 468.,550 1.,487.,001 NOTE: DEBT WITH A MATURITY OF OVER ONE YEAR. EXCLUDF.S IMF NET DRAWING OF SDR 61.5 MILLION EQUIVALENT TO 66.8 MILLIONS OF U.S. DOLLARS, AND ARGENTINA LOANS FROM GOVERNMENT OF $,5.006 FOR WHICH REPAYMENTS TERMS ARE NOT AVAILABLE. EXJONOMIC AND SOCIAL DATA DIVISION EXJONOMIC ANALYSIS & PROJECTIONS DEPARTMENT FEBRUARY 8., 1973  PROVISIONAL P.age 1 of 29 Table 4.3: PERU - EsrIMATED FUTURE SERVICE PAYMENTS ON EXI'ERNAL PUBLIC DEBT OUTsrANDING, INCLUDING UNDISBURSED, AS OF DEC»IBER 31, .1972 DEBT REPAY.ABLE IN FOREIGN CURRENCY (In millions of US dollars) TOTAL DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING or PERIOD .CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• Y~AR ONLY UNDISBURSED • MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (3) (4) (5) (6) (7) (8) 1965 261,458 591,7.76 138,487 164,810 38,771 15,301:1 ~4,079 349 1966 363,070 691,aiu 344,657 222,685 69,316 211110 901426 •ss1378 1967 535,2_19 9121004 1611(151 1661t173 66,219 31166'1 9718t18 •ti,596 1968 6341432 . 11oou1t1110 214,007 2151444 103,162 421872 Ut10l4 •8,839 1969 7431765 111021646 1021036 193,964 f9,5H 47,457 1361996 497 1970 8!>5,138 1,11511:140 194,185 139,395 123,384 461029 1691413 •31269 1971 870,146 1,183,372 2U31326 1861518 1511931 571396 2u9132Y 41322 1972 9221950 l123910tl .9 4071654 . 2551443 154141137 45.11034 1991971 •s,oos - 1973 1974 1975 1,0ltl,450 1,104,9tl7 1,0641030 l.11487,001 1,31(11136 11135,836 - - 255,401 141,344 41h 337 168,t165 lb2,301 173,726 531425 Stl,888 56,634 222,290 2411189 230,360 - 1976 1977 9361641 803,349 . 9621111 610,286 - 161533 6,935 1!>1,825 145,280 54,656 45,IH9 206,481 1Y1'099 • - . '19 7 ti 1979 1 CJ8o 664,444 554,427 453,2'17 664,446 554,429 - • - . - - 110,016 101,130 38, 111 33,173 Utl, 127 134,303 - - 1961 3b61464 453,299 386,486 - - . 66,814 54,949 2(11069 24, u,s u,oos 9418t1l 7'1,144 • 191i2 1Yi:13 3.H,535 202"678 331,5.37 282,680 - • - 48,856 44,864 14,561 ~6,861 59,425 . . 19!14 1965 237,813 1.,.ti,597 237,815 198,599 - - 3,;,, 215 29,401 10,563 8,20'! 49,798 37,606 19t16 1987 198n 1<>9,1416 150,7!16 1.34,239 169,196 150,788 134,240 . . - . 18,410 16,546 14,687 6166S 5,974 5,20J 25,275 22,522 21Jl091 • - .... 1989 119,]52 119,353 - . 13,608 4,41J8 11h105 . • <] 1990 · 1991 105,744 lj/1,856 105,745 91,657 · - 13,666 10.670 3, t54·2 3,206 17,730 141076 0 w 01 NOTE: DEBT WI'lH A MATUlllTY OF OV~ ONE YEAR. INCLUDF.S SERVICE ON ALL DEBT LISTED ON TABLE 4 •2  PROVISIONAL 'Page 2 of 29 PERU _ EsrIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT ... . Table 4o3: (A) OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 0) <1 DEBT REPAYABLE IN FOREIGN CURRENCY • (In millions of US dollars) SUPPLIERS DEBT OUT.STANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERlOD CANCEL• L.ATIONS, DISBURSED INCLUDING COMMl·T• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL · ME'NTS ( 1) (2) (3) (4) (5) (6) (7) Cl> 1965 96,560 190,628 ,.0,265 49,360 13.,329 S,151 181480 . •731 1966 13.211583 216,833 219,412 87,938 16·, 1S8 ij1W95 l71153 61 1967 202,363 418,148 601993 57,147 31,273 131503 44,776 ·2,926 1968 227,331 4441942 9,8.82 651065 46,686 181654 65,342 · •139 1 "61i 2451631 407,997 81437 83,577 44,9CS4 14,825 5918()9 5,740 1971) ?.90,265 377,190 14,752 47,078 481303 14,77U 63,073 •1 1971 2691038 343,638 115,586 60,964 42,275 17,tHS3 601158 •91031 1972 31 l, 979 407,918 66,936 3.6,223 471857- 14,174 62,032 • 72,755 .• 1973 302,345 4~61998 47,355 57.1224- 151531 1974 292'475 369,773 • 551261 57,387 141566 711952 • 1975 2901350 ' 3121.367 • llh869 491795 14,947 641742 • 197 6 2551424 2621592 • 61133 471309 18,448 65,756 • 1977 2141248 2151283 • 1,035 46.,704 16,085 62,789 • 1978 168,580 1681560 • • 35,516 14,318 49.,836 • 1979 1331062. 1331062 • • 321249 131736 451985 • 19~0 100,613 1001813 • • 2a.,206 121754 40,960 • • 19tH 1962 198j 72,607 491722 32,164 7216U7 491722 32.,184 - • •· • • • • • 221665 171537 14,525 101994 10,703 61026 31800 1,212 33,589 231563 18,325 12,267 • • . 1964 171660 171660 • 1965 1986 61666 .• - 611!,66 - • • • • 61666 • - 308 61974 . • ~ • 1987 1988 - - • • • - • - • • - . • • • • • • • 1989 1990 1991 - - • • • • • • • • - • • • • • • •  PROVISIONAL Page 3 of 29 Table 4o3: PERU _ ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, UNCLUDING UNDISBURSED, .A.S OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US ·dollars) PRIVATE BANKS DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNIN' er PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (3) (4) (5) (6) (7) (8) 1965. .31941 43,957 15,513 481513 71933 11634 911567 1966 44,522 51.,536 55,130 59.,760 36,411 1,799 38,210 --12 1967 67,7.99 70,.165 57,556 5214-04 16.,879 41992 21,871 • 1968 103,324 110,H62 69., ·1 01 51,052 28,816 8,107 361923 •22 1969 125,559 151'731 6,262 24,449 61485 121202 181687 •S,352 1970 143,687 146,156 2,054 2,920 21,623 9,832 3111455 •819 1971 125,301 125,768 24,950 1,450 2,2.,846 111300 341l1t6 •77 1972 104,295 127,795 196,169 98,024 24,401 8,272 321673 - 197J 1974 1975 177,916 255,696 2J5,504 299,56J ' 276·, 027 238,109 - • • 101.,314 17,726 21606 23,536 37,918 48,170 15,169 211018 18,695 3811704 ~81937 66,86• - • 1976 1977 197d H.19, 940 139,526 b4.,862 189,940 139,526 • • • - • • 50,412 54,106 15,045 10,625 651457 641731 • ~ • 1Y79 49.,473 64,662 49,473 .. • . • 351389 33,370 6,244 3,234 41,633 36,604 - 1980 1961 16,103 9,300 16,103 "'' 300 • - • 6,804 2,359 855 524 i'.11658 2,883 - • -" 1982 1983 1984 6,940 4,581 2,268, 6,940 4,561 2,i66 • • • - - 2,359 2,313 2,267 382 240 102 21741 21553 2.J369 - <l ·• .... w  PROVISIONAL Page 4 of 29 Table 4o3: PmU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTmNAL PUBLIC DEBT .... w OUTSTANDING, INCLUDING UNDISBURSED., AS OF DECEMBER 31., 1972 OJ <] DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) PUBLICLY ISSUED BONDS DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATlONS, DISBURSED INCLUDING COMMIT• DISBURSE• ·SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( l) (2) (3) (4) (5) (6) ( 7> • (8) 1965 41,240 41,240 • - - - 2,342 1'272 3,614 •l,098 1966 1967 37,800 34.,115 .37,aoo 34,115 - • - - 2,437 2,517 1'178 1'073 3,61-- 5 3,590 •l,248 •1,640 1966 1969 29,958 26.,376 29,958 261378 .• - - - 2,218 2,302 960 832 3,178 3,134 ·1,362 •2,535 1970 . 1971 21,541 17,563 21,541 17.,563 - - 2,425 2,551 710 588 3,135 3,.139 ·1,553 1,663 1Y72 16,675 161'675 - - - - 3,.320 476 3,.795 - • 1973 1974 13,355 9,935 13,355 9,935 - - - - 3,.420 3,523 375 272 3,.795 3.,795 • 1975 1976 1977 6.,412 2,782 11'596 61"412 2,782 1'596 - - - • 3,630 1,187 366 16S 68 45 3,.795 1'255 411 • . • • • 1976 1979 1,230 853 • 11'230 853 - • • - • 377 307 34 2) 411 llO - • 1980 1981 546 243 - 546 - 243 - - • 303 - 243 14 . / 5 317 248 - • 1962 - - - • • . / / 1983 198-4 - - • - - - - • • • • • • - - • - • • - • 1985 1966 - - • - - - • - - - - • - - .• • 1987 1968 - - - - - - - - - - - - • - • - 1980, 1990 1 ~ j .l - - - - - - • - - • - • • - - -  PROVISION.AL Page 5 of 29 Table 4o3: PERU - F.&rIMATED FUTURE SERVICE PAYMENTS. ON EXTERNAL PUBLIC DEBT \ '. OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY \ /' \ (In millions of US dollars) J •{ ; PRIV~TELY PLACED BONDg/-- --~ • DEBT OUTSTANDING TRANSACTIONSZRING PERIOD BEGINNING or PERIOD COMMIT• ·J DISBURSE• CANCEL• LATIDNS, ADJUST• DISBURSED INCLUDING SERVICE PAYMENTS YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS (1) (2) (3) (4) (5) C6) (7) (8) 1966 1967 12,soo • - 12,soo 12,soo • 12,soo - • - 96~ - 969 • - - 1960 196~ 12-500 10,634 12,500 10,834 • • - • .• 1,666 2, so· o 940 840 2,606 3,340 • - • 1970 1971 1972 6#334 ,.., 166 • 8,334 4,168 . - ·- • • • 4,166 4,168 • 653 323 • lh819 '+,491 • • .. <] .... w U)  PROVISIONAL Page 6 of 29 .... .;:- Table 4.3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT 0 oursTANDJNG, INCLUDJNG UNDISBURSED., AS OF DECEMBER 31, 1972 <l DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) OTtiER PRIVATE FINANCIAL INST, DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING or PERIOD CANCEL• LATlONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDlSBURSED MENTS . MENTS PRINCIPAL INTEREST TOTAL MENTS C1) (2) (3) (4) (5) (6) (7> (8) 1965 6,907 37,383 1,200 1#810 5.,555 496 6.,054 1 196b 3,159 33,026 11,548 1,462 134 269 403 •29,379 1967 4.,406 15,061 61037 61739 2,002 407 2,409 •54 1968 1969 1970 Y,169 10,636 14,069 19,042 201447 17,772 7,053 10,31@ - 7., 315 S,908 th351 4,160 2,675 2,1~5 46~ 890 1,043 4.1625 3~565 31198 •11488 • •275 1971 19,990 251660 211000 21266 2.,990 977 31961 • 1972 19,286 431670 11 302 - 241803 l,566 1,1!>2 4,738 - • 1973 1~74 40,505 34,962 41'386 34,962 - - 881 - - 6,424 61663 i , 156 936 7,Stl0 7.,599 • • 1975 1976 1977 26,2~9 24,036 20,603 28,299 241036 201603 • • - . • 4,263 3.,433 2.,577 666 497 391 4,931 3,930 2,968 • • 1978 1979 16,026 15,446 181026 15,448 • • .• • 21577 21577 354 317 2,931 21894 • • • • 1980 1961 1962 12'871 10,294 7,717 12,871 10 .. 294 7,717 • • - - 2.,577 2.,577 2.,577 280 243 206 2#857 21e20 2,783 • • 198.3 5,140 5,140 • • 2,577 169 2.,747 • • • • 1984 1985 2'563 1,895 21563 11895 - - - .. 668 668 132 96 800 764 • • 1966 1987 1,227 559 11227 559 - 668 559 59 15 72'7 574 •  PROVISIONAL Page 7 of 29 Table 4o3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING UNDISBURSED$ AS OF DECE1'1BER 31, 1972 DEBT REPAYABLE IN FOREIGN .CURRENCY (In millions of US dollars) LOANS rRoM INTL• ORGANIZATIONS IBRD DEBT OUTSTANDING TRANSACTIONS DURING PERIOD. BEGINNING or PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• .YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (3) (4) (5) (6) (7) (8) •1965 73.,238 97.,432 59.,000 171935 41700 41272 81972 3"655 1966 66.,341 155.,367 191100 181427 416!H 51096 91747 •31656 1967 1968 196;; 1001250 115.,466 117.,205 1661160 1781001 1671553 11.,500 - - 20,740 71519 111781 5.,522 s11e1 6,634 61046 61&60 71463 11"568 121641 141097 •t57 •41661 1 1970 1971 1221353 124.,631 160.,1J20 1631252 30,000 - 91946 11- 901 7.,667 6,809 1.,14a e,010 141815 14,819 •1 •455 1 972 . 129,268...,. 175.,968 - 18,417 7,677 8,395 161072 • - 197J 1974 140.,008 142,417 168,311 1591959 - • - 10,761 91000 6,352 8,821 8,253 8,266 161605 l 710tH - - 1975 1976 142.,596 141,822 151" l 36 141i822 - - tt.-542 - • 9,316 91512 5.,353 8.,1.387 17,669 171899 • - 1977 1978 197Y 132,310 122,593 112.,341 132,310 122159) 1121341 - - - - 9,717 10,252 911433 7•854 7,30~ 6.1737 17,571 11,557 16,170 • • 1980 1961 102,~06 941314 102•906 94,314 • - - - • - e., 594 7,154 . 6,22u 5,763 1411822 12,917 • • • 1962 19H3 67 # 160 7\h5ts9 87,160 79,589 - - • . 7.,511 e~u23 . 5.,335 41882 12,906 12.1905 - • 1984 1~85 71,566 b:h064 71,566 63,064 • - - • 8,502 8,726 4.,399 3~887 121901 1211613 - 54.,330 54,338 - • 3,401 10,291 1986 6,8~0 • •<J ., .... • 1CJ87 1988 47.,446 '+1,108 47,448 41'106 - - - • 61340 6,725 2,999 2,616 9,339 9.,341 - • .i=- .... 19HY 1990 1991 3413cH 2tl.,625 22.,.590 3'"' 383 28• 62.5 22,590 - - - • s,758 6,035 3,220 2,226 1,87l t-,540 7,984 7,908 4,760 - -  PROVISIONAL Page 8 of 29 ,_. Table 4o3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT .i:- OUTSTANDJNG, INCLUDING UNDISBURSED., AS OF DECEMBER 31, 1972 l\l <l • DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS rROM INTL• ORGANIZATIONS IDS DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LAT IONS,. DlSttURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS (1) (2) (3) ( 4-) (5) (6) (7) (8) 1965 6,466 U,635 e,ooo 4,124 323 4lS4 807 1 1966 10,268 19,313 41039 3,590 9tH 721 1,706 2 1967 12,873 22,367 1,981 3,928 1,040 665 1,905 •1,197 • 3,251 1968 1969 1970 1~u760 11,.200 US,601 22• 111 25,.550 23,627 6,500 9,.290 - 3,.324 2,547 11805 1,.929 2,091 1,008 1,285 1,254 2,613 3,214 3,345 •1,2so • -2 1971 19,0S~ 30,824 148 7,990 2,163 1,603 3,766 •55 1972 24,928 - 2s,etso. 28,754 - - 3,666 2,716 1,606 41322 - - 1973 19 7 4 231071 26,038 23,071 - - 158 - . 2,967 3,284 1,734 1,sso 4,102 41834 - - 1975 1~76 19,.7&7 16,868 19,787 16,868 - • • - 2,919 :?.,:Ho 11344 1,166 41263 31376 - .• 1977 1978 141658 12,,448 141658 12,448 - - - - 2,210 J.,495 11016 680 3,228 2,375 - - 1979 1980 10,953 9,457 10,953 9,457 - - - - 1,495 1,495 775 669 2,210 2,164 • - 1981 1li82 71962 61249 7,962 6,249 - - - ... 1,713 1,245 550 445 2,263 1,690 • • 1963 1984 5,004 J,759 5,004 3,759 • - • ... 1#245 1,245 355 264 1,600 1,s10 - - .· 1'985 1986 2,s1J 1,761 2, i:H 3 1,761 - - .• 752 752 lti2 124 934 876 • 1987 19118 1,009 316 1,009 316 - • 692 316 65 1l 758 329 • •  PROVISIONAL Page 9 of 29 Table 4.3: PERU - ESTIMATED FUTURE .SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31~ 1972 DEBT REPAYABLE IN FOREIGN CURB.ENCY (In millions of US dollars) LOANS FROM INTL1 ORGANIZATIONS DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING OF PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• D-ISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS (1) (2) (3) (4) (5) (6) (7) (8) 1965 79,704 1091067 67,000 22,059 51023 41756 9,779 3,656 1966 9b,609 174,700 231139 221017 5,638 51817 111455 ·3,654 1967 113,123 186,547 191481 241666 6,562 6,911 131473 •111354 1968 1969 1970 131'228 134,411 140,954 2001112 193,109 184,547 61500 39~290 - 101770 151105 121493 71586 8,563 9,758 7,868 8,748 6,402 151454 17,311 161160 ·5,917 1 •3 1971 143,686 214,076 146 19,891 8,972 9,613 16,585 •s10 1972 1~4,196 204,742 - - 221085 10,393 101001 201394 - • 1973 1974 165,888 165,486 1941349 183,030 - - 10,919 9,000 111319 12,105 -9,988 9,616 21,307 211921 • 1975 1976 1621363 158,690 170,925 1581'690 - - 81542 - 12,235 111722 9,698 9,553 21,932 21,275 - • - 1977 1978 146,968 1351041 146,968 1351041 - - • - - 11,927 U,747 8,871 81185 20,798 19,932 - - 1979 1980 123,294 112,365 123,294 112,365 - - - 10,928 10,089 7,512 61696 18,440 16,987 - - 1981 1982 102,276 1;3,409 102'276 93,409 - - • • 8,867 8,816' 6,313 5,780, 15,180 14,597 - - 1983 1984 64,593 151325 84,593 751325 - - • - - 9,268 9,747 5,237 4i663 14,505 14,410 - - 1985 1986 1987 65,577 56,099 413,457 65,577 56,099 48,457 - • • - - • 9,478 7,642 7,032 4,069 3,525 3,064 13,547 11,167 10,097 - ..... <l +" - - 1988 ~1'424 411424 7,041 216.?Y 9,670 • w • 1989 1990 1991 34,363 28,625 22'590 34,363 28,625 22,590 - • - • 5,758 61035 3,220 2,226 1,873 1,540' 7,984 7,908 4,760 - -  PROVISIONAL Page 10 of 29 .... -l:' Table 4o3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS · ON EXTERNAL PUBLIC DEBT -l:' <] OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS ARGENTINA DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (l) (4) (5) (6) (7) (8) 1965 6,241 6,241 - - - . - - - • - - • 1966 . 1967 6,241 6, ?,4·1 6•241 6•241 - - - • - - - - - • - - - 196b 1969 6•241 6,241 6•241 6•241 - - - • • - - - • 1970 1971 6•241 61257 6•241 6,257 - - • • - - • ·1,251 16 1972 5,006 5,006 - • - - - •5,006  PROVISIONAL Page 11 of 29 Table 4.3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS BELGIUM DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DI SBUR.SE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (3) (4) (5) (6) (7) (8) 1965 1966 - 11,105 - - 11,105 - - - ·• • • - 1967 196b 11,105 11,105 10,866 11,105 11,105 12,935 2,049 - - . • 644 644 644 644 - ·219 1969 • 1970 12,935 19,654 6,719 3,192 - - 2,049 6,719 1, 3\2 1,4~4 1,312 1,454 - - 1971 1 'h 654 il,353 22,846 21,353 3,192 - 1,493 6,493 1,696 1,314 3, 18·9 7,807 1,919 1972 16,779 16,779 - - - - 5,023 1,169 6,192 - - 1973 1974 1975 11'756 0,020 l.11246 11,756 6,020 1.,24b - - - - 5,736 4,774 1'246 783 332 112 6,51~ s,101 1,358 - - <J .... .i:- <n  PROVISIONAL Page 12 of 29 PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT .... Table 4.3: + en oursrANDING., INCLUDING UNDISBURSED., AS OF DECEMBER 31, 1972 <I DEBT REPAYABLE DJ FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS CANADA DEBT OUTSTAND.ING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS C1) (2) (3) (4) (5) (6) (7) (8) 1960 1969 - - - 500 500 2,582 37 - - - - 6 6 - - - 494 193 687 763 1970 1971 37 10,6S1 3,082 14,949 11,570 - 10,412 1"254 2,017 900 2,917 47 1972 9,933 12,979 21,011 - 2"858 2,220 591 2,611 - - 1973 1974 10,571 14,033 31,830 29,209 - - 6,083 11,057 21620 2,620 671 947 3,291 3,568 - - 1975 1976 22,470 23,885 26,589 23,666 - - 4,118 - - 2,703 2,765 1,568 1,660 4,271 .:+,446 - - 1977 197tj 21,099 ld,314 21,100 18,315 - - - - 2,765 2,799 1,455 1,249 4,240 4,048 - - 1979 1960 15,515 12"717 15,516 12,718 1 o, 119 - - - - 2,799 2,599 1,044 838 . 