Peru - Economic position and prospects

Report No. 655-PE Economic Position and L 1975/77 Prospects of Peru Rii &4a u LuA. & Ca i L17 March 3, 1975 Latin America and the Caribbean Regional Office Not for Public Use Document of International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be publishod. quoted or cited without Bank Group authorization. The Bank Group does not accept tespon- sibility for the accuracy or completeness of the report.  JRRENCY EQUIVALENTS* Currency Unit - Sol (S/.) U,S$1 S/.38.70 S/.1 = US$0.026 s/.1,ooo,oOo = US$2$5,o US$1 ,00,00O = V.38,700,000 GOVERNMT OF PERU FISGAL PEPIOD January 1 to Decslber 31 of following year (a biennium), starting from January 1, of uneven years. (*) Above rate applies to some 90 percent of total foreign exchange transactions (largely trade) and is used normally for conversions in thi9 report. Other transactions are done at a drat market rate of US$1 = S/.43.38  GLOSSARY OF ABBREVIATIONS AID United States Agency for International Development COFIDE Corporaci6n Financiera de Desarrollo CORPAC Corporaci6n Peruana de Aeropuertos y Aviacion Comercial CPV Corporacion Peruana de Vapores CENTROMIN Empresa Minera del Centro del Per'u EEA Empresas Electricas Asociadas ELECTROPERU Electricidad del Peru. ENAFER Empresa Nacional de Ferrocarriles ENAPIJ Empresa Nacional de Puertos ENCI Empresa Nacional de Comercializaci6n ENTEL Empresa Nacional de Telecomunicaciones del Per'u ENTURPERU Empresa Nacional de Turismo EPCHAP Empresa PIublica de Comercializacion de la Harina y Aceite de Pescado EPSA Empresa de Servicios Agropecuarios EPSEP Empresa de Servicios Pesqueros ESAL Empresa de Saneamiento de Lima FERTIPERU Empresa de Fertilizantes GDLT General Directorate of Local Transport GDP Gross Domestic Product GDY Gross Domestic Income IDB Inter-American Development Bank ITAI Instituto de Investigaciones Agro-Industriales INDUPERU Industrias del Peri LAFTA Latin American Free Trade Association MINEROPERU Empresa Minera del Perui MTC Ministry of Transport and Communications PETROPERU Petroleos del Peru SEM Servicio de Equipo Mec6nico SIMA Sociedad Industrial de la Marina UNDP United Nations Development Program   This report was prepared by Mr. Elkyn A. Chaparro on the basis of a visit to Peru in January 1975. He discussed it with the Peruvian authorities during the last week of February 1975. The report draws on the results of a mission in April-May 1974 composed of: Jose A. Guerra Mission Chief Elkyn A. Chaparro Deputy Mission Chief Fernando Mendoza Public Investment Analysis Alfredo Gutierrez Sector Analysis Elke Meldau Public Sector Finances Alirio Parra Petroleum Economist   TABLE OF CONTENT S Page No. COUNTRY DATA MAP INTRODUCTION, SUMMARY AND CONCLUSIONS . ................. i-xiv I. DEVELOPMENT STRATBEY AND RECENT ECCNOMIC DEVELOPMENTS ........................ #...... 1 A. Development Strategy . .. ......................... 1 B. Recent Economic Developments .................... 2 Resource Use and Savings ..... 3 Public Sector Finances ....................... 6 Monetary Policy and Prices .............. ..... 11 Wages and Salaries ........... .......................... . 13 Balance of Payments Performance and External Debt ... ..... . 15 II. RECENT SECTORAL DEVELOPMENTS ......................... 23 Introduction ...... ....................... 23 Agriculture ......... ............................ 23 Manufacturing ......... 0................... ................ 25 Fisheries ...............................AD R........... 26 Mining ............................................. . .. 27 Petroleum .......................... 28 Transport..,....... ...9........ 32 Power ................... * ...0 ... 34 III. FUTURE DEVELOPMENT ISSUJES AND PROSPECTS .............. . ..................... 36 Investmnent and Output ......... . 38 Mobilization of National Savings .................00. 40 Balance of Payments and External Debt .............. 49 A onclusion ..................................... 55 STATISTICAL APPINDITX   ANNEX I PTae 1 of 2 COUNT RY DATA - PERU AREA POPULATION DENSITY 2 1,280,219 km2 14.1 million (mid-1972) 11 per 112 Rate of Growth: 2.9% (from 1961 to 1972) 400 per km2 of arable land POPULATION C'ARACTERISTICS (1970) HEALTH (1970) Crude Birth Rate (per 1,000) 42 Population per physician 1,950 Crude Death Rate (per 1,000) 11 Population per hospital bed 440 Infant Mortality (per 1,000 live births) 73 INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIPi/