Announcement of Meeting of the Consultative Group for Peru on February 25, 1972

1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 February 25 , 19 72 Subject: Meeting of the Consultative Group for Peru A meeting of the Consultative Group for Peru sponsored by the World Bank was held in Paris on February 24 and 25, 19 72. This was the first meeting of the Group since 1966, and its purpose was to assist in coordina- tion of development financial assistance to.Peru. The meetin~ was attended by representatives of the governments of Belgium, Canada,, Finland, France, Germany, Italy, Japan, the Netherlands, • ~.pain and the United Kingdom. Representatives of the Intemational Monetary Fund, the Inter-American Development Bank, the Inter-American Committee for the Alliance for Progress, the United Nations Development Programme and the International Coffee Organization were also present. The United States, Switzerland and the Organisation for Economic Co-operation and Developmant were represented by observers. The delegation of the Government of Peru was headed by General Francisco Morales Bermudez, Minister of Economy and Finance. The Group discussed a report on the current economic situation and future prospects prepared by the World Bank, and considered Peru's needs for external financing in the th11=e years 1972-74. In his address to the meeting the head of the Peruvian delegation summarized the progress achieved since 1968, describing the objectives of his Government with respect to structural change, economic growth and social welfare, and measures taken er t:; t;; taken to ~ achieve these objectives. :r /roore  - 2 - The Minister placed particular emphasis on Peruvian economic and social policies in the fields of agriculture, ind.ustry, mining, fiscal reform and the balance of payments. He recalled the measures to improve Peru's capacity to prepare and carry out public development projects. He stated that the policy • of the Peruvian Government is to rely to a neximum on domestic efforts. He discussed the debt servicing burden of Peru resulting from the tm.favorable debt structure, and stressed the need for connnitment of substantial project assistance from abroad during the next several years in order to help achieve the investment and growth objectives of Peru. The Group agreed that Peru's economic achievenents in the last several years have been impressive. Participants commended in particular Peru's success in economic and financial stabilization, resumption of econo~i~ growth in the last two years, basic structural reforms in the economy, and increased attention to the needs of marginal groups of the population. The Group noted that the public invest:··.ent program for the next three years -- 19 72-1974 -- would call for external proje~t commitments of about $780 million, or $260 million per year on the basis of certain assumptions concerning export prices and absorptive capacity of the Peruvian economy during the three-year period. The Group expressed the view that • project assistance of this order of magnitude was. needed to achieve the investment l, and (growth investment of Peru. To be effective, such assistand\? would require implementation of the programs outlined by the Peruvian delegation in the field~ of domestic resources mobilization, expansion of public and private investment, particularly in the export industries, and continuing improvement in project pre- paration and implementation. The Group noted with satisfaction the Government's intention to implement flexible policies for encouraging private investment. The Group further agreed that external assistance should be provided on as favorable terms as possible, and many participants stated their willingness to consider Peru eligible for govemment-to-go".remment assistance on concessionary terms. The need for financing some local costs in addition to foreign exchange components was also recognized. The Group discussed the list of projects based on the National Development Plan and agreed that the discussions. concerning particular projects would be held among the interested. parties as soon as possible. The meeting was conducted under the chairmanship of Mr. Gerald Alter, on behalf of the International Bank for Reconstruction and Development. - 0 - •