3,642 3,437 - - 1981 1982 10,116 7,659 7,860 - - - - 2,259 2,120 660 502 2,919 2,623 - - 1983 1984 5,738 3,618 5,739 3,619 - - - - 2,120 2,120 350 197 2,470 2,317 - - 1985 1986 1,498 431 1,499 4.32 - - - - 1,067 13 44 s 1,111 19 - - 1987 1988 417 404 418 405 - - - - 13 13 5 5 18 18 • - 1989 1990 1991 3 'i 1 3 7 ts 364 392 379 365 - - - - 13 13 13 s 5 5 18 18 18 - -  PROVISIONAL Page 13 0£ 29 Table 4.3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON E:xTERNAL P1)BLIC DEBT OUTsrANDING., INCLUDING UNDISBURSED., AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS CZECHOSLOVAKIA DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDlSBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (3) ( 4) · (5) (6) (1) (8) 1971 - - 6,050 - - - - • 1~72 - 6,050 7,195 - 4,972 - - - - - 1973 1974 4,972 11,143 13,245 12,869 - - 6,527 1,746 - 356 1.,023 35j 471 709 1.,494 - 1975 1976 11.,667 10,259 11,867 10,259 - - - 1.,607 1,607 616' 2,221 - - 1977 1978 6,652 7,076 6#652 - - - 1,514 701 564 2#308 2"156 - - 197~ 1960 5,643 4,.347 7,078 5,643 4,347 - - - .. 1,435 1,296 469 372 1,904 1"669 - - 1981 3.,050 3.,050 - - - - 1"296 1,296 262 1.,s,e 1962 1963 1,754 1,169 1,754 1,169 - - - - 565 585 191 113 72 1,467 697 - • - 1964 585 585 585 31 656 615 - <] ..... .i:- -..J  PROVISIONAL Page 14 of 29 ..... ~ Table 4.3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON E:xTERNAL PUBLIC DEBT ?> OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 "-l DEBT REPAYABLE IN FOREIGN CURREN CY (In millions of US dollars) LOANS rROM GOVERNMENTS DENMARK DEBT OUTSTANDING TRANSAClIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS C1) (2) (3) (4) (5) (6) (7) (8) 1967 - - - 3,620 - - - - - - - - - - ·267 1968 1969 - 3,333 3,333 - - 1,369 - - - - - - - 1'J70 1971 111369 311049 3,332 3,332 - 111680 - - - - 250 1972 311278 3,562 - - 304 . 119 - . • 119 - .- 197 J 1974 311463 311224 311463 3Jt224 - - - - 239 239 - 239 239 - 1975 1976 2"985 2,746 2,985 2,746 - - - - 239 239 - - 239 239 - - 1977 1978 2'507 2,269 2,507 2"269 - - - . 239 239 - - 239 239 - - 1979 19th) 2,030 1"79i 2,030 1,, 791 - - - - 239 239 - - 239 239 - - 1961 198~ 1"552 1,313 1,552 1,313 - - - - 239 239 - - 239 239 • • 1983 1984 1,075 636 1,075 836 597 • • • • 239 239 239 - - 239 239 239 • - 1 'J 85 1966 1967 597 358 119 356 119 - • - - 239 119 • - 239 11'9 • •  PROVISIONAL Page 15 of 29 Table 4.3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON E:xTERNAL PUBLIC DEBT OUTSTANDING., INCLUDING UNDISBURSED., AS OF DECEMBER Jl, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS FINLAND DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATlONS, DISBURSED INCLUDING COMM IT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS C1) (2) (3) (4) (5) (6) (7) (8) 1~72 - - - 6,098 - - - - - - - • - - 1973 1974 6,098 6,098 6,098 - - 6,098 - - - - 122 122 - - 1975 1976 6,098 6,098 6,098 6109b - - - • - 122 122 122 122 - • 1977 197b 61098 51854 61098 5,854 - - - - 244 244 121 116 365 360 - - 1 i, 7 <, 1980 5,610 51366 51610 51366 - - - - 244 244 111 10C> 355 350 - - 1981 1962 51122 41876 51122 41878 - - - - 244 244 101 96 345 340 - 1qa3 19 ti4 41634 4,391 4,634 41391 ·• - - 244 244 91 87 335 331 • - - 1985 1966 41147 3,903 41147 3,903 - • • - 244 244 62 77 326 321 - - 1967 1988 3,659 3,415 31659 31,us - - • - 244 244 72 67 316 311 - - <I .... 1989 1990 1991 3., 1 71 2'927 2'663 3,171 21927 21683 • - - • • 244 244 244 62 57 52 306 301 296 - - + IJ)  PROVISIONAL Page 16 of 29 Table 4o3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERN.AL PUBLIC DEBT ..... u, 0 OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 <I DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS FRANCE DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERlOp CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS Cl) (2) Cl) (4) (5) (6) (7) Ce> . 1966 - 4,709 676 - - - • • - 1969 4,709" - - 3,583 676 76 76 ·525 1970 1971 4,184 6,895 4,164 17,309 13,121 - 4,710 7, 321♦ 992 372 1,007 372 i,999 1,418 4 1972 16,452 17,735 - - 1,283 2,086 1,351 3,436 -• 1973 1'JJ74 15,649 12'216 15,649 12,.216 - • • . - 3,434 5,116 1,277 1,025 4,711 6,141 - - _ 1975 1976 7,100 2'381 7,100 2,381 • - 4,719 2,381 639 214 5,356 2,595 -  PROVISIONAL Page 17 of 29 Table 4.J: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING lJNDlISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAY.ABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS GERMANY CFED1REP10F> DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING OF PERIOD CANCEL• LATI0NS., DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UN0ISBURSE0 MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS C1 ) (2) (3) (4) (5) (6) (7) (8) 1965 - 41,000 - - 4,323 - - 267 267 - 1966 1967 3., 375 7,698 41.,000 20,000 - :n,soo 4,323 7,471 - - 185 36J 185 363 •21.,000 • - 1968 1969 15•169 33,750 20,000 52,500 - Uh581 15,026 726 697 1,670 697 2,398 4,872 1970 1971 s1.,1trn 62., 41 ti 56,644 80,~56 27,968 - 14,994 13,653 3,757 7,907 2,55t, 3.,424 6,315 11,331 1 10.,353 1972 77.,096 83.,302 - - 1,862 10,236 4.,716 14.,952 - • 1973 1974 6th722 55,517 73,066 57,999 • - 1,862 1,862 15,067 14·,629 4,051 3,067 19,118 17,895 - - 1975 1976 42"550 J0,396 4.3., 1 70 30,39e - - 620 - - 12,772 7,022 2,181 1,196 14,953 8,218 - - 1977 1976 23,376 21,307 23,376 21,307 - - - - 2,069 2,069 696 636 2,767 2,705 - 1979 1980 19,239 17,170 19,239 17,170 - - - - 2,069 2,069 574 512 2,643 2,581 • - • 1981 19b2 15,101 13,032 15,101 13,032 - - - - 2,069 2,069 450 300 2,519 2,457 • • 19 ts 3 1984 10,964 8,695 10,964 th89S - - - - 2,069 2,069 326 264 2,395 2,332 • 1985 1986 6,826 4,758 6,826 4,758 - - - - 2,069 2,069 202 140 2,210 2,208 • • - .... <l 1987 1968 2,6ij9 1,448 2.,689 1,448 - - - 1,241 414 65 40 1,306 454 - - .... 01 1989 1990 1991 1,034 621 207 1,034 6 21 207 - - - • - 414 414 207 2a 16 l 442 429 210 - -  PROVISIONAL Page 18 of' 29 .... u, Table 4o3: PERU - ESTD1ATED FUTURE SERVICE PAYMENTS ON E:XTERNAL PUBLIC DEBT N <l OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In :millions of US dollars) LOANS FROM GOVERNMENTS HUNGARY DEBT OUTSTANDING TRANSACTIONS DURING PERIOD SEGINNING or PERIOD CANCEL• LATlONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS (1) (2) (3) (4) (5) (6) (7) c ·a > 1971 - - 10,400 - - - • • 1972 1973 2,045 - 10,400 27,298 16,990 - 2,137 15,806 1,670 92 32 153 124 1,823 • . • 1974 1975 16,UH 2:l,558 251'626 221558 - • - 9.,,447 3,070 3.,,010 925 996 3,995 41'066 - 1976 1977 19,489 16,419 19,489 16,6'19 - • - - • - 3,070 3,070 832 667 J,901 3,736 • • 1978 1979 13,349 10,279 13,34~ 10,279 - - - 3,070 3,070 502 337 3,572 3,407 - • - 1980 1961 1,2u9 s,111 7,209 5,717 - - • - 1,492 1,400 172 134 1,664 1,534 - - 1962 1963 4,317 2.,917 4,317 2,917 • - • .- 1,400 1,254 99 64 1,499 1#319 - - 1984 1985 1,663 554 1,663 554 - • 1,109 SS4 35 1 1,143 561 • •  PROVISIONAL Page 19 of 29 Table 4.3: PERU - ESTD1ATED FITTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDDJG, INCIDDDJG UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAY.ABLE. DJ FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNME~TS ITALY DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• DISBURSED LATlONS- INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL ( 1) MENTS (2) (3) (4) (5) • ( 6) (1) (8) 1 ',69 - - 5Y2 - 592 - - - .- - . - 1970 1971 592 5'i2 ~92 5> 9 2 1>544 1,544 - - - 141 - 1972 1973 2,277 2,21s 2>27"/ - • - - 62 187 249 - - 1974 1,':129 2,215 1,929 - • - - 2ts6 544 177 14b 463 692 - - 1~75 1976 1>365 569 1"365 569 - - 796 569 96 36 89'+ 625 - <] .... 01 w  PROVISIONAL Page 20 of 29 ,_. 01 Table 4o3: PERU - EsrDIA.TED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT ~ <l OUTsr.ANDING, INCLUDING UNDISBURSED, AS OF· DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS f'ROM GOVERNMENTS JAPAN DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• VEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS (1) (2) (3) (4) (5) (6) (7) (8) 197:t! - - 57,143 - 9,474 • - - • 1973 1974 9,474 )3,i)<,1 57,,143 57,143 - 23,617 16,510 • • 1,010 2,222 1,016 2,222 - • 1975 1'Jl76 51,6Ul 57,143 s7,14J 57,143 • - - 5,542 - • • 2, CJ50 3,143 2,950 J,143 • - - 1977 197B 57,143 53,766 57,143 53,766 - - - • - 3,377 3,810 3,102 2,905 CH47'J o,714 • - 197'! 19a·o 4!i,9'j7 46,147 49,957 46,147 - - - - 3,tHO 3,810 2,695 2,480 6~505 o,295 - • 19tH 19H2 42,33H 38,528 42133d 3&,526 - - - - 3,810 3,610 2,276 2,067 6,0ti6 5,676 - - 1';163 l9H4 34,719 30,909 )4,719 30,909 - - .. .. 3,810 J,cHO t,85/ 1,648 5,667 ~,457 • - l:,t;5 198b 21,100 i:h2CJ0 21,.100 23,290 - .. J,810 3,810 1,4Jij 1,229 51248 5,03ts • 1987 198b lj,481 15,671 19,481 15,671 - • - - 3,a10 3,610 1,019 810 ~,829 4.1619 - • - l~d9 •1990 l-i9 l 1111661 8,052 4#242 11,661 6,052 4#242 - - - • 3,1:H0 3,dl0 . 3,610 600 390 181 4.1410 4,200 3,990 - •  PROVISIONAL Page 21 of 29 Table 4.3: PERU - ESTIMATED FUTURE SERVICE P~IMENTS ON EXTERNAL PUBLIC DEBT OUTSfANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT •REPAYABLE IN FOREIGN CURRENCY (In millions of' US dollars) LOANS FROM GOVERNMENTS NETHERLANDS DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING or PERIOD CANCEL• LATIONS- DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL • MENTS ( 1) (2) (3) (4) (5) (6) (7) (8) 1971 - - 1,030 - - - . - 60 1972 - 1,110 5,671 - 3.,190 • - - - 1973 1974 3,190 6.11410 6" '7 8.1 6#411 - - 3,590 - - 3'70 370 159 369 529 739 • 1975 1976 6#040 5.,503 6>041 5,504 - - - - 537 334 369 352 906 686 • • 1977 197d ~ .. 169 4.,a3s s,.110 4Jltj36 - - - - 334 334 331 309 664 643 • - • 1979 1960 4.,501 4., 121 4,502 4>122 - - - - 380 426 287 261 667 687 - - 1981 1982 J.,695 31266 3#696 3,269 - - - - 426 426 233 206 660 632 - 1983 19134 2,A42 2>416 2,843 2>417 - • - - 426 426 176 150 604 576 - • 1965 1986 1987 l.11969 1#563 1,990 1,564 - - - 426 426 122 95 549 521 • • 1'186 1 .. 137 676 1'136 876 - - • - - 259 92 67 56 326 146 • • <J ... 1 IJ89 1990 1991 786 693 601 766 6.93 601 - - - - 92 92 92 50 44 38 142 136 130 • • • 01 0,  PROVISIONAL Page 22 of 29 .... (/1 en Table 4o3: PERU - ESTIMATED FlYrURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT <I OUI'STANDING; JNCLUDJNG UNDISBURSED, AS QF DECEMBER 31, 1972 DEBT REPAYABLE lN FOREIGN CURRENCY (In millions of US dollars) LOANS f'ROM GOVERNMENTS NEW ZEALAND DEBT OUTSTANDING TRANSACTIONS DURING PERioo BEGINNING Of' PERIOD CANCEL• LATIONS, D1S8URSED INCLUDING COMMIT• DISBURSE• , SERVICE PAYMENTS ADJUST• YEAR ONLY UNOISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS C1 ) (2) (3) (4) (5) ,6) (7) (8) 1Y6Y - - - 10,000 - - - - - - - 1970 · 1 ~, 1 3,233 10,000 10,000 • 3,233 6,767 • 607 335 942 - - - 1972 1,,393 9,393 - - - - - 556 556 - - 19 7 3 1974 l ij]5 ~,393 9,393 9,3~3 9,393 9,393 - • - - • • 368 486 368 486 - - 1976 1977 th 393 6,3Y3 9,393 6,393 - - - - 1,000 2,000 575 489 1,575 2,489 -• 197b liJ71} 4,393 2,393 6,393 4,393 - - - - 2,000 2,000 374 258 • 2,374 2,256 - ,. 1960 393 2,393 393 - - 2,000 393 144 29 2,144 422 -  PROVISIONAL Page 23 of 29 Table 4.3: PERU ... ESTIMATED FUTT.ffiE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING UNDISBURSE:D, AS OF DECEMBER 31, 1972 DEBT REPAYABLE DI FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS SPAIN DEBT OUTSTANDING TRANSACTIONS DURING PERlOD BEGINNING or PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY, UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS Cl l (2) C3 l (4) (5) (6) (7) (8) 19 '7 2 - - - 1,164 • - .4i 41 - 1973 . 1974 • 1 Y75 1,164 1,679 840 1,679 1,679 840 - - 515 . • ts40 640 100 103 44 100 942 884 - • - <3 .... 01 -..J  PROVISIONAL Page 24 of 29 Table 4.3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT ..... OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 U1 CD DEBT REPAYABLE IN FOREIGN CURRENCY <l (In millions of US dollars) LOANS rROM GOVERNMENTS UNITED KINGDOM DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING or PERIOD CANCEL• LATIONS.- DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNOlSBURSED MENTS MENTS PRINCIPAL INTEREST • TOTAL MENTS (1) (2) (3) (4) (5) (6) (7) (8) i'J6t, - - 2,059 - 1,200 • • - - - 1969 1970 1971 1'200 1'642 1'670 2,059 2,060 4,459 2140U - 442 29 • - • 94 123 i.u, 94 123 138 383 1 1972 1,614 4,842 • • 1,464 157 141 299 - - 1973 1974 3,121 4,266 4,664 4,527 - - 1,303 261 - 157 157 162 150 319 307 • 1~75 1976 1977 4,369 4,212 4,055 4,369 4,212 4,055 - • - • 157 157 157 137 125 112 294 282 269 • - - 1978 1979 3,697 3,740 3,897 3,740 - • - • - - 157 260 100 tH 257 347 - • - 1960 1981 3,460 3,221 3,460 3,221 - • 260 260 74 62 334 322 - - 1962 1983 2,961 2,101 2,961 2,101 • • - - • - 260 260 49 37 309 297 - 1984 1965 1986 2,442 2,1e2 1#923 2,442 2,182 1'923 - - - • 260 260 134 24 12 . 1 264 272 136 . • - - 1Y~7 1'168 1,786 1,686 1,786 1,686 - ~ - - - • 102 102 - - 102 102 • - - 1969 1990 1991 111584 1,482 ·1" 3 7 9 l,584 1#482 1., 379 - • - - 102 102 102 . • 102 102 102 - -  PROVISIONAL Page 25 of 29. Table 4.3: PERU - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING UNDISUBRSED, AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS U.S.A. - A.I.D. DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS (1) (2) (3) (4) (5) (6) (7) (8) 1965 1966 1967 6,949 16,964 .31,598 49.,559 57,ooa 67,769 a,ooo 11,100 3,400 12,678 12.,953 9,341 550 319 368 266 244 284 816 563 652 - - 1968 1969 1970 40,571 4th793 52,665 70.,821 85.1153 83.1103 14,400 - - 8,643 lh238 2"911 422 346 355 346 422 4-01 768 766 756 354 •1"70'1 ·1,422 1971 55,240 81,326 7,310 s,112 146 405 553 •l.1063 1972 5'h741 87,425 - 27.160iJ 5,644 147 613 760 - - 1973 1974 1975 65123d 76,290 69,501 114.,678 114,730 - - 11.,200 14,100 148 869 666 846 814 1,734 - - 1976 ~7,240 113,641 111,540 - - 10,040 8,400 2,302 2,662 1,161 1,409 3,462 4.1071 - - 1977 197t, 102"976 10~1660 108.1678 105.1860 - - 5,900 - . 3,016 2,349 1"646 1,626 4.1666 4,176 - - 197\J 1980 103,510 9Y,496 103,510 9!h496 - - - - 4,014 4,466 2.,176 2,010 6.,190 6,557 - - 1961 1962 95,009 90,514 95,009 90,514 - - - - 4,495 4,895 1,944 1,819 6,439 6.,714 - - 1983 1964 85,619 81,964 85.,619 61.,964 • - - 3,655 3,158 1,952 1.1674 5.1607 5.,032 - - 1985 1986 78,806 75,645 78,806 75,645 - • - - - 3,161 3,164 1.,605 1,736 4,, 966 4.,900 - - <J ,_, 1987 72,460 - (J1 198d 6'i.,313 72.1480 69# 313 - - - • 3,166 3,·111 1.,666 1,597 4#834 4,768 - U> 1989 1990 1991 66,142 62"967 59,769 66,142 62,967 59,78i - - - - 3.,174 3.1176 3.,1e1 1.,527 1,457 1.,3aa 4.,701 4,635 4.,569 - -  PROVISIONAL Page 26 of 29 .... . CTI Table 4.3: PERU - ESrIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT 0 <l OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) LOANS FROM GOVERNMENTS u.s.. A. - EXIMBANK DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING QF PERIOD CANCEL• LATIONS" DISBURSED INCLUDING COMMIT• DISBURSE•· SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (3) (4) (5) (6) (7) (8) 1965 12#705 54,221 1,000 9,7&6 1,598 1,054 2,652 ·1,479 •t,6 1966 1967 lH,765 33,673 521'144 57,815 71'700 s,2ou - 161'905 51'798 1,943 2,902 1,347 11'985 3,290 4,887 ·116 1966 1-169 36,568 43,.412 54.,797 55,439 - - 11,136 2,555 4,293 5,2,i,7 2"348 21'666 6,641 71'963 - ·265 1970 1971 1to,670 35,316 501'142 441'226 - 562 - 5,914 61'302 21'224 1,868 8,136 a,.110 - -2 1'i172 291'014 37,•n4 - - 910 ~,130 1,563 71'693 - - 1973 1974 23,794 't!0,104 311'794 26,104 - - 21'000 2,000 5,689 5,021 1,271 11'068 6,961 61'069 - .- 1975 1976 17,084 14,627 2 l , 084 16,627 - .- 2,000 2,000 - 4,457 3,U48 895 766 5,.352 31'814 - 1977 1978 13,.579 111'400 13,.579 111'400 - - - 21'179 1,520 709 606 2,868 21'126 - - 1979 1980 ~•BdO 8,3oO 9,860 8,360 .. . - - t., 520 1,520 523 439 2,043 11'959 -- 1961 1962 61'840 5,320 6,640 5,320 - - - .- 1,520 1,520 355 272 1"875 t,792 -- 1'i63 1964 1965 3,800 2•260 760 31'600 21'280 760 - - - 11'520 1,520 760 18b 10~ 21 1"706 1,625 7tH - -  PROVISIONAL Page 27 o:f 29 Table 4o3: PERU - ESTOO.TED FTJrURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT oursrANDING, INCLUDING UNDISBURSED, AS OF DECE£,IBER 31, 197.2 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions o:f US dollars) LOANS FROM GOVERNMENTS USA DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COMMIT• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS (1) (2) (3) <•> ( 5·) (6) (7) (8) 1965 19,654 10311780 9,000 22'466 2,148 1,320 311468 •1111uso 1966 37,729 1091152 161600 2911858 2,262 11591 3.-853 ·86 1967 65,271 12516Cl4 3,400 1511139 3,270 211269 511539 ·116 1968 1969 1970 77.-13'1 92.,205 931355 12511618 140,592 13311245 1911600 - - 191781 611793 31.473 4,715 511643 611269 211694 31106cS 2, 62"5 711409 1:h731 611694 •111704 •111424 69 1971 901556 12511552 7,310 511712 61450 211273 . th723 •111063 1972 1973 d6,755 ti9,O31 1251349 1461671 27,600 - 611554 6,276 211176 81453 - - 1974 Y6,394 1401634 - - 131200 16,100 51637 ~,909 111937 1,914 7,774 711823 - - 197~ 1976 106,565 111,867 13411925 12e·, 167 - - 12,040 10,400 61156 5,710 2,056 211175 6,614 71865 - 1977 1970 1979 116,557 117 1260 113,390 12211457 11711260 11311 390 - - - 51 90(1 - s11u,1 311669 511534 2,357 211433 7,554 61302 • • • 1980 · 1961 1u7.-856 HH,849 1071856 • - - - 6,008 2,696 21150b 81232 61516 • - 1982 9511:i34 10111849 95.-834 - - - - 61015 6,415 211300 2,091 811314 8,505 - - 1963 1984 ti91419 b411244 691419 84,244 - - - - 511175 ,..,678 2,140 11979 711315 611657 - - 19b:, 1986 79,566 7511645 7911566 7511645 - - - - 31192.1 3,164 111ti26 11736 s,i41 41900 - - <I .... l<i8l 196H 7211480 691313 7211480 6911313 - - - - 311168 311171 111666 1,597 4.-834 411166 • O'l .... 1969 1·no 1991 66,142 6211967 59,769 6611142 62#967 59., 769 • - - - 3.-174 311176 31181 11527 11457 111388 41701 41635 411569 - • •  PROVISIONAL Page 28 of 29 Table 4oJ: PERU - EsrIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT ..... (Tl OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 I\) DEBT REPAYABLE IN FOREIGN CURRENCY <l (In millions of US dollars) LOANS fROM GOVERNMENTS DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING or PERIOD CANCEL• LATIONS, DISBURSED INCLUDING COM ►1l T• DISBURSE• SERVICE PAYMENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS C1 > (2) (3) (4) (5) (6) O'> (8) 1965 25,895 162,126 9,000 37i894 2>148 1,st11 3,735 ·1,460 1966 58,450 167,498 1B,80U 34,181 2,262 2,420 4,682 •21,086 1967 '.ll0,315 162,950 9,069 22'610 3,270 3,276 61546 •622 1968 109,435 168,127 66,087 42,287 4,715 4,703 9,418 69 1969 147,007 229,Sti8 16,366 34,561 6,371 6,368 12'759 2,643 1970 170,254 242,226 55,067 41,72.3 12,013 7, 56.7 19,580 ·621 1971 208,674- 284,659 26,334 36,254 2_4, 466 9,391 33,857 12,211 1972 1973 230,783 234,765 298,604 410,971 143,447 - - 35,262 78,601 26,274 35,772 10,9~9 11"207 37,233 46,979 •s,0·06 - - 1974 1975 277,594 2Sl7,086 375,199 335,708 - - 58,983 22.1320 39,490 36.1444 12,2eo 12,461 51,771 48,905 - - 1976 1977 282.1962 267,468 299.1264 27.3.1370 - .- 10.1400 - 5.., 900 25,894 21,,045 11.1045 9,eoi 36,939 30,846 - 1976 1979 252.1323 232,297 252.132~ 232,299 - . - 20,02s 21,699 8,976 8.1350 29,001 J0,,049 - • - 1980 1981 210.1598 1~1,763 210,600 191,765 - - - - 1th 835 18.1017 7.1268 6,,407 26,,103 24.1424 - - 1962 1963 17.3"746 156,179 173.1748 156.1181 - - - - 17,567 16.1181 5,,611 5.111S 23.1177 21#296 - - 1964 1985 139,998 124,,459 140.1000 124.1461 - - - - 15.1539 12,589 4,413 3.,732 19.1952 16.1322 - - 1966 1987 111.1670 101#770 111.1672 101.1772 - - - - 10,099 e,,956 3.1282 2.1895 13.1381 11.1851 - - 198t:s 1989 92,815 04.1969 92#816 84,970 - - - - 7,846 7,850 2,574 2.1272 10.1420 10,121 - - 1990 1991 77,119 69,266 77.1120 69,267 - - 7,853 7,650 l.1969 1.1666 9.1822 91316 •  r nv v J..uJ..v1~..1:UJ Page 29 of 29 Table 4.3: PERU· - ESTlMA.TED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, INCLUDING UNDISBURSED, AS OF DECEMBER 31, 1972 DEBT REPAYABLE IN FOREIGN CURRENCY (In millions of US dollars) UNCLASSIFIED DEBT OUTSTANDING TRANSACTIONS DURING PERIOD BEGINNING Of' PERIOD CANCEL• LATIONS, 01S~URSED INCLUDING COMMIT• DISBURSE• SERVICE PAY'4ENTS ADJUST• YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS ( 1) (2) (3) (4) (5) (6) (7) (8) 1965 7,211 7,375 s,5O9 s,11" 2,438 I+ 1 £ 2,aso - . 1966 1'il67 9,947 10,496 1O,q46. 10,498 4,326 &,s1~ 4,827 4,705 4,276 3,716 632 53H 4,906 4,254 - - 196b • 1-J69 1970 11,487 43,129 ' 57,634 t!:1,297 62,762 l lb11.)74 54,77H 70,971 72,704 36,955 30,364 26,830 7,313 15,659 22,941 1,175 2,732 311052 8,486 18-, 3Y 1 25,993 - 3 1IJ71 61,726 167,640 15,306 65,671 43,663 7,323 50.11966 • 1Y72 63.11734 139.11·4H5 - - 39,046 39,106 - . 3c;,, 106 - - 1973 1'174 t:i3,674 68,836 100.11379 69.11210 - - 16.11331 374 31,1b9 25,214 - - :n,169 25.11214 - 1975 1916 43.11990 24.11806 43,996 24.11606 - - • - - 1'1.11190 11.11668 - 19,190 11,666 • - - 1977 1976 12.11938 4,363 12.11 'Jll8 4.11363 - - • th555 4,383 • - th555 4.11363 - <I ECONOMIC AND SOOIAL DA TA DIVISION .... CTI ECONOMIC ANA:USIS & PROOECTIONS DEPARTMENT w FEBRUARY 8, 1973  o t YEAR!/ Table 4.4 PERU - AVERAGE TERMS OF EXTERNAL DEBT OUTSTANDING, 1968 - 197i, END · ... a, ~ <l (Repayable in foreign currency) 1 9 6 8 1 9 6 9 1 9 7O 1 9 7 1 Maturity Grace Maturity Grace Maturity Grace Maturity Grace Type of (years) (years) (years) (years) (years) (years) (years) (years) debt Interest Grant Elem. Interest Grant Elem. Interest Grant Elem. Interest Grant Elem. (percent) (percent) (percent) (percent) (percent) (percent) (percent) (percent) Supplier's 12.5 3.1 12.6 3.2 12.2 2. 7 · 12.4 3.1 Credits 6.9 16 -6.8 17 . 6.8 16 • 6.5 18 Private 4.1 1.7 3.8 1.7 6.8 0.6 6.8 0.7 Banks 7.4 6 7.3 6· 8.2 5 8.2 5 Publicly 48.9 4.0 49.3 4.3 50 4.8 50.5 5.1 Issued Bonds 3.0 60 3.0 60 3.0 61 3.0 61 Privately 5.0 1.5 5.0 1.5 5.0 1.5 Placed Bonds 7.8 6 7.8 6 7.8 6 Other Private 14.1 2.6 15.3 2.8 12.2 2.4 13.1 2.5 Financial Inst's 6.8 17 6.5 20 5.5 22 5.6 23 International 21.2 4.5 21.4 4.5 22.6 5.3 22.8 5.3 Organizations 5.7 30 5.7 30 6.0 29 6.0 29 Governments 23.2 7.3 22.2 7.1 19.8 6.3 19.7 6.2 4.1 44 4.3 43 4.9 36 5.0 35 Total 16.1 4.0 16. 0 4.2 16.4 3.9 16.6 4.3 6.0 24 6.0 24 6.3 24 6.1 24 !/ Excludes debt for which terms are not known, the proportion of which varies from about 15 percent to 6 percent of the total in in_ d ividual years. SOURCE: IBRD Debtor Reporting System  vl65 Table No. V. PUBLIC FINANCE STATISTICS 5.1 Central Government Cash Operations, 1968-72 5.2 Analysis of Central Government Summary Operations, 1968-72 5.3 Central Government Revenue, 1968-74 5.4 Central Government Revenue Structure, 1968-74 5.5 Functional Classification .of Central Government Expenditure, 1968-74 • 5.6 Functional Structure of Central Government Expenditure, 1968-74 5.7 ca~h Operations of Social Security Agencies, 1970-72 5.8 Consolidated Cash Operations of Public Enterprises, 1970-74 5·.9(a) Principal Cash Accounts of Selected Public Enterprises, 1970 5.9(b) Principal Cash Accounts of Selected Public Enterprises, 1971 5.9(c) Principal Cash Accounts of Selected Public Enterprises, 1972 5.9(d) Principal Cash Accounts of Selected Public Enterprises, 1973 5.9(e) a l Cash Accounts of Selected Public Enterprises, 1974 Princi~, 5.10 Central ., Government Budgetary Transfers to Public Sector Agencies, 1973-74 : 5.ll(a) Biennial Plan 1973-74, ·Public Investment, Agriculture ! . 5.ll(b) Biennial Plan 1973-74, Public Investment, Fisheries 5 .ll(c) Biennial Plan 1973-74, Public Investment, Industry and Tourism 5.ll(d) Biennial Plan 1973-74, Public Investment, Mining 5.ll(e) Biennial Plan 1973-7.4, Public Investment, Hydrocarbons 5.ll(f) Biennial Plan 1973-74, Public Investment, Power 5.ll(g) Biennial Plan 1973-74, Public Investment, Transport and Communications 5.ll(h) Biennial Plan 1973-74, Public Investment, Housing and Urban Infrastructure 5 .ll(i) Biennial Plan 1973-74, Public Investment, Health and Sani ta t,ion I. 5.ll(k) Biennial Plan 1973-74, Public Investment, Education 5.ll(t) Biennial Plan 1973-74, Public Investment, Other Programs 5.12 Biennial Plan 1973-74, Public Investment, Summary  Table 5.1: PERU - CENTRAL GOVERNMENT CASH OPERATIONS, 1968-72 (In millions of soles at current prices) Page 1 of 2 .IJ:. Estimate Calendar years 1966 1970 1971 1972 I. Current revenues 28,2,.)5 32,140 38,529 40,870 44,782 1. Taxes on income, property • and e:xports /1 8,557 10,241 14,378 12,676 . 15,462 2. Taxes on .imports 7,149 7,845 8,095 8,898 1,962 3. Taxes on produc:tion ·and conswnption / 3 9,350 10,299 11,883 14,228 16,082 4. Collections for pension fund 825 958 1,072 1,120 1,276/4 5. Non-:tax revenues 2,354 2,791 3,101 3,948 4,000L!:! II. Direct current expenditures 23,653 24,635 29,316 33,182 37,493 1. Wages and salaries 11,591 12,574 13,819 15,838 18,071 .2 . . Goods and services 969 1,352 2,355 2,194 3,459 3. Interest and commissions 1,463 1,802 1,962 3,031 2,511 a. On domestic debt ( ,662) ( 747) ( 570) ( 1,116) ( 1,137) 801) ( 1,055) ( 1,392) ( 1,915) (t;~~~ b. On external debt ( 4. Current transfers . 2,4.37 2,256 3,642 3,550 a. To domestic private. sector ( 2,.399) ( 2,199) ( 3,551) ( 3,502) ( n.a.) b. To abroad ( .38) ( 57) ( 91) ( 48) . ( n.a.) 5. Outlays for national defense 7,19.3 6,651 ·7,538 8,569 9,452 III. Saving before pubiic sector transfers 4,562 7,505 9,213 7,688 7, 289 IV. Current transfers to public sector 4,194 3,6o8 2,746 V. Current surplus/deficit 388 3,897 5,844 4,942 J,838 VI. Other revenues 168 193 521 378 11o& 1~ State enterprise profits .l!3. 139 166 69 87 478 2. Grants 331 3. Other capital revenues 29 27 121 291 232 VII. Capital expenditures 6,197 5,980 9,5ll 12,551 13,929 1. Gross fixed capital formation 2,680 2,997 5,122 6,871 ""'g,021:i" a. From ordinary funds ( 2,680) ( 2,997) ( 3, 86o) ( 5,564) ( 8,931) b. From defense funds. ./1 • ( - ) ( - ) ( 1,262) ( 1,307) ( 93) 2. Financial investment 16 189 732 350 1,058 3. Capital transfers 3,501 2,794 3,657 5,330 3,847 a. To private sector ( 5) ( 1) ( -) ( - ) ( ) - b. To public sector ( 3,496) ( 2,793) ( 3,657) ( 5,330) ( 3,847)  v7167 Table 5.1: PERU - CENTRAL GOVERNMEtl.T CASH OPERATIONS, 1968-72 (continued) (In millions of soles at current prices) Page 2 of 2 E3timate Calendar yearslJ; 1968 1969 1970 1971 1972 VIII. Overall su!l?iusLdeficit -52641 -1 2890 -3,146 -72231 -9,381 II. Financing 5,641 12890 32146 72231 92381 1. External (net) 1,858 1,265 1,324 - 162 3,680 a. Loan utilization ( 5,028) ( 4,249) ( 5,360) ( 5,399) ( 8,357) b. .Amortization (-3,170) (-2, 984) (-4,036) (-5,561) (-4,677) 2. Domestic (net) 3,783 625 l,822 1,393 5,'.rol a. 10% tax advance (•l,281) (- 91) (- 135) .(- 135) (- 135) b. Banking system (net) ( 1,526) ( 1,372) ( 456) ( 7,900) ( 4,000) c. Other, including discrepancies ,& ( 976) (- 650) ( 1,501) (- 372) ( 1.,8,36} The figures are reported on a cash accounting basis to the extent possible • . Peruvian fiscal years have changed, and have been converted to calendar years as follows: er 1968 = January-March 1968 operations of FY 1967, plus liquidation perj.od of FY 1967, plus April-December operations of Ff 1968. er 1969 = January-March 1969 operations of FY 1968, plus liquidation period of FY 1968, plus April-December operations of FY 196~. CY 1970 = Liquidation period of FY 1969, plus January-December operations of FI 1970. ·cy 1971 = Liquidation period of FY 1970, plus January-December 1971 operations of FY 1971-72. CY 1972 = January-December 1972 operations of FY 1971-72. ·fl_ Among the stabilization legislation of 1967-68 was a compulsory tax prepayment by exporters (except exporters of fishmeal) of 10% of their FOB export value, to be repayed by deductions from the nonnal income tax duri'ng eight years, starting in 1969. The repayment is shown in the table on a gross basis, i.e. as a notional income tax receipt and as a payment for the financing item "tax advance"; the sums being 140 million soles in 1969, and 135 million for each following year. 11 Excludes payments for 11 Signos de Aviacion", which are counted as proper revenue of CORPAC instead of as government transfers; 75 million in 1968, 86 million in 1969, llO million in 1970, 148 million in 1971, and 150 million in 1972. 11±,'2 The split between the items in these two cases is a mission estimate. Central Reserve Bank only gives totals of 4,710 and 7,451 respectively. /_§_ Non-financial enterprises only, see Table $.8 • _77_ Helicopters and transport aircraft used essentially for civiJ.ian purposes (e.g. in support of oil exploration in the Selva area), but financed from defense funds. ~ Includes net placements of treasury bonds outside the banking system, which cannot be separated as figures for bond redemptions are not available with sufficient detail. Source: a) Banco Central de Reserva for categories I-VIII, with some mission estimates of breakdown for ite~s in 1972. • b) IMF category IX in the period 1968-71, and mission estimates for 1972.  ..... 0) a> <I Table 5.2: PERU - ANALYSIS OF CENTRAL GOVERNMENT SUMMARY OPERATIONS, 1968-72 1968 1969 1970 1971 1972 1968 1969 1970 1971 1972 A. Millions of soles, constant 1970 prices 13,,_ PPr.qent:,.agg share of GDP Current revenues 31,689 34,301 38,529 38,520 39,077 14.8 15.6 16.3 15.4 14.8 Direct current _expenditures 26,547 26,291 29,316 31,274 32,716 12.4 12.0 12.4 12.5 12.4 Savl&gs, before public sector transfers 5,142 ~ ~ 7,246 6,361 2.4 3.6 ~ 2.9 2.4 CurE'ent public sector transfers 4,707 3,851 3,369 2,588 3,011 2.2 1. 7 1.4 1.0 1.1 Current surplus/deficit 435 4,159 5,844 4,658 . 3,350 0.2 1. 9 2.5 1.9 1.3 Other revenue.s 189 206 521 356 620. 0.1 0.1 0.2 0.1 0.2 Capital expenditures 6,663 6,083 9,511 12,221 12,617 3.1 2.8 4.0 4.9 4.8 Overall surplus/deficit -6,039 -1,718- -3,146 -7,207 -8,647 -2.8 -0.8 -1.3 -2.9 -3:3 \ Source: A: Tables 5.1 and 2.5. All revenue and current expenditure items have been deflated using the national accounts deflator for public consumption, capital expenditures by the deflator for p~blic fixed investment. B: Part A and GDP at constant prices from Table 2.1.  Table 5.3: PERU - CENTRAL GOVERNMENT REVENUE, 1968-74 1 (In millions of soles at current pricesL ) Budget- E.stimate. 