Announcement of Meeting of the Consultative Group for Peru on June 21, 1973

1818 H STREET, N.W .. WASHINGTON 0. C. 20433 TELE ..HONE: EXECUTIVE 3-e360 June 21, 1973 Subject: Meeting of the Consultative Group for Peru A meeting of the Consultative G4oupi for Peru sponsored by the World Bank was held in Paris on June 19 and 20, 1~73, with the purpose ·of assisting in the coordination of development aid to P~ru. The meeting was conducted under the chairmanship of Mr. Gerald Alter, Regionai Vice Preaident for Latin America and the Caribbean. \ The delegation of the Government of Peru was headed by General Francisco Morales Bermudez, Minister of Economy and Finance. The meeting was attended by representatives of the governments of Belgium, Canada, Finland, France, Germany, Italy, Japan, the Netherlands, Spain and the United Kingdom • • Representatives of the International Monetary Fund, the Inter-American Development Bank, the Inter-American Committee .for the Alliance for Progress and the United Nations Development Programme were also present. the United States, Yugoslavia, the Organisation for Economic Co-operation and Switzerland, Development and the International Coffee urganization were represented by observers. The Group discussed the current economic situation and prospects of Peru, on the basis of a report prepared by the World Bank, and considered the country's needs for external financing in the peri1od 1973-76. In his address to the meeting, the head of the Peruvian delegation summarized the progress made in the development of the various sectors of the economy since the last meeting of t;he Group in February 1972 and the plans for the future. The minister made special mention of the Government's policies in the fields of agriculture, \. ' industry, mining, hydrocarbons, and fisherieso· With referenc·e to the latter, he presented the special reasons that had prompted his Government to the recent nationalization of the fishmeal and fishoil industry, emphasizing that this measure should not be interpreted as an indication of a change of the Government's • positive poli~ies towards private industry. /more Unn. Ba.nlc P.R. -Meeting of the Consultative Group f or-"Peru - 2 - The minister also described the steps that had been taken to increase domestic resource mobilization, in line -~th Peruvian plans and the recom- mendations of the Group in February 1972. He discussed the Peruvian experience in obtaining external financing, and the role the Group had played in facilitat- • ing negotiations. He also pointed out that, while there was reason to be satisfied with the volume of financing contracted, the average terms had not been as favorable as recommended at last year's meeting. The Group agreed that Peru's achievements had been commendable, despite adverse natural circumstances affecting fisheries and agriculture. Participants commended in particular the Government's continuing efforts to combine economic growth with social justice. The Group noted that, in order to meet the country's external capital requirements, annual project loan commitments, which amounted to about $250 million in 1972, would have to increase to $295 million in 1973 and rise further to $470 million.by 1976, given certain assumptions concerning likely export earnings and the absorptive capacity of the Peruvian economy during the period. In addition, continued efforts to inc~ease domestic resource mobi- lization would be needed, as would be efforts to stimulate'export growth and to sustain the continued improvement in project preparation and implementation. • The Group noted with satisfaction the Government's intention to pursue policies conducive to encouraging private investment, foreign and.domestic. The Group recommended that external assistance should be provided on as favorable terms as possible, and many participants stated that they considered Peru eligible for government-to-government assistance on concessionary terms. The need for some local cost financing, in addition to the financing of foreign exchange project components, was also recognized. ' I The Group reviewed a list of projects for external,.financing and expressions of int.erest were provided by members of the Group. It was pointed out that many of the projec~s on the list ·were alreatly at an advanced stage.of corld:i.deration_ l I by members of the Group and that' further discussions concerning particuia'r I prpjects would be held among the interested parties as soon as possible. 0 •