1968 1969 1970 1971 1972 1973 1974 Direct taxes 8,557 10,241 14,378 12,676 15,462 14,468 15,784 1. Taxes on income 5,341 6,699 10,970 8,058 8,696 10,080 10, 795 2. Taxes on property 687 1,170 835 826 1,012 1,398 1,659 3. Taxes on transfer of property 809 602 659 697 693 696 709 4. Taxes on payrolls 826 951 1,108 1,244 1,416 1,745 2,005 5. Other direct taxes 894 819 806 798 811 549 616 6. Tax amnesty (D.L. 18815) 1,053 2,834 Taxes on imports 7,149 7,845 8,095 8,898 7,962 8,966 9,821 Taxes on production and consu!!!Etion 9,350 10,299 11,883 14,228 16,082 23,386 26,925 }.. Stamp and sales taxes 6,167 6,300 7,459 8,881 10,089 17,188 18,617 2. Excise taxes 2,187 2,971 3,034 3,697 4,050 ) ) a. Tobacco (456) (832) (932) (1,253) (1,457) ) ) b. Alcoholic beverages (806) (943) (1,001) (1,257) (1,295) ) 6,198 ) 8,308 c. Gasoline (925) (1,196) (1,101) (1,187) (1,298) ) ) 3. Other 996 1,028 1,390 1,650 1,943 ) ) Collections for pension fund 825 958 1,072 1,120 1,276 1,406 1,370 Other revenueL3 2,522 2,990 3,622 4,326 4,710 4,972 5,636 Total 28,403 32,333 39,050 41,248 45,492 53,198 59,536 /1 An inflation rate of 8.5% annually is anticipated during the budget period. Zz Budget figures for calendar year 1973 corrected by adding a liquidation period of FY 1971-72 to FY 1973 data. For 1974 no liquidation period is anticipated. <I ..... L3 Comprises Non-tax (current) revenue and Other revenue .from table 5.1. m I.O Source: a) For 1968-72, Banco Central de Reserva. See notes to table 5.1 for derivation of calendar year figures. b) For 1973-74, Ministerio de Economia y Finanzas.  ..... Table 5,4· PERU - CENTRAL GOVERNMENT REVENUE STRUCTURE, 1968-74 0 -..J <l (Percentages of annual totals) Budget ~~timate 1968 1969 1970 1971 1972 1973 1974 Direct taxes 30,1 31. 7 36.8 30.7 34.0 27.2 26.5 1. Taxes on income 18.8 20.7 28.1 19.5 19.1 19.0 18.1 2. Taxes on property 2.4 3.6 2.1 2.0 2.2 2.6 2.8 3. Taxes on transfer of property 2.9 1..9 1. 7 1. 7 1.6 1.3 1. 2 4. Taxes on payrolls 2.9 3.0 2.8 3.0 3.1 3.3 3.4 5. Other direct taxes 3.1 2.5 2.1 1.9 1.8 1.0 1.0 _6. Tax amnesty (D. L.18815) 24.3 20.7 2.6 21.6 6.2 17.5 16.9 - 16.5 Taxes on imports 25.2 Taxes on production and con sump t ion 32.9 31. 9 30.4 34.5 35.4 44.0 45.2 1. Stamp and sales taxes 21. 7 19.5 19.1 - - 21.5 22.2 32.3 31.3 2. Excise taxes 7.7 9.2 7.8 9.0 8.9 ) ) a. Tobacco (1. 6) (2.6) (2.4) (3.0) (3. 2) ) ) b. Alcoholic beverages (2.8) (2. 9) (2. 6)' (3. 1) (2.8) ) 11. 7 )13.9 c. Gasoline (3. 3) (3. 7) (2.8) '(2.9) (2. 9) ) ) 3. Other 3.5 3.2 3.5 4.0 4.3 ) ) Collections for pension fund 2.9 2. 9. 2.8 2.7 2.8 2.6 2.3 Other revenue 8.9 9.2 9.3 10.5 10.3 9.3 9.5 Total 100,0 100,0 100.0 100.0 100.0 100.0 100.0 = Source: Table 5.3.  Table 5·.5: PERU - FUNCTIONALLl CLASSIFICATION OF CENTRAL GOVERNMENT EXPENDITURE, 1968-74 (In millions of soles at current prices) Estimate Budget- 1968 1969 1970 1971 1972 1973.-74 Average Current Capital Current Capital Current Capital Current Capital Current Capital Current Capital Economic services 1,940 3,908 2,061 4,142 ~ 6,350 -1..z..§.21 ~ 3,000 5,878 4.105 8,642 Agriculture 1,025 1,259 1,022 1,033 1,323 1,925 1,369 1,471 1,382 2,082 1,973 3,437 Fishing 152 215 145 520 291 456 Energy and mines / 135 915 126 1,016 190 1,050 205 1,422 230 768 362 2,380 3 Transportation and co=nication- 728 1,532 843 1,971· 971 3,154 984 3,796 1,012 2,131 1,105 1,956 Industry and commerce 52 202 72 122 113 221 183 943 231 377 374 413 ·social services 11,658 489 11,558 470 12,546 936 13,353 ~ 15,595 -1:..,1&Q 16,838 ___!_,_Z11 Education 8,528 ~ 8,-472 ---m 9,190 ~ 9,718 305 12,259 487 12,628 912 Health 2,620 8 2,581 48 2,826 144 3,025 174 2,846 291 3,543 395 Housing and urban 99 442 180 290 437 542 443 736 342 393 481 398 Labor and welfare 411 2 325 1 93 167 5 148 9 186 8 Co=nitx develoEmentl4 .- 745 ----1,,lli ----1.till 751 Reconstruction 362 279 102 882 77 765 98 ~ General administration 1,734 ~ _!.z.ill 1,324 ~ ~ 2,503 _blli_ 2,985 2,802 5,638 3,482 Defense, Police and Justicel3 11,052 81 11,087 44 12,437 23 14,046 . 27 16,031 ~ 16,380 -----212 Non-classifiab1el5 lr463 1,802 --1.z.2§1 3,031 ..1.,,111_ ~ 1 8ooL6 5,474 Total 27,847 ~ 28,243 5,980 32,685 9,511 35,928 12,551 40,944 13,929 49,752 16,832 /1 The breakdown in principle follows the division between spending ministries. Z2 No correction is made for the liquidation period of FY 1971-72. The figures thus represent only expenditure included in the budget for 1973-74 as the budget does not give data for individual years an average is used. The figures here are not quite comparable to the historical ones for two reasons: (a) they largely represent the division between operational and investment expenditure in the budget; this is not exactly the same as current and capital expenditure, and (b) the figure for General administration includes a lump sum for salary increases which in actual fact will be distributed between all sectors. /3 The civilian transport equipment purchased in 1970-72 with defense funds is shown as a capital expenditure for transport and coIIl!lnJnications. 14 Corresponds to expenditures by SINAMOS, an agency which from 1972 represents the consolidation of a number of programs, the largest of which was administered by a decentralized agency (FNDE) earlier. /5 The current expenditure shown represents government interest payments. 16 Represents disbursements of development loans for which no sector distrubution was available to the mission. Source: Banco Central de Reserva.  .... -..J 1-) <J Table. 5.6: PERU - FUNCTIONAill STRUCTURE OF CENTRAL GOVERNMENT EXPENDITURE, 1968-74 (Percentages of column totals) Estimate Budget.L.2 1968 1969 1970 1971 1972 1973-74 Average Cu:r;-rent Capital Current Capital Current Capital Current Capital Current Capital Current Capital Economic services 7.0 63.1 7.3 69.3 7.9 66.8 8.0 62.5 7.3 42. 2 8.3 51.3 Agriculture 3.7 20.3 ~ 17.3 4.0 20.3 3.8 11. 7 3.4 15. 0 4.0 20.4 Fishing 0.4 1.7 0.3 3. 7 0.6 2.7 Energy and mines 0.5 14.8 0.4 17.0 0.6 11.0 0.6 11. 3 0.5 s.s 0.7 14.1 Transport and conmrunicationsL3 2.6 24.7 3.0 33.0 3.0 33.2 2.7 30.3 2.5 15. 3 2.2 11.6 Industry and connnerce 0.2 3.3 0.3 2.0 0.3 2.3 0.5 7.5 0.6 2. 7 0.8 2.5 Social services 41.9 7.9 40.9 7.9 38.4 9.8 37.2 9.7 38.1 8.5 33.8 10.2 Education 3M <i:6 30.0 ~ 28.1 2:-G 27.1 ----z:4 29.9 3.5 25.4 ~ Health 9.4 0.1 9.1 0.8 8.7 1.5 8.4 1.4 7.0 2. 1 7.1 2.3 Housing and urban 0.4 7.1 0.6 4.9 1.3 5.7 1.2 5.9 0.8 2. 8 0.9 2.4 Labor and welfare 1.5 0.1 1.2 0.0 0.3 0.5 0.0 0.4 0.1 0.4 0.1 Communitx develoEmentl4 ...l.Jl. ....2..,_Q ...l..i ~ Reconstruction -1..:.l. ...b2. ....Q.d ...l.:.l 0.2 --2..:2 ~ 10.1 General administration ...&..:.1 27.7 ....&.J 22.1 -1!..:.1 20.2 ...Lil 20.5 ...L1. 20. 1 11.3 20.7 Defense, Police and Justicel3 39.7 .id 39.3 ....Qd 38.1 ~ 39.1 ~ 39.2 ~ 32.9 ...1..:1. Non-classifiable.LS ..2.d 6.4 ~ 8.4 ~ 12.i..6 11.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 = = Source: Table 5.5. See especially the notes there.  ·raDle :,. t: PERU - CASH OPERATIONS OF SOCIAL SECURITY AGENCIES, 1970-72 (In millions of soles) SSE SSE SSE sso sso sso SSE & SSO SSE & SSO SSE & SSO 1970 1971 1972 1970 1971 !2Z2 1970 1971 1972 I. Current revenues 2,298.4 2,587.4 3,029.1 2,291.9 2,915.8 3,170.3 4,590.3 5,503.2 6,199.4 1. Contributions 2,149.2 2,383.4 2,791.7 2,010.5 2,627.2 2,847.8 4,159.7 5,010.6 5,639.5 2. Other current income 149.2 204.0 237.4 281.4 288.6 322.5. 430.6 492.6 559.9 II. Direct current expenditures 2,302.9 2,522.8 2,662.8 2,099.6 2,210.6 2,281.1 4,402.5 4,733.4 4,943.9 1. Remunerations 856.8 705.9 764.3 775.9 1,306.4 1,243.1 1,458.2 2. Goods and services 870.1 922.5 894.1 288.5 275.0 210.4 1,158.6 1,197.5 1,104.5 3. Interest payments 4. Social security contributions 18.8 21.3 22.8 64.7 '65.0 73.3 83.5 86.3 96.1 5. Current transfers to private sector 813.5 920.2 1,063.6 1,040.5 1,106.3 1,221.5 1,854.0 2,026.5 2,285.1 III, a) Savings generated -4.5 64.6 366.3 192.3 705.2 889.2 187.8 769.8 1,255.5 b) Ct,irrent public sector transfers (net) 20.9 ___:.Q_,] -0.2 -6.3 -46.5 -108.9 14.6 -46.8 -109.1 1. Transfers received from central government 21.8 1.1 0.9 105.7 61.1 23.2 127.5 62.2 24.1 •• 2. Transfer payments made to rest of public sector 0.9 1.4 1.1 112,0 107.6 132.1 112.9 109.0 133.2 c) Current account surplus/deficit 16.4 64.3 366.1 186.0 658.7 780.3 202.4 723.0 1,146.4 IV. Other revenues 85.4 94.5 107.8 85.4 94.5 107.8 1. Capital transfers from central government 33.2 10.5 33.2 10.5 2. Other capital :revenue 52.2 84.0 107.8 52.2 84.0 107.8 v. Capital expenditures 213.1 193.6 306.2 553.5 116.5 -24.0 766.6 310.1 282.2 1. Fixed capital formation 170.0 192.4 131.1 266.7 156.1 41.3 436.7 348.5 172.4 a) Studies 1.0 1.0 b) Construction 149.0 163.8 97.3 260.8 138.7 20.5 409.8 302.5 117 .8 c) Machinery & equipment 21.0 28.6 32.8 5.9 17.4 20.8 26.9 46.0 53.6 2. Financial investment 43.1 1.2 175.1 286.8 -39.6 -65.3 329.9 -38.4 109.8 a) Buildings, land, etc. 43.1 ~ 1.2 0.1 43.1 1.2 0.1 b) Government bonds (net) 280.2 -43.4 -65.3 280.2 -43.4 -65.3 c) Other 175.0 6.6 3.8 6.6 3.8 175.0 VI. Overall surplus/deficit -196,7 ...:.ill..d ~ -zaz 1 .....il§..1. -2.ll..l -478.8 50Z,!t ...212....il... VII. Long-term financing 10.1 -307.9 -54.9 159.6 162.1 120,0 169,7 -145,8 65.1 1, Loans granted 10.1 -307.9 -54,9 159.6 162.1 120.0 169. 7 -145,8 65,1 a) Disbursements made 325.2 82.0 325.2 82.0 b) Amortization received 10.1 17.3 27.1 159.6 162.1 120.0 169. 7 179.4 147.1 <] 2. Loans received .... '-I w Short-term financing and cash balance 186.6 437.2 -5.0 122.5 -798.8 -1,032,1 309.1 -361. 6 -1,037.1 Source: Information provided by Seguro Social del Empleado and Caja Nacional de Segura Social Obrero,  Table 5.8: PERU - CONSOLIDATED CASH OPERATIONS OF PUBLIC ENTERPRISES* 1970-1974 (Millions of Soles at current prices) Page 1 Est. Budget 1970 1971 1972 197'3 1974 I. Own current revenues 10,167.5 11,872.0 14,559.0 20,238.3 24,888.2 1. Sale of goods & services_L! 9,763.4 11,351.3 1'3,996.8 19,908.1 24,546.6 2. Other current revenues 384.1 520.7 560.2 330.2 341.6 II. Direct current expenditures 8, '345. 2 10,269.4 12,524.9 18,134.3 21,784.0 1. Renumeration 2,297.5 2,621.9 3,096.4 4,572.7 5,036.8 2. Purchases of goods & servicesE 5,329.4 6,769.4 8,506.0 12,607.6 15,456.4 3. Interest payments 448.4 484.6 434.0 337.0 615.1 a. external debt ./l. (194-9) (275.2) (255.3) (105.4) (339.8) b. domestic debt :z!!: (253.5) (209.4) (178.7) (231.6) (275.3) 4. Current transfer to private sector 122.6 217.5 281.8 276.0 302.3 5. Social security contributions~ 147., 176.0 206.7 ,41..0 373-4 Savings generated 1,822.3 1,602.6 2,034.1 2,104.0 3,104.2 IIIb. Current public sector transfer (net) -60Ll -503.2 -578.7 139-3 -783.5 1. Transfer revenues m:o 273.6 ~ 922.2 rtP a. from central government (115.2) (273.6) (285.2) (907.2) (130.2) b. from rest of public se·c tor ( 1.4) ( - ) ( - ) ( 15.0) ( 15.0) 2. Transfer expenditures 717-7 776.8 863.9 782.9 928.7 a. direct taxes (508.8) (570.6) (621.0) (464.0) (487.8) b. indirect taxes ( 85.1) (128.2) (139.1) (286.9) (330.2) c. other current transfers to central government ( 36.o) ( 12.8) ( 15.1) ( - ) ( - ) d. other current transfers to rest of public sector ( 87.8) ( 65.2) ( 88.7) (. 32.0) (110.7) IIIc. Current account surplus/deficit 1,221.2 1,099-4 1,455.4 2,243.3 2,320.7 IV. Other revenues 1,396.4 2,329.5 1,937.5 4,586.7 3,107.3 1. Capital transfers from public sector 1,172.7 2,235.8 1,727.1 4,427.3 3,032.6 a. from central government (1,110.6) (2,214.1) (1,654.7) (3,021.6) (2,500.1) b. from COFIDE ( ) ( ) ( 60.0) (1,404.7) ( 531.5) c. from rest of public sector ( 62.1) ( 21. 7) ( 12.4) ( 1.0) ( 1.0) 2. other capital revenue ii:_ 223.7 9'3.7 210.4 159.4 74-7 v. Capital expenditures 1. Capital transfers to public sector 3,438.8 68.1 3,670.6 86.8 4,709.8 492.6 13,223.3 132.0 11,349.4 237 .9 ~- a. to central government ( 68.1) ( 86.8) ( 477-7) ( 132.0) ( 237.9) b. to rest of public sector ( ) ( ) ( 15. O) ( ) ( )  vl75 Table 5.8: PERU - CONSOLIDATED CASH OPERATIONS OF PUBLIC (continued) ENTERPRISES* 1970-1974 (Millions of Soles at current prices) Page 2 Est. Budget 1970 1971 1972 1973 191u V. CaEital expenditures (cont'd.) 2. Fixed capital formation 2,953.8 3,281.2 4,690.0 12,740.8 n,003.9 a. studies ( 149-3) ( 163.5) ( 406.6) (1,407.1) (1,228.9) b. construction (1,827.5) (2,167.3) (3,167.3) (8,917.1) (7,440.4) c. machinery & equipment ( 977.0) ( 950.4) (1,116.1) (2,416.6) (2,334.6) 3. Financial investment 416.9 302.6 -472.9 350.s 107.6 a. buildings, land, etc. ( 50.6) ( 26.5) ( 87.6) ( ll0.7) ( 35.9) b. government bonds (net) ( 357.0) ( 65.6) ( -559.5) ( 233.8) ( 63.7) c. other public securities (net) ( B.l) ( 140.9) ( -130.4) ( ) ( ) d. other investment ( 1.2) ( 69.6) ( 129.4) ( 6.o) ( 8.0) VI. Overall surElus/deficit -821.2 -241.7 -1,316.9 -6 2 393.3 -5 2 921.4 rn. Lon~-term financing 1,689.5 2z737.4 1,737.1 5,630.5 6 2039.1 1. Loans granted -8.5 -12.7 a. disbursements made ( ) ( 8.5) ( 12.7) b. amortization received ( ) ( ) ( ) 2. Loans received 1,689.5 2,745.9 1,749.8 5,522.1 6,039.1 a. foreign (1,576.4) (2,870.4) (,!, 240. 9~ (4,410.3) (3,570.3) i) used funds !J,035.27 6,425.y L2, 232 .,2 L~,340.117 /!l,802 .fl ii) amortization pay- b. domestic ments f2. r 459.57 r 554.97 r 992.07 r 930.17 T -124.~) T 508. 9) Tl,220.2) ;I,232.27 T2,468.'8') T 113.I~ i) used funds r r r ,34.17 /I,837.37 /2,665.97 ii) amortization payments 2so. 3 r 131.'f.l r 68.47 192.w r 25.y r 611.v r 191.v 'III. Short-term financing and cash balances -868.3 -2 2495.7 -420.2 762.8 -ll7.7 Excluding banks and other financial institutions. For . a list of enterprises included, see at the end of these notes. 1 For enterprises whose main activity is commercialization (EPSA, MINEROPERU, EPSEP) it includes only the gross profits from such operations. In the case of EPSEP for the budget years this information is not available and gross value of sales has been used. -~ For enterprises whose main activity is commercialization it does not include the gross purchase of the products which they place in the market, except for EPSEP in 1973 and 1974. (See note 3/- above.) 3 Data may not be in agreement with external debt, or balance of payments, since it refers to interest payments and amortization payments made by the enterprise. It does not include payments made in behalf of public enterprises by the central government. 4 .,. Includes interest payments on both -short-term and long-term financing . , Includes mission estimates of social security contributions of MINERDPERU and ELECTRDPERU for the years 1973-1974. 5 Refers mostly to the sale of used capital goods. ource: Data provided b~ enterprises and Ministerio de F.conomia y Finanzas.  176,;;, Enterprises Included in the Consolidation of Tables 5. 8 and 5. 9 Included all years F.ditora del Diario Oficial "El Pernano 11 Imprenta del Minist~rio de Economia y Finanzas Empresa Publica de Servicios Agropecuarios (EPSA) filnpresa Publica de Servicios Pesqueros (EPSEP) Empresa Publica de Comercializacion de la Harina y Aceite de Pescado (EPCHAP) Empresa Siderurgica del Peru (SOGESA, SIDERPERU) Empresa d& la Coca y Derivados filnpresa de la Sal (EMSAL) filnpresa Nacional de Turismo (ENTURPERU) Empresa del Alcohol Industrial filnpresa Nacional del Tabaco filnpresa Nacional de la Coca Servicio Nacional de Fertilizantes (SENAFER) Petroleos del Peru (PETROPERU) Electricidad del Peru (ELECTROPERU) - For 1970-72 this is the sum of three enterprises: CORSANTA, CORMAN and SEN Corporacion Peruana de Vapores (CPV) Corporacion Peruana de Aeroportes y Aviacion Comercial (CORPAC) filnpresa Nacional de Puertas (ENAPU) Ernpresa Nacional de Telecomunicaciones del Peru (ENTEL) filnpresa de Saneamiento de Lima (ESAL) filnpresa de Saneamiento de Arequipa (ESAR) filnpresa Administradora de Inmuebles del Peru (EMADI) Included from 1971 F.mpresa Minera del Peru (MINEROPERU) Empresa PubJ.ica de Certificaciones Pesqueras del Peru (CERPER) Included from 1972 Industrias del Peru (INDUPERU) Included from 1973 Institute de Investigaciones Agro-Industriales (IIAI) Empresa Nacional de Comercializacion Industrial (ENCI) Two new enterprises in 197'3 had to be excluded as no information was available. ii They are ENA.FER (railways) and EPPA (Promotion of handicraft and cottage industry).  Table 5.9 (a): PERU: PUBLIC ENTERPRISES, 1970 PRINCIPAL CASH ACCOUNTS OF SELECTEO _ (In million of soles at current prices) Sixteen Al 1 PETROPERU SIDERPERU CPV EPSA ELECTROPERJ.1 E.n.te r rises Enter rises Own current revenues 5,201.2 800.5 798.5 393-~ 178 .8 7,372.4 2,795.1 10, 167.S Direct current expenditures 3,944.6 847.8 829.5 429.6 345.8 6,297.3 2,047.9 8,345.2 Savings generated 1,256.6 -74.3 -31.0 -36.2 -167.0 1,075.1 747.2 1,822.3 Curre.nt public sector transfers (net) -497.4 86.o -411.4 -189.7 -601. 1 Transfer revenues ( - ) (90.8) (90.8) (25.8) (116.6) Transfer expenditures (497.4) (4.8) (502. 2) (215.5) (717. 7) Current account surplus/deficit 759.2 -74.3 -31 .o -36.2 -81.0 536.7 684.5 1,221.2 Other reserves 3.3 0.6 251.7 228.6 • 652.3 1,136.5 259.9 1,396.4 Capital trans fe rJ2. ( - ) ( - ( 141.5) (198.6) (616.8) (956.9) (215.8) (1,172.7) Other ( 3.3) ( o.6) (ll0.2) ( 30.0) ( 35.5) (179.6) ( 44.1) ( 223.7) Capital expenditures 926.6 17.2 471. 2 1,604.7 3,019.7 419.1 3,438.8 Fixed capita 1 format ion (597-9) (17. 2) (471. 2) (1 ,'567.0) (2,653.3) (300.5) (2,953.8) Other.!.§_ (328. 7) ( - ) ( - ) (37.7) (366.4) ( 118;6) (485.0) Overall surplus/deficit -164.1 -90.9 -250. 5 192.4 -1,033.4 1,346.5 525.3 -812.2 Long-term financinr/1. -114.2 193.4 267.2 438.0 1,052.2 1,836.6 -147.1 1,689.5 Short-term financing & cash balances 278.3 -102.5 -16.7 -630.4 -18.8 -490.1 -378.2 -868.3 fl ELECTROPERU was created in 1972. The figures for 1970-71 refer to the addition of three public enterprises: Servicios Electricos Nacionales (SEN), Corpo- racion del Mantaro (CORMAN) and Corporacion del Santa (CORSANTA). /2 MINEROPERU did not start operations until 1971. /3 The Empresa Publica de Servicios Agropecuarios (EPSA) deals mainly in the comm.eroiaJ.izationof agricultural commodities. Current income includes .2.!llY the gross profit from the purchase and sale of such products; it does .!!Q.! include the gross sale value. For 1970-72 the figures are those provided by EPSA, for . 1973-74 the figures are mission estimates. /4 It does not include the purchase of the agricultural commodities which EPSA market~ For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates. /5 Until 1972 about 95% of capital transfers are from the Central Government. ln 1973-74 about 25°/o of all capital transfers will be made by the Corporation Financiera de Desarrollo (COFIDE). /6 Includes capital transfers paid by the enterprises and net financial investment . /1 . Includes both domestic and foreign long-term loans. • The figures are net of amortization payments. <l ..... --.J --.J  Table 2,2 (bl: PERU: PRINCIPAL CASH ACCOUNTS OF SELECTED PUBLIC ENTERPRISES, 1971 .... --.J (In million of soles at current prices) (l) <l Subtotal, Remaining Six Selected Eighteen fil All PErROPERU SIDERPERU CPV EPSA ELECTROPERJ! MINEROPERU Enterprises Enterprises Enterprises Own current revenues 5,317.4 1,057.6 1,004.o 418.9 L1 251.2 43.6 /8 8,092,7 3,779.3 11,812.0 Direct current expenditures 4,684.4 1,305.6 973,7 542.1 14 413.8 92.0 /9 8,011.6 2,257.8 10,269.4 Savings generated 633.0 -248.o 30.3 -123.2 -162.6 -48.4 81.1 1,521.5 1,602.6 Current public sector transfers (net) -526.6 80.0 172.4 -3.7 -277,9 -225,3 -503,2 Transfer revenues ( - ( 80,0) (172,7) ( - 252,7) 20.9) 273.6) Transfer expenditures (. 526.6) ( - 0,3) 3.7) 530.6) ( 246,2) 776.8) Current account surplus/deficit lo6.4 -248.o 30.3 -43.2 9.8 -52.1 -196.8 1,296.2 1,099,4 Other revenues 3.5 715,1 215.6 603.1 559,5 2,096.8 232.7 2,329.5 Capital transfers !.J.. ( - (715.0) (215.6) (566.4) (559,5) (2,056.5) ( 179.3) ( 2,235.8) Other 3.5) 0.1) - ) ( 36,7) ( - 4o.3) 53.4) 93,7) Capital expenditures 449.3 13.2 10.5 5.1 1,840.2 540.4 2,858.7 811,9 3,610.6 Fixed capital formation ( 857.6) ( 13,2) ( 9.5) 5.1) (1,837.4) (119, 7) (2,842.5) ( 438.7) 3,281,2) Other~ (-4o8.3) ( - ( 1,0) - ) 2.8) (420,7) 16,2) 373,2) 389.4) Overall surplus/deficit -339.4 453,9 235,4 -48,3 -1,227,3 -33.0 -958,7 717.0 -241.7 Long-term financing 12 -28,1 41.6 -144.9 1,537.7 1,447.2 2,853.5 -116,1 2,737,4 Short-term financing & cash balances 367,5 -495,5 -90,5 -1,489.4 -219,9 33,0 -1,894,8 -600.9 -2,495,7 J.l ELECTROPERU was created in 1972, The figures for 1970-71 refer to the addition of three public enterprises: Servicios Electricos Nacionales (SEN), Corporacion del Mantaro (CORMAN) and Corporacion del Santa (CORSANTA). 11. The Empresa Publica de Servicios Agropecuarios (EPSA) deals mainly in the commercialization of agricultural commodities, Current income includes only the gross profit from the purchase and sale of such products; it does not include the gross sale value, For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates, - /4 It does not include the purchase of the agricultural commodities which EPSA markets. For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates, /5 Until 1972 about 95 percent of capital transfers are from the central government. In 1973-74 about 25 percent of all capital transfers will be made by the Corporacion Financiera de Desarrollo (COFIDE). /6 Includes capital transfers paid by the enterprises and net financial investment. /7 Includes both domestic and foreign long-term loans. The figures are net of amortization payments, /8 Includes only the gross profit from the purchase and sale of minerals. It does not include the gross sale value. The figures for 1971-72 are those provided by MINEROPERU, for 1973-74 the figures are mission estimates. /9 Does not include the purchase of mineral.s which MINEROPERU markets. For 1971-72 the figures are those provided by MINEROW.RU, for 1973-74 the figures are mission estimates, /10 For a list of enterprises included each year, see the notes to Table 5.8. Source: Data provid'ed by enterprises, and Ministerio de Economia y Finanzas.  ·Table 5.9 (c): PERU: PRINCIPAL CASH ACCOUNTS OF SELECTED PUBLIC ENTERPRISES, 1972 (In million of soles at current prices) Subtotal, Remainin'1 0 Six Selected Nineteen- All PErROPERU SIBERPERU CPV EPSA ELECTROPEI«il MINEROPERC- Enterprises Enterprises Enterprises Own current revenues 6,163.1 1,782.6 1,212.3 526.5./ 3 328.8 166.~ 10,180.1 4,378.9 14,559.0 Direct current expenditures 5,264.7 1,490.9 1,131.6 1,007.o/.!!. 508.6 183.cl2 9,585.8 2,939.1 12,524.9 Savings generated 898.4 291.7 80.7 -480.5 -179.8 -16.2 594.3 1,439.8 2,034.1 Current public sector transfers (net) -570.l 149.4 123.9 -8.4 -305.2 -273.5 -578.7 Transfer revenues ( - (149.4) (124.3) ( - (273.7) ( 11.5) 285.2) Transfer expenditures (570.l) ( - ( o.4) 8.4) (578.9) (285.0). 863.9) Current account surplus/deficit 328.3 291.7 80.7 -331.l -55.9 -24.6 289.1 1,166.3 1,455.4 Other revenues 5.8 79.0 146.4 60.0 1,020.6 25.5 1,337.3 600.2 1,937.5 Capital transfers /5 79.0 146.4 60.0 993.5 25.5 1,304.4 422.7 1,727.1 Other 5.8 27.l 32.9 177.5 210.4 Capital expenditures 945.5 17.6 13.6 22.3 1,921.2 -258.5 2,661.7 2,048.1 4,709.8 Fixed capital formation (1,14o.5) (17.6) (13.6) ( 18.5) (1,904.7) (162.2) (3,257.1) (1,432.9) (4,690.0) Other.L§. ( -195.0) ( - ( - 3.8) 16.5) (-420.7) ( -595.4) 615.2) 19.8) Overall surplus/deficit -611.4 353.l 213.5 -293.4 -956.5 259.4 -1,035.3 -281.6 -1,316.9 Long-term financing /7 -82.2 189.7 -195-9 1,284.7 348.9 1,545.2 191.9 1,737.1 Short-term financing & cash balances 693.6 -542.8 -17.6 -991.3 607.6 -259.4 -509.9 89.7 -420.2 /1 ELECTROPERU was created in 1972. The figures for 1970-71 refer to the addition of three public enterprises: Servicios Electricos Nacionales (SEN), Corporacion del Mantaro (CORMAN) and Corporacion del Santa (CORSAN!A). J.l. The Empresa Publica de Servicios Agropecuarios (EPSA) ·deals mainly in the commercialization of agricultural commodities. Current income includes only the gross profit from the purchase and sale of such products; it does not include the gross sale value. For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates. -- /4 It does not include the purchase of the agricultural commodities which EPSA markets. For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates. 12. Until 1972 about 95 percent of capital transfers are from the central government. In 1973-74 about 25 percent of all capital transfers will be made by the Corporacion Financiera de Desarrollo (COFmE). /6 Includes capital transfers paid by the enterprises and net financial investment. /7 Includes both domestic and foreign long-term loans. The figures are net of amortization payments. /8 Includes only the gross profit from the purchase and sale of minerals. It does not include the gross sale value. The figures for 1971-72 are those provided by MINEROPERU, for 1973-74 the figures are mission estimates. /9 Does not include the purchase of minerals which MINEROPERU markets. For 1971-72 the figures are those provided by MINEROPERU, for 1973-74 the figures are mission estimates. /10 For a list of enterprises included each year, see the notes to Table 5.8. Source: Data provided by enterprises, and Ministerio de Economia y Finanzas. ..... --.J U)  Table 5.2 {d}: PERU: PRINCIPAL CASH ACOUNTS OF SELECTED PUBLIC ENTERPRISES, 1973 .... CD 0 <] (In million of soles at current prices) emaim.ng Twenty-onEL!.Q AD PETROPERU SIDERPERU CPV EPSA ELECTROPEmiil MINEROPERU Enternrises En:tez:Dz:j ~es Ectei:::cz:ise~ 6,414.6 1,499.0 8 Own current revenues 2,909.5 713.Jfl. 531.8 388.J/ 12,456.1 7,782.2 20,238.3 Direct current expenditures 5,481.7 2,392.4 1,368.6 1,330.~ 585.6 377.rft-- u,536.7 6,597.6 18,134.3 Savings generated 932.9 517.l 130.4 • -617.4 -53.8 10.2 919.4 1,184.6 2,104.o Current public sector transfers (net) -414.4 -0.l 570.0 106.5 -19.l 242.9 -103.6 139.3 Transfer revenues ( - ( - (570.0) lll.5) ( - (681.5) (240.7) (922.2) Transfer expenditures ( 414.4) ( 0.1) ( - 5.0) 19.1) (438.6) 344.3) 782.9) Current account surplus/deficit 518.5 517.l 130.3 -47.4 52.7 -8.9 1,162.3 1,081.0 2,243.3 Other revenue 776.0 73.3 10.0 ll9.9 1,600.0 1,361.1 3,94o.3 646.4 4,586.7 Capital transfersf-1 ( 776.o) ( '73.3) ( - ( - (1,600.0) (1,361.1) (3,810.4) 616.9) (4,,427.3) Other ( - ) 10.0) (ll9.9) ( 129.9) 29.5) ( 159.4) Capital expenditures 2,066.1 584.9 352.0 301.5 4,204.4 2,491.2 10,000.1 3,223.2 13,223.3 Fixed capital formation (2,058.1) (584.9) ( 352.0) (241.3) (4,198.2) (2,491.2) (9,925.7) (2,815.1) (12,740.8) Othe~ 8.o) ( - ( - ( 60.2) 6.2) 74.4) ( 408.1) 482.5) Overall surplus/deficit -771.6 5.5 -2ll.7 -229.0 -2,551.7 -1;139.0 -4,897.5 1,495.8 -6,393.3 Long-term financing / 7 804.2 -55.7 240.0 63.9 1,913.9 1,313.4 4,279.7 1,350.8 5,630.5 Short-term financing & cash balances -32.6_ 50.2 -28.3 165.l 637.8 -174.4 617.8 145.0 767.8 1.1. ELECTROPERU was created in 1972. The figures for 1970-71 refer to the addition of three public enterprises: Servicios Electricos Nacionales (SEN), Corporacion del Mantaro (CORMAN) and Corporacion del Santa (CORSANTA). /3 The Empresa Publica de Servicios Agropecuarios (EPSA) deals ma.inly in the commercialization of agricultural conrrnodities. Current income includes only the gross profit from the purchase and sale of such products; it does not include the gross sale value. For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates. - .!.!!... It does not include th~ purchase of the agricultural commodities which EPSA markets. For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates. 11. Until 1972 about 95 percent of capital transfers are from the central government. In 1973-74 about 25 percent of all capital transfers will be made by the Corporacion Financiera de Desarrollo (COFIDE). /6 Includes capital transfers paid by the enterprises and net financial investment. /7 Includes both domestic and foreign long-term loans. ·The figures are net of amortization payments. /8 Includes only the gross profit from the purchase and sale of minerals. It does not include the gross sale value. The figures for 1971-7'2 are those provided by MINEROPERU, for 1973-74 the figures are mission estimates. /9 'noes not include the purr.hase of minerals which MINEROPERU markets. For 1971-72 the figures are those provided by MINEROPERU, f'or 1973-74 the figures are mission estimates. ill. For a list of enterprises included each year, see the notes to Table 5.8. Source: Data provided by enterprises, and Ministerio de Economia y Finanzas.  Table 5.9 {e): PERU: PRINCIPAL CASH ACCOUNTS OF SELECTED PUBLIC ENTERPRISES, 1974 (In million of soles at current prices) ema.im.ng /10 /1 Twenty-one- All PETROPERU SIDERPERU CPV EPSA ELECTROPEiur- MINEROPERU Enterprises Enxe!:Erises Ente!:,Erises /3 /8 Own current revenues 6,897.5 4,4o4.3 1,660.0 1,340.6- 884.8 483.~ 15,670.7 9,2l7.5 24,888.2 /4 /9 Direct current expenditures 5,924.1 3,930.2 1,513.8 1,314.o- 974.3 546_3- 14,202.7 7,581.3 21,784.o Savings generated 973.4 474.1 146.2 26.6 -89.5 -62.8 1,468.o 1,636.2 3,104.2 Current public sector transfers (net) -46l.3 -0.l l05.3 -65.5 -421.6 -361.9 -783.5 Transfer revenues ( - lll.5) lll.5) 33.7) 145.2) Transfer expenditures 461.3) ( 0.1) 6.2) 65.5) 533.1) 395.6) 928.7) Current account surplus/deficit 5l2.l 474.l 146.1 26.6 15.8 -128.3 1,046.4 1,274.3 2,320.7 Other revenues 81.2 33.l 1,588.8 1,263.9 2,967,0 14o.3 3,107.3 Capital transfers.Li ( 81.2) ( - (1,588.8) (1,263.9) (2,933.9) 98.7) (3,032.6) Other ( - (33.1) ) 33.1) 41.6) 74.7) Capital expenditures 2,415.2 518.2 92.0 44.3 1,703.4 3,267,6 8,o4o.7 3,308.7 ll,349.4 Fixed capital formation (2,415.2) (518.2) (92.0) (44.1) (1,703.4) (3,267.6) (8,040.5) (2,963.4) (ll,003.9) Other ./.2._ ( - ( 0.2) 0.2) 345.3) 345.5) Overall surplus/deficit -1,903.l 37.l 54.l 15.4 -98.8 -2,132.0 -4,027.3 -1,894.1 -5,92l.4 Long-term financing/7 1,702.9 300.6 -23.0 -50.9 419.2 1,917.6 4,266.4 1,772.7 6,039.1 Short-term financing & cash balances 200.2 -337.7 -31.l 35.5 -320.4 214.4 -239.1 12l.4 -ll7.7 /1 ELECTROPERU was created in 1972. The figures for 1970-71 refer to the addition of three public enterprises: Servicios Electricos Nacionales (SEN), Corporacion del Mantaro (CORMAN) and Corporacion del Santa (CORSANTA). !.l. The Empresa Publica de Servicios Agropecuarios (EPSA) deals mainly in the commercialization of agricultural commodities. Current income includes only the gross profit from the purchase and sale of such products; it does not include the gross sale value. For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates. - /4 It does not include the purchase of the agricultural commodities which EPSA markets. For 1970-72 the figures are those provided by EPSA, for 1973-74 the figures are mission estimates . .Li Until 1972 about 95 percent of capital transfers are from the central government. In 1973-74 about 25 percent of all capital transfers will be made by the Corporacion Financiera de Desarrollo (COFIDE). 1.& Includes capital transfers paid by the enterprises and net financial investment. /7 Includes both domestic and.foreign long-term loans. The figures are net of amortization payments. /8 Includes only the gross profit from the purchase and sale of minerals. It does not include the gross sale value. The figures for 1971-72 are those provided by MINEROPERU, for 1973-74 the figures are mission estimates. jg Does not include the purchase of minerals which MINEROPERU markets. For 1971-72 the figures are those provided by MINEROPERU, for 1973-73 the figures are mission estimates. <l /10 For a list of enterprises included each year, see the notes to Table 5.8. ..... co ..... Source: D_ata provided by enterprises, and Ministerio de Economia y Finanzas. 1s2v Table 5.10: PERU - CENTRAL GOVERNMENT BUDGETARY TRANSFERS TO PUBLIC SECTOR AGENCIES, 1973-74 (Million soles at current pricesl1) Type of agency Bµ.dKet trenstere for 197J~7q C."'ent Capital Decentralized institutions 4,838 666 Non-financial public enterprises 1,037 5,716 Financial enterprises 70 4,413 (of which to be directly channeled on to non-financial enterprises) (1,935) Lending funds 1,722 Social securities 1,067 Local governments (est.) 1,000 Beneficencias publicas (est.) 500 Total 8,512 12,517 Ll The budget assumes an 8.5 percent annual price increase. Source: Budget law, enterprise budgets, social securities budgets, mission eotimate. I \  'l"aDl.e '.).ll la): l:'ERU: BIENNIAL -PLAN 1~75-74, PUBLIC INVESTMENT AGRICULTURE (In millions of current soles) Budgeted resources 1973-74 Esti.ma.ted Planned e!Eenditure 1973-74 External 1 from Expenditure Domestic External Domestic,. loans signed Technical ~ro~ram.s 1971-72 Total resources resources in budget Dec. 31, l~F2 A. Central ~overnment 2,§90 3, 7@tt 2,5~ Ministry of Agriculture 2, 70 ~-6~ , 4,w,~ 2.5~~ 3, ,5 3, 5 _ ,5 1. Agr. Reform and Rural Settlement ( 454) ( 374) ( 80) 2. Water and Irrigation (4,668) (2,323) (2,335) , 3. Production promotion ( 585) ( 463) ( 122) 4. Marketing ( 287) ( 286) ( 1) 5. Research ( 156) ( 156) ( - ) 6. Forestry, etc. ( 103) ( 103) ( - ) 7. General CRYRZA 120 ( 143) 247 ( 143) 207 ( -40 ) 170 40 B. Rest of ;e1.1blic sector 294 ~ 173 125 173 125 EPSA film 203 138 125 138 125 1. Renovation of Agricultural Machinery 2. • Livestock for Northern Peru ( - 288) ) ( 151) ( 45) ( 106) ( - ) ( 45) ( 106) ( - ) ( ( 78) ( 78) ( 78) 3. other ( - ) ( 34) ( 15) ( 19) ( 15) ( 19) IIAI - Research and Development 20 20 20 ONAA - Food support 6 15 15 15 Public sector total 3,114 6,941 4,228 2,712 3,927 22.Ih~ c. ~ ~ Additional on ~roject list 4 1. La Joya Colonization 3 7 ~2 13 2. Animal Health program 251 112 139 3. Tinajones Irrigation, II 132 93 39 4. Integrated Development Project 580 240 340 5. National Food Markets 3-87 194 193 6. Iparia Forestry Dev. 15e 19 139 7. Rural Integration (SINAMOS) 835 448 387 <l 8. Ma.jes Irrigation 1,465 258 1,207 ..... co 9. Tocache Oil Plant 101 35 66 w For general notes and sources, see Table 5.11 (1).  .... CD ~ Table 5.11 (b): PERU: BIENNIAL PLAN 1973-74, PUBLIC INVEST~ <I FISHERIES (In millions of' current so.les) Budg~~~d resources 1973-74 Estimated Planned e~enditure 1973-74 External, from Expenditure Domestic External Domestic, Loans signed Technical ~ro~ra.m.s 1971-72 Total resources resources in bu~et Dec. 31~ 1272 A. Central government 559 2~392 1,tt67 925 720 Ministry of' Fisheries 549 2,355 1, 30 925 (;gg -9 1. Research and Development ( 15) ( 32) ( 32) ( - ) 2. Production ( 342) (2,175) (1,250) ( 925) 3. Marketing ( 18) ( 43) ( 43) ( - ) 4. Training ( 35) ( 44) 21)· ( 44) ( - ) 5. Works and Equipment ( 139) ( ( 21) ( ) 6. Fisheries• Development in Eastern Region ( - ) ( 40) ( 40) ( - ) CRYRZA 10 37 37 31 B. Rest of public sector 118 901 901 '891 --- EPCHAP 21 771 771 771 1. Research and Development ( 21) ( 42) ( 42) ( - ) ( 42) ( - ) ( - ) ( ( ( - ) ( ~ 2. Bulk carriers 729) 729) 729) EPSEP - Research and Developm,e nt 74 25 25 25 f ~ ~ CERPER - Research and Development 12 39 39 39 IMARPE - Research a.~d Development 11 66 66 56 Public sector total 677 3,293 22368 925 b_611 For general notes and sources, see Table 5.11 (1). I /  Table 5.ll lC): PERU: BIENNIAL PLAN 1973-74, PUBLIC INVESTMENT INDUSTRY AND TOURISM (In millions of current soles) Budgeted resources 1273-74 Estimated Planned expenditure 1973-74 External, from Expenditure Domestic External Domestic, Loans signed Technical ~rograms 1971-72 Total resources resources in budget Dec. 31, 1972 A. Central ~overnment 156 431 431 421 Ministry of Industry and Commerce 146 366" 366 366 1. Own activities ( 66) ( 66) ( 66) 2. For delegated progra.nlS ( 300) ( 300) ( 300) CRYRZA (Ind. and Tourism) 10 65 65 55 B. Rest of public sector 275 9,0§7 4,2~3 4,774 1,982 2,557 SIDERPERU - Steelmaking 41 55 517 559 MINEROPERU - Metallurgy 11. 50 ' 2,777 1,009 1,768 571 . 1,077 L Copper Refinery (1,580) ( 503) (1,077) ( 503) (1,077) 2. Zinc Ret'inery (1,152) ( 461) ( 691) ( 34) ( - ) 3. ·tead Refinery 130 ( 45) 1,608 ( 45) 251 ( - ) ( 34) 251 ( - ) PETROPERU - Fertilizer 11. 1,357 1,357 EM3AL - Salt production 123 123 123 123 ENTURPERU - Tourism 25 437 370 67 380 Minor enterprises 18 98 98 98 other programs 2,858 1,793 1,o65 l. Steel ( 326) ( 174) ( 152) 2. Other Basic Metals ( 100) ( 50) ( 50) 3·. Metalworking Industries ( 682) ( 495) ( 187) 4. Chemicals and PetrochemiGals ( 267) ( 267) ( - ) 5. Pulp and Pa.per (1,414) ( 738) ( 676) 6. other J3a.sic Industry ( 69) ( 69) ( - ) ITINTEC - Research and Development 11 74 74 74 Pu.blic sector total 429 9,488 4,714 4,774 2,403 2,557 c. Additional on EroJect list 1,t26 585 541 1. Expansion of SIMA Shipyard 53 241 212 2. Construction of Bulk Carriers, SIMA 673 344 329 <I ..... a> /1 Note that other programs o:t· MINEROPERU a.re shown under Mining in Table 5.11 (d). Ul 11.. Note that other programs of PETROPERU a.re snown und.er Hydrocarbons in Table 5 .11 ( e). For general notes and sources, see Table 5.11 (1).  ..... CD en <J Table 5 .11 (d): PERU: BIENNIAL PLAN 1973-74, PJBLIC INVESTMENT MINING (In millions of current soles) Budgeted resources 1973-74 Estimated Planned -~ndi ture 19TI_:.74 External, from Expenditure Domestic External Domestic, Loans signed Technical programs 1971-72 Total resources resources in budget Dec. 31, 1972 A. Central government 20 100 100 91 Ministry of Energy and Mines 20 To To - 40 CRYRZA 60 60 51 B. Rest of :public sector 242 42..396 l,~7 ?.,*19 h,972 2,_l'.z._Q. MINEROPERU - Mining 11. 232 4,385 ' '6 , 19 , 1, §"Gf /2 2,150 1. Cerro Verde (3,367) (1,217) (2,150) (1, 217)- (2,150) 2. Tintaya ( 458) ( 189) ( 269) ( 90) ( - ) 3. Other Programs ( 560) ( 560) ( - ) ( 654) ( - ) JCAE - Nuclear Energy 10 11 11 11 Public sector total 41.1±.~~ . s.Q.II 21.4~2 ~l-<2~ ~,150 11. Note that further programs of MINEROPERU are shown under Industry in Table 5.11 (c). 11. Of this total, 1,160 million sales represent the equivalent of a US$30 million roreign loan which the Government plans to take up specifically for a capital transfer to MINEROP~RU;tnis loan had not been signed at the end of 1972. For general notes and sources, see Table 5.11 (1).  Table 5.11 (e): PERU: BIENNIAL PLAN 1973-74, PUBLIC INVESTMENT HYDROCARBONS (In millions of current soles) Budgeted resources I9 73-?I+ Estimated Planned ~nditur~ 1973-74 External, from Expenditure Domestic External Domestic, Loans signed Technical programs 1971-72 e, Total reso1.1.rces resources in budget Dec. 31 2 1972 A.. Central government 20 29 29 29 Ministry of Energy and Mines 20 29 29 29 B. Rest of ~blic sector 2,300 3,735 967 2, 7~~ 1,718 85l PETROPERU /1 2,300 3,735 Wt ,7' 1, 7IB /2 851 L Refining ( 235) (l, 067) ( 113) ( 597) 2. Petroleum Exploration ) (1,501) ) ) 3. Natural Gas Exploration ) (2,065) ( 147) ) (1,605) ) ( 254) 4. Petroleum Production ) ( 696) ) ) 5. Other programs ) ( 324) ) ) Public sector total 2,320 3. 764 996 2,768 1,747 85l c. Additional on project list 499 81 418 1.- Talara Natural Gas Plant 174 174 2. Carbon Black Pl~t 73 19 54 3. Solvents Complex 252 62 190 J.1. Note that one further program ot· PETROPERU is shown under Industry in Table 5 .11 ( c). 1.1 Of this total, 776 million sales represent tne equivalent of a US$20 million external loan which the Government has taken up expressly to make a capital transfer to PETROPERU. The enterprise also includes in its budget as domestic resources an external general-purpose bank loan which COFIDE is expected to take up on its behalf; this loan had no"t been signed .... <l (D at the end of 1972. -.J For general notes and sources, see Table 5.11 (l).  Table 5.11 (f'): PERU: BIENNIAL PLAN 1973-74, PUBLIC INVESTMENT .... POWER CX) CX) <l • (In millions of' current so.les) Buageteu resources I973-rq Estimated Pl~~<!_-~enditure 197.L-74 External, f'rom Expenditure Domestic External Domestic, Loans signed Technical programs 1971-72 Total resources resources in budget Dec. 51. 1972 A. Central government 305 208 193 15 166 15 Ministry~ofEnergy and Mines 45 25 25 25 CRYRZA 260 183 168 15 141 15 B. Rest of' publ~<:_-~~ 3,740 7,357 4 1±.~7 s.2.30 s.754 2,_128 ELECTRO PERU 3,740 7,357 a, 27 2,930 2,754 2,128 1. Mantaro Power Station, I (2,311) ( 650) (1,661) ( 650) (1,661) 2. Installation of' Diesel Generators ( 243) ( 143) ( 100) ( 143) ( lOD) 3. Electrif'ication, Iquitos and P..1callpa_ ( 351) ( 102) ( 249) ( 102) C 249) 4. Mantaro Power Station, II ( 233) ( 69) ( 164) ( 69) ( - ) 5. Cuzco Thermal Power ( 163) ( 38) ( 125) ( 38) ( - ) 6. Lima-Chimbote Transmission ( 101) ( i9) ( 82) ( 19) ( - ) 7. Works in Reconstruction Area ( 305) C ·187) ( 118) ( 187) ( 118) 8. Canon de Pata Power Station ( 434) ( 316) ( 118) ( 47) ( - ) 9. El Chorro Power Station ( • 439) ( 439) ( - .) ( 19) ( - ) 10. Piura Electrif'ication ( 305) ( 107) ( 198) ( 11) ( - ) 11. Other projects (1,977) (1,862) ( 115) (1,469) ( - ) Public sector total 4,045 L._565 4,620 2,945 2,920 2,143 c. Additional on Eroject list 136 40 96 1. Lamb~yeque Electrif'ication 39 20 19 2. Charcani Power Station, V 97 20 77 /1 Early in 1973 a loan agreement 1·or t.t1is proJect was signed with the Government of' Japan.· For general notes and sources, see Table 5.11 (1).  'l'abJ.e 5.ll ~~l: PERU: BIENNIAL. PLAN 1973-74, RJBLIC INVESTMENT TRANSPORT ANTI COMMUNICATIONS (In millions of current soles) Eiictge'Eea: resources I9'7~-'l1±. Estimated Planned e?El2enditure 1973-74 External, from Expenditure Domestic External Domestic, Loans signed Technical programs 1971-72 Total resources resources Unknown/! in bu$e:t . Di;:~. :il l~Z2, A. Central ~overnment 3,~80 7,081 3,679 1,033 .s.2.69 3,8§1 1,027 Ministry of Trans. and Comm. 3, 50 5,972 3,213 390 2,369 3, 3 390 1. Studies ( 108) ( 77) ( 31+2) ( - ) ( 31) ( - ) 2. Mech. E~uipm. Service (1,163) ( 183) ( 638) ( 183) 3. Infrastructure for Aviation ( 398) ( 280) ( - ) ( U8) ( - ) 4. Infrastructure for Shipping ( 48) ( 48) ( - ) ( - ) ( - ) 5r Traffic Eng., Mass Transit, etc. ( 273) ( 210) ( 63) ( - ) ( 63) 6. Highway Construction (3,185) (1,659) ( 144) (1,382) ( 144) 7. Highway Maintenance ( 692) ( 492) ( - ) ( 200) ( - ) 8. Post and Telegraph Service ( 105) ( 105) ( - ) ( - ) ( - ) CRYRZA 230 1,109 466 643 23f3 637 B. Rest ot· E!tblic sector 613 4,2g5 1,862 582_ 1,850 2,020 583 CORPAC - Airp0rt Equipment 44 23 113 150 ll3 CPV - Shipping 15 745 417 10 318 417 10 ENAPU - Port Constr. and Equipm. 450 1,120 812 108 200 812 108 ENTEL - Telecommunications 86 1,142 518 465 159 481 465 Decentralized institutions 18 2 2 2 Railways (ENAFER) /2 1,023 1,023 195/2 4,493 ll,375 5,541 1,616 4,219 5,341 1,610 c. Additional from ~roject list /3 1,363 541 822 1. Oroya-Aguaytia Hignway 333 139 194 2. Broadcasting and ETV 364 u6 248 3. Computer Centre 132 23 109 4. Urban and Rural Telephones 329 221 108 5. Telex System 205 42 163 11. This is the onl¥ sector in which the source - a draft Plan version - uses tnis category. /2 As the railway enterprise, ENAFER, is newl,y set up, no budget was available, and tne drat·t Plan did not give any sources of finance. The amount shown as budgeted for tne railway program is a capital transfer included ~n <] the Central Government budget. .... 0) U> /3 It is not quite clear exactly which projects from the project list are strictly additional to tne above planned expenditures; there may be some slight double-counting. For general notes and sources, see Taole 5 ..ll (1) .  ..... U) Table 5.11 (h): PERU - BIENNIAL PLAN 1973-74, PUBLIC INVESTMENT 0 <l HOUSING AND URBAN INFRASTRUCTURE (In millions of current soles) Planned E!Eenditure 1973-74 Budgeted Resources 1973-74 Estimated Eirternal, from Expenditure Domestic Eirternal Domestic, Loans, signed Technical Programs 1971-72 Total Resources Resources in Budget Dec. 31 2 1972 A. Central government 1 2 446 1,693 1,027 666 891 666 Ministry of housing 7L6 ~ 615 170 IB' 170 1. Water and Sewerage ( 593) ( 567) ( 397) ( 170) ( 397) ( 170) 2. Housing and land improvement ( 129) ( 174) ( 174) ( • - ) ( 174) ( - ) 3. Other programs ( 24) ( 44) ( 44) ( - ) ( 44) ( - ) CRYRZA 700 908 412 .496 276 496 B. Rest of Eublic sector 920 1 2 990 1,368 622 1,368 EMADI - Housing and rehabilitation % 745 745 ~ ESAL 200 1,240 618 622 618 1. Lima water 2. Lima sewerage ( 649) ( 485) J ( 512) } ( 622) 3. Other 18 ( lo6) ( 106) ( - ) ESAR - Arequipa W. & S. 5 5 5 SER.PAR - Parks, etc. 107 Public Sector Total 2 2 366 3,683 2,395 1 2 288 22 259 666 c. Additional from Eroject list 398 228 170 Urban water and sewerage 398 228' 170 For general notes and sources, see Table 5.11(1).  Table 5.11 (i): PERU - BimNIAL PLAN 1973-74, PUBLIC INVESTMENT HEALTH AND SANITATION (In millions of current soles) Planned Expenditure 1973-74 Budgeted Resources 1973-74 Estimated External, from Expenditure Domestic External Domestic, Loans, signed· Technical Programs 1971-72 Total Resources Resources in Budget Dec. 31, 1972 A. Central government 510 870 520 350 482 350 Ministry of Health 410 753 ( 193) U5 343 ( 122) 390 ( 71) m (122) 1. Rural water and sewerage ( 71) 2. Construction and equipment of hospitals, clinics, etc. ( 560) ( 339) ( 221) ( 319) (221) CRYRZA 100 117 110 7 92 7 B. Rest of public sector 127 1,685 1,685 1,685 Decentralized institutions 12 100 100 100 Socialsecurities - hospitals 115 1,585 1,585 1,585 1. sso ( 20) ( 777) ( 777) ( 777) 2. SSE ( 95) ( 808) ( 808) ( 808) Public sector total 637 2,555 2,205 350 2,167 = C. Additional from project list 549 244 305 1. Hospital equipment oo 12 ~ 2. National Health Institute 151 70 81 3. Chimbote Hospital 205 81 124 4. Rural water and sewerage plan ·127 91 46 Excludes - for lack of information - the hospital construction program of the Beneficencias Publicas (Public Welfare Organization). <l Note that further programs of SSO and SSE are shown. under Other in Table 5.11(1). .... .... <j) For general notes and sources, see Table 5.11(1).  .... c.D I'-) <l Table 5.11 (k): PERU - BIENNIAL PLAN 1973-74, PUBLIC INVESTMENT EDU0A'fi0N (In millions of current soles) Planned Expenditure 1973-74 Budgeted Resources 1973-74 Estimated External, from Expenditure Domestic External Domestic, Loans, signed Technical Programs 1971-72 Total Resources Resources in Budget Dec. 31, 1972 A. Central government 930 3,244 1,889 1,351 1 2167 407 Ministry of education ~ , 1,687 1,317 1,000 373 1. School construction ( 760) ( 760) ( - ) } (1,000) ( -) 2. School equipment ( 968) ( 431) ( 537) (373) 3. Secondary education reform project (1,086) ( 446) ( 640) ( - ) ( -) 4. Educational 'IV ( 190) ( 50) ( 140) ( - ) ( -) CRYRZA /. 280 236 202 34 167 34 B. Rest of public sector 295 1,065 611 454 457 Universities - construction & equipment 240 1,000 ~ Eli" 402 Decentralized institutions 55 65 65 55 Public sector total 1,185 4,305 2,500 1,805 1,624 407 After the original budgets were finalized, a loan has been signed with the Government of Hungary which increases the foreign resources available for these purposes. For general notes and sources, see Table 5.11(1).  Table 5.11 ~): PERU: BIENNIAL PLAN 1973-74, RJBLIC INVESTMENT OTHER PROGRAMS (In millions of current soles) Budgeted resources 1973-'74 Estimated Pl.anned ~enditure 1973-74 External, from Expenditure Domestic External Domestic, Loans signed Technical programs 1971-72 Total resources resources in budget Dec. 31. 1972 A. ~t£.al -~overnmen~ 2,8fg 3,875 3,640 235 3,170 235 Ministry of Interior 1,070 1,070 · 1,070 CRYRZA - Own Programs 39a 515 353 162 275 162 SINAMOS 2,i50/6 1,696 1,696 1,322 other 11. 280 594 521 73 503 73 B. Rest of public sector /2 645 2 296 2,2~5 11. 2,~5 11 Social securities - General /3 465" 1:465 ,4 5 , 5 Public enterprises_ /4 190 320 320 320 Decentralized institutions D.. 50 511 50:l 11 500 11 Public sector total 3,505 §....171 5,925 246 5,455 246 -- -- fl Includes Presidency, Foreign · Office, Judiciary, Ministry of Econoll\Y and Finance, Ministry of Labor, INP and ONIT. /2 Ex:cludes local governments for lack of information . ./3 Note that further programs of the social securities are shown under Health and Sanitation. /4 Includes the development banks, El Feruano and Imprenta del MEF. '\ /5 Includes Central Reserve Bank and institutions belonging to the Presidency. /b This includes the expenditure in 1971 and first quarter of 1972 of these institutions wm.cn from April l, 19.72 make up SINAMOS. General. Notes-·~Tab1e 5 .ll a) The intent of the table is to show only those expenditures that are a p~rt or investment programs, and not to include routine equipment purchases for ongoing operations, in accordance with the Peruvian practice of having an investment budget distinct from tne operational budget. The different sources have used varying practices in this respect, however, and as a result the :t:igures sometimes do include some amounts for "non-program" P'irchases. b) On1y real investment is included, not financial investment or capital transfers. c) The figures for estimated expenditure 1971-72. are mission estimates, based on mid-1972 eval.uation data by INP, and information directly from enterprises. d) The figures for planned expenditure have as sourc~ a draft 1973-74 Pl.an, and worksheets 1'rom INP of December 1972. For some programs, these sources had no information-:- planned is then te.lten as equal to budgeted. e) The figures for budgeted resources in the case of central governmen~ come from various early budget documents. The totals for each ministry nave· been adjusted to conform to the adopt_ed budget, but this means that the breakdown in individual programs either is a mission estimate or is lacking. In case of enterprises and social securities the source is their budgets as submitted to <I the Ministry of Econoey and Finance, and for decentralized institutions it is the publicized global investment budget. ..... U) (JJ f) Ex:ternal resources include grants. Included as budgeted are only drawings fro,n such loans as were reported by Direccion General de Credito Pub1ico as signed by ear11 January 1973; in some.cases the public budget does include loans not yet signed. ·g) Domestic resources include. loans and transfers from the· centrai government.  19'-+v Table 5.12: PERU - BIENNIAL PLAN 1973-74, PUBLIC INVESTMENT SUMMARY (In millions of current soles} Budgeted resources 1973-74 Estimated Planned Expenditure 1973-74 • External, from expenditure Domestic External Domestic, loans signed 1971-72 Total resources resources Unknown in budget Dec. 31 1 1972 (a} AGRICULTURE Central government 2,990 6,643 4,055 2,588 3,754 2,588 Rest of public sector 294 298 173 125 173 125 Additional from project list 4,296 1,643 2,653 (b) FISHERIES Central government. 559 2,392 1,467 925 720 Rest of public sector 118 901 901 891 Additional from project list (c) INDUSTRY & TOURISM Central government 156 431 431 421 Rest of public sector 275 9,057 4,283 4,774 1,982 2,557 Additional from project list 1,126 585 541 (d) MINING Central government 20 100 100 91 Rest of public sector 242 4,396 1,977 2,419 1,972 2,150 Additional from project list (e) HYDROCARBONS Central government 20 29 29 29 Rest of public sector 2,300 3,735 967 2,768 1,718 851 Additional from project list 499 81. 418 (f} POWER Central government 305 208 193 15 166 15 Rest of public sector 3,740 7,357 4,427 2,930 2,754 2,128 Additional from project list 136 40 96 (g) TRANSPORT & COMMUNICATIONS /1 /2 /2 Central government 3,880- 7,081 4,556- 2,525- 3,321 1,027 Rest of Public Sector 613 4,295 2,454 1,841 2,020 583 Additional from project list 1,363 541 822 (h) HOUSING & URBAN INFRASTRUCTURE Central government 1,446 1,693 1,027 666 891 666 Rest of public sector 920 1,990 1,368 622 1,368 Additional from project list 398 228 170 (i} HEALTH & SANITATION Central government 510 870 520 350 482 350 Rest of public sector 127 1,685 1,685 1,685 Additional from project list 549 244 305 (k ) EDUCATION Central government 930 3,240 1,889 1,351 1,167 407 Rest of public sector 295 1,065 611 454 457 Additional from project list tl) OTHER PROGRAMS Central government 2,860 3,875 3,640 235 3,170 235 Rest of public sector 645 2,296 2,285 11 2,285 11 Additional from project list ll. /4 ALL PROGRAMS /1 Central government 13,676- 26,562 17,907 8,655 14,212- 5,288 Rest of public sector 9,569 37,075 21,131 15,944 17,305 8,405 Additional from project list 8,367 3,362 5,005 /1 Excludes the purchases of transport aircraft made with defense funds, see note to Table 5.1. /2 The amounts shown in Table 5.ll(g) as "unknown" have here been distributed. The proportion for external financi has been taken as the average one observed for projects in this sector on the project list for external financin► /3 Excludes local governments and beneficencias publicas. /4 This does not include expenditure falling into the liquidation period of FY1971-72. Therefore, the total shown for 1973-74 should be increased by some 1,100 million to get total expenditures during the biennium. Source: Table 5.11. See especially the notes at the end of 5.11(1)  vl95 Table No. VI. MONETARY STATISTICS 6.1 Monetary Developments, 1968-72 (Dec. 31) 6.2 Summary Accounts of the Banking System, 1968-72 (Dec. 31) 6·.3 Summary Accounts of the Central Reserve Bank, 1968-72 (Dec. 31) 6.4 Summary Accounts of the Banco de la Nacion, 1968-72 (Dec. 31) 6.5 Summary Accounts of the Specialized Banks, 1968-72 (Dec. 31) 6.6 SUI11I11ary Accounts of the Commercial and Savings Banks, 1968-72 (Dec. 31). 6.7 Interest Rates and Commissions on Financial Intermediaries• Loans to the Public 6.8 Credit to Private Sector by Purpose, 1968 - June 1972  .... U> m <I Table 6.1: PERU - MONETARY DEVELOPMENTS 1968-72 (Dec. 31) Million of Soles Annual Chan.Bez Percent l9bB l9b9 1970 1971 1972 1959 1970 1971 1972 I. International. Reserves (net) 4.3 5.9 15.8 1'3.4 15.1 16.4 153.1 -18.5 15o9 II. Domestic Cred:Lt 41.5 45.9 52.l 66.1 80.0 10.6 13.5 26.9 21.0 Public sector (net) 10.3 n.6 12.2 18.1 21.1 12.6 5.2 48.4 16.6 Central Govemment (net) 12.7 12.6 12.1 22.7 26.5 -.8 -4.o 87.6 16.7 Rest of public sector (net) -2.4 -1.0 -1.0 -4.6 -5.4 Pri11:ate sector credit 31.2 34.3 39.9 48.1 58.9 9.9 16.3 20.6 22.5 other assets (net) 1.1 2.1 2.7 -0- -i.6 III. Bank Liabilities 46.9 53.9 70.6 79·.5. 93.5 14 .9 31.0 12.6 17.6 Money and quasi-money 36.5 41.9 55.9 63ol 74.8 14.8 33.4 12.9 18.5 Money 19.3 23.6 34.3 36.4 42.9 22.3 45.3 6.1 17.9 Quasi-money 11.2 18.3 21.6 26.7 31.9 6.4 18oO 23.6 19.,.5 Capital and surplus 9.3 10.9 13.6 15.2 17.6 11.2 24.8 n.8 15.8 Other 1.1 1.1 1.1 1.2 1.1 -0- -0- 9.1 -B.3 Source: Banco Central de Reserva , IMF, and mission estimates.  vI97 Table 6,2; PERU - SUMMARY ACCOUNTS OF THR BANKING SYSTEM, 1968-72 (Dec. 31) (In millions of soles) I9oB I9o9 I970 I97I !9721!, I. International Reserves (net) 4.3 5.9 15.8 13.4 15.1 Foreign .assets 8.7 10.3 · 19.1 18.2 20.2 Foreign liabilities 4.4 4.4 3.3 • 4.8 4.9 II. Domestic Credit 37.6 41.8 46.7 57 .o 68.6 To Central Government (net) 12.7 14.0 14.5 22.4 26.4 To local governments (net) -.1 -.1 -o- .3 n.a. To other official entitie5 (net) -2 .3 -2.3 -2.3 -4.6 -5.3 To private sector 31.2 34 . .3 39.9 48.l: 58.9 Official capital and surplus -5.o ~6.2 -8.l -9.0 -9.6 Other 1.4 2.3 1~6 .5 -1.6 Interbank float -.3 -.1 LO -.1 n.a. Foreign reserves revaluation acconnt -0- -0- -0- -.5 n.a. III. Long-term Jj_abilities to I~ternational Institutiens 1.1 1.1 1.1 1.2 1.0 IV• Liabilities to P ri va te S actor 40.8 . 46.6 61.4 69.3 74.8 Money 19.2 23.6 34.2 36.4 42.9 Currency 10.0 ll.8 16.3 18.9 21~9 Demand deposits 9.2 11.8 17.9 17.5 21.0 Quasi-money 17.3 18.3 21.6 26.6 29.7 Time deposits 3.1 3.7 5.9 7.3 1.9 Saving deposits 7.2 7.6 7.9 8.9 10.0 Deposits in foreign currency 4.2 3.4 .2 .2 .5 Mortgage bonds 2.8 3.6 7.6 10.2 11,3 Capital and surplus 4.3 4.7 5.5 6.2 1.8 Foreign exchange certificates -0- -0- .1 .1 -0- [! Preliminary Source: Central Reserve Bank, IMF, and mission estimates.  198~ Table 6.3: PERU - SUMMARY ACCOUNTS OF THE CENTRAL RESERVE BANK., 1968-72 (Dec. 31) (In billions of· soles) 1268 1969 1970 1971 1212 I. Foreign Reserves (net) 4.0 5.5 12.5 ll.6 17.0 Foreign assets 5.2 7.4 1.4.1 13.2 20.0 Foreign liabilities 1.2 1.9 1.6 1.6 3.0 II. Domestic Credit 10.5 10.9 11.8 14.2 16.1 To Central Government (net) 9-4 9.5 9.5 9.5 9.8 To other officia·l entities (net) -.3 -0- -0- -0- To Banks 1.6 1.9 3.4 6.7 8.6 To Banco de la Nacion -0- -0- -0- 2.1 2.1 To commercial and saving banks .2 .5 1.2 1.8 1.6 To specialized banks 1.4 1.4 2.2 2.8 4.9 Official capital and surplus -.2 -.7 -.9 -.9 -.9 Net unclassified assets -0- .2 -.2 -.9 -1.1 Foreign Exchange Revalua.tion Acct. -0- -0- -0- .2 ·- .3 III. Liabilities to Banks 4.4 4.5 7.8 6.5 1.1 To Banco de la Nacion -0- .4 .5 .5 3.4 To commercial and saving banks 4.0 3.6 6.7 5.5 3.6 To specialized banks .4 .5 .6 .5 .7 IV. Liabilities to Private Sector 10.1 ll.9 16.5 19.3 22.4 Currency 10.0 11.8 16.3 18.9 21.9 Demand deposits -0- .1 .1 .2 .1 Deposits in foreign currency -0- -0- -0- -0- .3 Foreign exchange certificates -0- -0- .1 .2 .1 Source: Banco Central de Reserva and IMF  vl99 Table 6.l~: PERU - SUMMA..~Y ACCOUNTS OF THE.BANCO DE LA NACION, 1968-72 (Dec. 31) (In millions of soles) 1968 192'9 1970 1~7! I97~ I. Foreign Reserves (net) -1.1 -.3 4.3 3.2 -1.l~ Foreign assets . .1 .4 4.7 4.8 -0- Foreign liabilities 1.2 .7 .4 1.6 l.~ II. Cash, Reserve Deposits and Other Claims on Central Bank -0- .).i .5 .6 3.8 currency -0- .l. .4 .4 .5 .Deposits -0- .3 .1 .2 3.3 III •. Domestic Credit 1.8 1.9 1.8 4.1 8.o To Central Government (net) 2.9 3.2 -1.1 3.6 -1.0 To local governments (net) -0- -0- .2 .3 n.a. To other official entities (net) -1.3 -1.6 -1.6 -4.S . -4.8 To Banks .8 1.6 6.0 1.2 12.0 To commercial and saving banks -0-. .3 5.5 6.7 (11.0) To specialized banks .8 1.3 .5 .5 ( 1.0) To private sector .2 .2 .5 1.1 .9 Official capital and surplus -.6 -.1 -1.3 -1.8 -1.9 Net unclassified assets -.2 -.8 -.9 -1.8 -1.9 Iv. Liabilities to Central Bank -0- -0- -0- 2.1 2.1 v. Liabilities to other Banks -0- .s 5.3 3.7 .5.1 To commercial and saving banks -0- .5 4.2 3.5 4.4 To specialized banks -0- -0- 1.1 .2 .7 vr. Liabilities to Private Sector .8 1.4 l~l-t 2.1 2.3 Demand deposits .2 .8 .8 .7 .8 Time deposits .6 .6 .4 1.3 1.2 Deposits in foreign currency -o-- -0- .2 .1 .3 Saving deposits -0- -0- -0- -0- -0- Source: Banco Central de Reserva, IMF, and mission estimates. A small difference in the totals are due to rounding.  200v Table 6.5: PERU - SUMMARY ACCOUNTS OF THE SPECIALIZED BANKS; 1968-72 (Dec. 31) (In billions of soles) '- 192:iB 192:i9 1970 1971 1972 I. Foreign Reserves (net) -1.4 -1.1 -.6 -.1 .1 Foreign assets .2 .1 .2 .1 .1 Foreign liabilities 1.6 1.2 .8 .8 -0- II. Cash Reserve Deposits and Other Claims on Central Bank .4 .6 .6 .5 1.0 Currency .3 .4 .J .3 .J Deposits .1 .2 .3 .2 .1 III. Domestic Credit 8.5 .9.8 13.6 17.4 21.0 To Central Government (net) -.1 .1 1.3 3.8 5.o To local governments (net) -0- . -0- -0- -0- -0- To other official entities (net) -.4 -.4 -.6 -.2 -.6 To Banks 1.0 1.5 4.0 2.6 3.3 To Banco de la Nacion .1 -0- 1.1 .2 .1 To commercial and s,a.ving banks .9 1.5 2.9 2.4 2.6 To private sector 12.8 14.2 15.4 18.2 23.0 Official capital and surplus -4.1 -!-1.8 -5.4 -6.~. -1.0 Net unclassified .assets -.8 -.8 -.9 -.6 -2.7 IV. Long-term Liabilities to International Institutions 1.1 1.1 1.1 1.2 l.] v. Liabilities to Central Bank 1.4 1.4 2.2 2·. 8 Q.9 VI. Liabilities to other Banks 1. 7 2.7 2.0 2.0 1.8 To Banco de la Nacion .8 1.5 .5 .1 1.0 To commercial and saving banks .9 1.2 1.5 1.3 .8 VII. Liabilities to Private Sector 3.2 4.1 8.4 11.3 14.3 Demand deposits .4 .5 .1 1.1 l.l~ Time deposits -0- .2 .6 .1 .1 Saving deposits .1 .1 .1 .2 .J • Deposits in foreign currency -0- -0- -0- -0- -o- Mortgage bonds 2.5 3.1 6.8 9.1 11.? Cc1>ital and surplus .2 .2 .2 .2 .2 Source: Banco Central de Reserva and IMF  .v201 Table 6.6: . PERU - SUMMARY ACCOUNTS OF THE COMMERCIAL SAVING BANKS, 1968-72 (Dec. 31) ( In billions of soles) l2bB 12b2 1~70 I~7I i97~ I. Foreign Reserves (net) 2.7 1.9 -.5 -.7 -.4 Foreign assets 3.3 2.4 -o- -0- -o- Foreign liabilities .6 .5 .5 .7 .4 II. Cash, Reserve Deposits and other Claims on Central Bank 4.0 3.6 6.8 5.6 6.3 Currency 1.9 1.6 2.1 2.1 2.1 Deposits 2.0 2.0 4.7 3.5 3.6 Certificates .1 -0- -0- -0- -0- III. Domestic Credit 21.3 25.9 37 .2 42 .5 53.2 To Central Government (net) .. 3 1.2 4.9 5.5 7.8 - To local governments (net) -.1 -.1 -.2 -.1 . -0- -To other official entities (net) - •.3 -.3 -.1 -0- -0- To Banks .8 1.7 5.4 4.6 5.3 To Banco de la Nacion -0- .6 3.9 3.3 4.4 To specialized banks .8 1.1 1.5 1.3 .9 To private sactor 18.2 19.9 24.0 28.7 . 35.o Net capital and surplus -.1 -.8 .6 -.1 -.l Net unclassified assets • 2. 1.i 3.7 3.8 3.7 5.2 IV• Liabilities to Cent:ira~ Bank .2 .4 1.7 1.8 1.7 v. Liabilities to other Banks To Banco de la Nacion To specialized banks 1.0 -0- 1.0 ., 1.8 1.3 6.8 3.9 2.9 9.0 7.1 1.9 13.6 4.0 2.6 ' VI. Liabilities to Private Sector 26.7 29.1 35.l 36.7 43.8 Demand deposits 8.5 19.h .16.J 15.6 18.7 . Time deposits 2.5 2.9 4.9 5 .3 . . 5.9 Saving deposits 1.1 7.5 7.3 8. 7 . 9.7 Deposits in foreign currency 4.2 3 .4 .1 .1 .2 Mortgage bonds .J .4 .7 1.1 1.6 Capital and Surplus 4.1 4.5 5.3 5~9 1.1 Source: Banco Central de Reserva and IMF  • 202v Table 6.7: PERU - INTEREST RATES AND COMMISSIONS ON FINANCIAL INTERMEDIARIES' LOANS TO THE PUBLIC (In percent) Interest Commissions Total 2 1. Commercial banks /1_ 12 1 13 2. Specialized banks a. Agricultural Bank To small farming (up tos/. 100,000) 7-10 7-10 To medium farming (from s/. 100,000 to s/. 500,000) 12-13 12-13 To large fanning (above S/. 500,000) 13 1 14 Foodstuffs production loans 7-9 1 8-10 Loans on warrants 10 1 11 b. Industrial Bank Ordinary- loans 8-12 Ll. 9-13 supervised loans Loans to nontraditional export 6-10 ilk 7-11 industries 6 1 7 Discounted letters of cradit 12 2 14 c. Mining Bank To small mining 5 5 To medium mining 7-12 8-13 d. Central Mortgage Bank Mortgaged loans 10-12 1 11-13 Housing loans 9-11 1 10-12 3. Nonbank financial intennediaries a. Savings and loan associations To associated credit cooperatives 7 1 To homeowners 12 1 13 b. Financing corporations and investment companies 12 1 13 11. s against Central Reserve Bank credit line must have an interest rate under Loan· 9 percent. /1. In the case of loans secured with documents or requiring speqial investigation, an additional 1 percent commission is also charged. Moreover, the unutilized portion of a credit loan is subject to a maximum charge of 1 percent quarterly. Plus an additional 1 percent charge for technical studies if required. Commission is charged only on loans in excess of s/. 50,000. Source: IMF and Banco Central de Reserva  .v203 Table 6.8: PERU - CREDIT TO PRIVATE SECTOR BY PURPOSEf 1968-June 1972 (Amount outstanding at end of .period in billion of soles) (In billions of soles, end of period) Average annual percent June ·increase Sector 1968 1969 1970 1971 1972 1911,1968 Agriculture 6.6 7.6 8 • .3 8.8 7.8 10.0 Mining 1.0 1.0 1.0 1.3 2.,5 9.2 Manufacturing and fishing fl. 9.8 10.8 12.4 14.9 16.1 1,.0 Construction 5.6 7 • .3 9.5 12.9 18.2 11. .32.0 All other fl. 9.8 11.9 14.9 18.3 .3.2 Totals L!! 31.2 34.3 39.9 48.1 51.0 15.5 /1_ Almost wholly manufacturing; fishing has averaged only s/. 600 million in the last three years. ft Does not include the mutual.es; no information available; have averaged about s/. 3.4 in the last three years. L1 This is a consolidation of remaining categorieij from which credit to public sector has •been excluded &, Total credit .to private sector as reported by the Central Reserve Bank. * The sector data is as reported by the Superintendencia .de Banca y Seguros. Source: SUperintendencia de Banca y Seguros and Banc~ Central de Reserva  .- - Table No. VII. AGRICULTURAL AND FISHING STATISTICS 7.1 Major Agricultural Products 1960, 1965 and 1968-72 7.2 Areas Planted and Specific Yields 1960, 1965, 1968-71 7.3 Indexes of Areas Planted, Crop and Livestock Production 1960, 1965, 1968-72 7.4 Progress in Agrarian Reform 1964-69, and 1969-72 7.5 Land Settlement by Type of Ownership (November 30, 1972) 7.6 Anchovy Catch, 1968-72  Table 7.1: PERU - MAJOR AGRICULTURAL PRODUCTS 1960, 1965 and 1968-72 (Million metric tons) 1960 1965 1968 1969 ~970 1971 1972 est!iiiates . A. Cro:es Rice (paddy) 358 291 286 444 587 591 440 Barley Maize • 180 442 179 591 146 526 164 590 170 617 159 616 .. 586 Wheat 153 147 113 137 125 122 126 Potatoes 1,398 1,568 1,.526 1,856 1,930 1,968 1,1,0 Bananas 350 586 805 868 6,412 8.54 919 .. 8,700 Sugarcane 1,101 7,772 7,272 7,591 8,)()() Seed cotton 362 357 286 255 248 233 225 Cof'fee 33 48 65 68 65 71 71 B. Livestock Products Beef 63.2 74.0 76.0 82.6 84.9 89..S 93.4 Pork 39-1 43.1 43.5 46.7 46.5 53.6 51.4 Mutton 24.6 21.2 22.3 23.4 23 .8 23.6 19.9 Poultry 16.4 30.6 39.0 42 .4 47.7 52.6 74.5 Other meats /1 54-4 45.8 39.4 41.5 42.2 41.0 . .. Milk /2 487.5 775.3 751.8 781.8 845.2 918.0 900.0 Eggs 16.6 18.6 24.0 25.3 27.7 30.0 37.2 Wool & f'iber 14.4 16.2 16.4 17.4 17 ..5 16.8 16.4 /1 Comprises goat, llama, alpaca and guinea-pig. 72 Includes ~mall amounts of goat's milk . . Source: 1960-71 data from Ministerio de Agricultura, Oficina de Estadistico . 1972 figures are mission estimates, based upon growth rates supplied by Oficina Sectorial de Planificacion. ~ This latter office makes independent production estimates for planning purposes, but as these sometimes ~ dif'fer markedly from the ones published by the Oficina de Estadistico the two sources cannot be used / directly together.  Table 7 .2: PERU - AREAS PLANTED AND SPECIFIC IlELDS 196o, 1965, 1968-71 (In thousands of hectares and kilograms per hectare, respectively) 196o 1965 1968 1969 1970 1971 Rice, area 86.6 74.9 76.o 109.9 140.4 147.3 yield 4,129 J,878 3,765 4,045 4,180 4,010 Barley, area 202.0 176.2 173.4 181.7 186.3 183.0 yield 891 1,015 840 900 910 870 Maize, area 324.o 359.7 311.1 368.4 i382.1 373.8 yield 1,364 1,642 1,690 l,6oO 1,610 1,6.50 Wheat, area 154.7 153.2 136.0 _, 146.5 136.2 138.5 yield 999 956 830 935 920 880 Potatoes, area 254.0 251.1 250.9 303.5 315.1 320.0 yield 5,500 6,245 6,085 6,115 6,120 6,150 Bananas, area 35.o 47.5 60.8 65.1 66~5 66.2 . yield 10,000 12,330 13,250 13,210 12,830 1;3,890 Sugar cane, area planted 77.2 94.2 79.2 78.7 78.3 83.9 yield, area planted 99,750 82,500 91,800 81,soo 96,950 99,000 (145,300) (+51,100) (137 , _ 400) (lu0,6o0) (156,800) (173,600) (yield, area harvested) Coffee, area 76.4 92.7 115.5 119.0 113.4 123.2 yield 425 520 56o 574 575 515 Cotton, area 252.4 238.1 166.2 168.6 143.8 136.3 yield 1,433 1,500 1,731. 1,510 1,720 1,105 Source: "Estadistica Agraria del Peru", by Oficina de Estadistica, Ministerio de Agricultura. -~·,  .v201 Table 7.3: PERU - INDEXES OF AREA.S PLANTED, CROP AND LIVESTOCK PRODUCTION 1960, 1965, 1968-72 (1970 farm prices) 196o 1965 1968 1969 1970 1971 1972 l. Crops Domestic consumption /1 Area planted 88 87 82 96 100 100 •• .Production value 73 78 73 91 100 101 89 Export production/2 Area planted 121 127 108 109 100 102 •• Production value 112 117 106 98 100 102 102 Total Crops Area planted 95 96 87 99 100 101 •• Production value 86 91 84 93 100 101 93 I. Livestock food Eroducts /3 Production value 89 89 95 100 107 113 '1 Includes rice, barley, maize, wheat and potatoes. ~2 Includes sugar cane, coffee and cotton. The export of cotton refers to the fiber; seed oil is consumed dOlllestically. 13 Includes beef, pork, mutton, poultry, alpaca, llama, goat, guinea-pig, cow's milk and goat's milk. :Ource: Area and volume figures fran tables 7 .1 and 7.2. ~'here table 7.1 shows no production figure for 1972, the 1971 figure was used in the index number computation. 1970 farm prices from Ministerio de Agricultura, Oficina Sectorial de Planificacion.  \ Table 7,4: PERU - PROGRESS IN AGRARIAN REFORM 1964-69 AND 1969-72 Law 15037 Law 17716 Target of /2 1964-mid 1969 mid 1969-1972/l Total Law 17716- Expropriation Units 795 1,939 2,734 Area, thousand has. 1,470 3,226 4,696 12,677 Animals, thousand head 270/3 1,395 1,665 Value, million soles 843.L 8,559 9,402 18,050 Land and buildings (635) (7,574) (8,209) Animals (208)3 ( 985) (1,193) Payments·, million soles 1,105- 8,297 9,402 Cash (579) (1,136) (1,715) Bonds (526)' (7,161) (7,687) Reallocation Area, thousand has. 570 2,250 2,820 Families 19,820 86,609 106,509 331,900 • /1 By November 30, 1972. Z2 The target should be compared to the total, not just to progress under Law 17716. L3 The explanation of the negative differance between value and payments during this period is not known. Source: Direccicfo General de Reforma Agraria y Asentamiento Rural. •  Table 7 .5: PERU - LAND SETTLEMENT BY TYPE OF OWNERSHIP (November JO, 1972) Type of Ownership Individual., Coooerative Conmnm.ity Total. A. On land realloca tad under agrarian reform Number of uni ts Area, .• thousand has. .. 123 161 1,240 62 332 19 1,126 .. 2,821 Number of families 16,690 55,664 16,001 18,154 106.,509 Average land, has/family 7.4 22.3 20.7 62 .. 0 26.5 B. On newly opened agricultural land Number of uni! ts Area, thousand has Number of families •• 202 9,062 70 37 2,612 - - 239 ... 11,674 Average land,bas/family 22.3 14.1 20.5 \ \ ~ Sociedad Agricola de Interes Social Source: Direccion General de Refonna Agraria y Asentamiento Rural <I N 0 <D  Table 7 .6: PERU - ANCHOVY CATCH, 1968-72 (In thousands of metric tons) Calendar Fishing Fishing Year Catch Season Catch Year Catch Jan. -Aug. 5,195 1968 10,263 Sept.-Dec. 4,468 Ja11. -Aug. 5,619 1968/69 10,087 1969 8,960 Sept.-Dec 3,341 Jan. -Aug. 7,598 1969/70 10,939 1970 12,277 Sept.-Dec. 4.,779 Jan. -Aug. 5,213 1970/71 9,992 1971 10,282 Sept.-Dec. 5,069 Jan. -Aug. 4,246 1971/72 9.,315 Estimate 1972 4,700 Sept.-Dec. 454 Note: There are two distinct ianchovy fishing seasons in Peru, separated by some months with virtually no catch. Source: IBRD report 'WH-212a and EPCHAP information.  .v211 Table No. VIII. INDUSTRIAL STATISTICS 8.1 Index of Manufacturing Production, 1970-72 8.2 Mineral Production, 1968-72 8,3 Electric Power: Capacity Installed and Energy Generated by Department, 1971 8.4 .Fishing and Fishmeal Industry 1960, 1965, and 1968-72  212v Table 8.1: PERU - INDEX OF MANUFACTURING PRODUCTION (1968 = 100) Annual growth rates Estimate Average 1970 1971 1972 1969/70 1971 1972 Consumption goods 123.6 140.2 150.5 11.2 13.4 -2:1 Food products 119. 7 135.9 147 .5 9.4 13.5 8.5 Beverages 109.5 129.2 132.4 4.6 18.0 2.5 Tobacco 124.1 134.3 146.4 11.4 8.2 9.0 Textiles 151.3 173.0 177 .3 23.0 14.3 2.5 Apparel and footwear 115.6 124.9 145.5 7.5 8.0 16.5 Furniture and fixtures 116. 7 122.0 109.3 8.0 4.5 -10.4 Printing and publishing 105.4 105.0 127.1 2.7 - 0.4 21.0 Miscellaneous 123.5 150. 9 179.6 11.1 22.2 19.0 Intermediate goods 115.3 120.3 123 .o 7.4 4.3 2.2 Fishmeal 132.5 113.2 58.9 15.1 -14.6 -48.0 Lumber and products 124.3 156.1 160.9 11.5 25.6 3.0 Paper and products 102;5 115.6 124.8 1. 7 12.8 8.0 Leather and products 134.6 148.8 151.8 16.0 10.6 2.0 Rubber products 144.4 144.9 173.9 20.1 0.,4 20.0 Chemicals 107.3 127.9 149.0 3.6 · 19. 2 16.5 Petroleum products 110.2 120.2 139.2 5. 0. 9.1 15.8 Non-metallic minerals 96.9 119. 9 135.5 - 1.6 23.7 13.0 Basic metals 115.4 106. 8 114.3 7 .4 - 7.5 7.0 Capital goods 119. 7 138.1 176.7 • 9.4 15.4 28.0 Metal fabricating 128.2 151.1 170.7 13.2 17.9 13.0 Non-electrical machinery 99.1 117 .6 164.1 - 0.5 18.7 39.5 Electrical machinery etc. 102.5 113.4 140.6 1. 2 10.6 24.0 Transport equipment 139.8 160.0 224.0 18.2 14.5 40.0 Total, factories 119. 7 131.5 141.1 9.4 9.9 7.3 Cottage industries 106.3 109.4 114.3 3.1 3.0 4.5 Total, manufacturing 117. 7 127.9 136.8 8~5 8.7 7.0 Source: Secretariado Tecnico del Plan Economico de Corto Plazo I  v213 Table 8.2: PERU - MINER.AL PROJJJCTION, 1968-72 (In tho•eanda of metrle ton~ if not otherr-rise stated) 1968 1969 1970 1971 1972 - - -.:---/-1 - -..._Metals_ Copper 211 201 218 214 218 Zink 339 357 360 377 437 Lead 163 169 164 172 186 Iron Ore · 9,01~ 9,270 9,713 8,849 9,301 Silver (tons) 1,127 1,175 1,217 1,235 .1,237 Non -metallic Coal 161 162 156 94 9 Petroleum (Mln. bar:eels) 27.1 26.3 26.3 22.6 22.4 /1 Measured as fine content of ores except for iron ore, which is - gross. The metal figures seemingly ·refer to total theoretical content rather than recoverable content; the dii'ference being most marked in the case .at zink, where it amowits to some 15%. Source: Secretariado Tecnico del Plan Economico de Corto Plaza.  Table 8.3, PERU - ELECTRIC POWER: CAPACITY INSTALLED AND ENERGY GENERATED I\) .... BY DEPARTMENT, 1971 .i:- <I (KW and MWh respectively) Installed capacity Energy Generated Piibh.c Captive Public Capt1Ve Department Total Service Plant Total . Service Plant Amazonas 1,084 964 120 1,983 1,353 630 Ancash 179,457 144,117 35,340 290, 7i,6 247,120 43,646 Apurimac 4,110 3,207 903 3,613 2,943 670 Arequipa 57,253 38,358 18,895 137,308 107,l.44 30,164 Ayacucho 7,842 2,478 5,364 10,595 2,767 7,828 Cajamarca 9,560 3,294 6,266 17,382 5,252 12,130 Cuzco 52,561 48,101 4,460 177,199 172,291 4,908 Huancarelica 19,766 673 19,093 10,346 1,046 69,300 Huanuco 9,673 3,015 6,598 19,420 6,317 13,103 Ica 118,861 12,621 106,240 411,652 32,594 379,058 Junin 113,131 13,668 99,463 410,980 22,440 388,540 La Libertad 88,310 11,196 71,114 274,791 10,001 264,784 Lambayeque 49,764 12,983 36,781 149,568 • 39,041 110,527 Lima and Callao 714,825 610,343 113,482 2,682,076 2,525,278 156,798 Loreto 14,371 9,521 4,850 38,817 24,704 14,113 Madre de Dios 444 297 147 462 240 222 Moquegua. 118,788 2,405 116,383 315,982 2,087 313,895 Pasco 130,517 705 129,812 139,385 1,423 737,962 Piura 42,155 15,835 26,320 122,071 38,316 BJ, 755 Puno 14,128 6,oos . 8,123 28,174 8,981 19,193 San Martin 2,051 1,870 181 2,339 1,956 383 Tacna 42,859 36,464 6,395 35,766 33,974 1,792 Tumbes 5,245 4,825 420 8,232 6,920 1,312 Total 1,796,755 974,005 822,750 5,948,909 3,296,815 2,652,094 Source: Ministerio de Energia y Minas c r6a  Tabla 8.4: PERU - FISHING AND FISHMEAL INDUSTRY 1960, 1965, and 1968-72 (In thousands of metric tons) E$timate 1960 1965 1968 1969 1970 1971 i972 Anchovy catch 2,944 7,23h 10,263 8,960 12,277 10,282 4,700 Fishmeal Prcxiuction 530 1,282 1.,922 1,611 ·2,253 1,935 940 Exports 507 1,260 2,083 1,656 1.,873 1,752 1,600 Domestic consumptionl.l 20 45 47 40 33 53 68 Change in stocks 3 -23 -208 -85 347 130 -728 Closing stocks 77 237 392 307 654 788 60 Fish oU Production 48 254 292 161 311 408 217 Exports 35 138 323 141 200 276 290 Other fish Eroducts Exports 47 29 24 25 25 21 . 37 {}.. Incl udas losses during storage Sowtee: :1960 and 1965 from IBRD report WH-206a 1968 - 71 from IMF 1972 mission estimate ~ .... 01  \'>~- "----------- 21Gv Table No. XI. PRICE AND WAGE STATISTICS 9.1 Changes in Cost of Living Index for Major Ci ties, 1967-72 9.2 Cost of Living Index for Lima-Callao, 1967-72 9.3 Legal Minimum Salaries and Wages by Department at the End of 1972  .v217 Table 9.1: PERU - CHANGES IN COST OF LIVING INDEX FOR MAJOR CITIES, 1967-72 (Percentage change between annual averages) /1 Cumulative 1968 1969 1970 1971 191r 1909-72 Lima-Callao 19.1 6.2 5.0 6.8 7.2 27.,7 Arequipa 21.6 8.7 6.1 4.9 11.5 34.9 /2 Trujillo • 10.2 2.1 5.1 10.6 30.8 Chiclayo 24.2 14.9 5.6 2.9 10.3 37.6 Cuzco 18.4 9.7 1.6 4.3 6.9 24.3 Iquitos 26.5 10.5 5.8 3.4 7.8 30.4 Huancayo 22.1 9.8 3.1 2.6 9.6 27.2 /1 The 1972 values are calculated between averages for ten months in the .case of Trujillo, Chiclayo, Cuzco and Iquitos, between averages for eleven months in the case of Arequipa and Huancayo. Only for Lima...Callao has the full ...year average been available. /2 The current index number series for Trujillo only starts from 1968. Source: Price index series published by Oficina Nacional de Estadistica y Censos  21av Table 9.2: PERU - COST OF LIVING INDEX FOR LIMA-CALLAO, 1967-72 (1966=100) Total Food Housing Clothin~ Other IOO% 5~ 2I.0% 12/3~ Il:i.~~ 1967, average 109.8 111.2 106.6 108.3 110.4 1968, average 130.7 130.0 128.4 122.5 143.5 1969, average 138.9 136.9 139.3 128.u 153.8 1970, average 145.9 141.1 154.3 136.9 157 .8 1971, average 155.8 150.8 164.4 149.9 166.1 1972 January 162.7 158.2 172.2 158.6 168.2 February 164.2 161.1 172.6 158.6 168.2 March 171.2 173.5 173 ..1 160.5 169.6 April 166.4 162.4 173.8 164.0 171.)~ May 164.9 159.1 174.0 165.3 171.9 June 167.1 161.8 177 .3 166.0 172.0 July 166.0 159.1 177.8 167.2 172.2 August 166.6 159.5 177.8 169.6 172.8 September 168.9 162.4 178.0 171.)~ 173.2 October 169.4 16J.8 178.4 172.1 174.0 November 168.2 161.4 178.5 172.5 174.0 December 168.8 160.4 183.1 173.3 174.0 Average 167.0 161.9 176.4 166.6 171.8 Source: Monthly Bulletin from Oficina Nacional de Estadistica y Censos  / .v219 ' /1 Table 9.J: PERU - LEGAL MINIMUM SALARIES AND WAGES BY DEPARTMENT- AT THE END OF 1972 (soles) Non-agricultural Occupations Agricultural Occupations _ _ _ _ _..,._M=o....,nt • h=l...,y_S=a,...l=a-r,._y__D=a=i=l:.i..Y-:W-=a=g=e_ _M_o,..n.,.t...,h"""ly~S=a:iary .... Daily Waie Amazonas 1620-1890 54-63 1410-1620 47-54 Ancash 1200-1750 40-55 1200 40 Apurimac 1110-1230 37-41 Boo 25 Arequipa ·1500-2100 50-70 1050-1500 3.5-.50 Ayacucho 1410-1620 47-54 f-20p 40 Cajamarca 1485-1670 44.,.49 1200-1458 40-43 Cuzco 1440-1620 48-54 1050'-1110 35-37 Huncavelica 1470-1500 49-50 1200 40 Huanuco 1470-1650 49-55 • 1260-1.590 42-.53 Ica 1500-1800 50-60 1200-13.50 40-4.5 Junin 1530-1860 51-62 1260-1.530 42-51 La Libertad 1400-1650 41.5-50 963-1450 29-44 Lambayeque . 1400-1600 45-51 1320-1500 37-43 Lima/2 1320-1560 44-52 1500-1650 .50-55 Loreto 1950-2200 65-74 1680-1950 57-65 Madre de Dios 2160 67 1740 57 Moquegua • 1500-1800 50-60 1050-1200 35-40 Pasco 1470-1740 . 49-58 1260-1650 42-55 Piura 1650-2200 55-70 1590-2400 53-65 Puno 1200-1560 40-52 1050-1110 35-37 s~n Martin 1620-1890 54-63 1410-1620. 47-54 Tacna 1500-1800 50-60 1050-1400 35-40 Tumbes 1800-1900 60-66 1590-1800 53-60 Lima-Callao 2400 80 . 1800 60 /1 There are variations also within' departments - between provinces and sometimes districts - and that is the reason for giving a range in the table. /2 Department of Lima excluding the Province of Lima, which is part of Lima-Callao (Metropolitan Lima). Source: Mi.nisterio de Trabajo, Oficina de Remuneraciones. lntf'rnational Bank for Reconstruction ahd Development 1S-18 H Street N.W., Washington, D.C. 20433 US.A. ·.'"t-' !" ;. r.~ ,-··/ \•11~, ';~.: . r .· t ~' ,L I f,.j,, .. {,.;\: ",,." ':.·.•;· ,-,j. ':· - • ,,-,,,1 -~ •-1 :.~\f)\~-g-;'~·L;.,.,'~ t • -. '· 1·;~·: 1 _; ~:/'- ~i~·, < '~ti~.~/ 17 .i a : I~.-~ .- r~-'i~_~:. :· ·:I~\ ~~-:~1~ i~ ~ -~~·-_; 1\ '.i-~. ~ ', ·:- I~. ~t' 11 ,~i •• .,_ .;.°L_.1.•,·.--=-r•.I· • .•_,~:,1.-:.:• - ';-"' ► \I:._ ~1•,1~ •~;1•:t' ~,.,1\::_f'i• ~,1![,?,llrj'"~ ..__ 1,{11 :t ·,,~' 1 ' -2j~):: :·,.