Peru - Trade Policy Reform Loan Project

42>f <> t 0 -LN.2-f SfrKz TheWofld Bnk aM OM.CAL USE ONL' MICROFICHE COPY bpwt No. P-5666-PE Report No. P- 5666-PE Type: (PR) SHEPHERD, / X31912 / I7 051/ LAlCO REPORT AND RECOMMNATION OF THE PR-SIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIf 4- TORS ,'. ON A PROPOSEED T1OADE POLICY REFORM LOAN IN AN AMOUNT EQUIVALENT TO US$300 MILLION TO THE REPUBLIC OF PERU JANUARY 10, 1992 This docnett has a resrictd dbutio and may be and by recip only in thLe perfomance of thei:oficia s, ItsntetsmaY Mt otherw be disrelsed without Worl n thoriati  MEN,CY EQUIVALENTS (As of December 30, 1991) Currency Unit Nuevo Sol (SI.)V US$1.00 - S/.0.9S SI.1.00 = US$1.05 GOVERNMENTS FISCAL XEAR January 1 - December 31 ABBREVIATIONS ALADI - Asociacid6n Latino-Ametica de Inttegract6n (Latin Ameria Integration Asociation) CERTEX Certiricado de Reinte TnbutWat a ta Exportacl4n (Export Tax Reimbutement Certificate) CIF Cost, Insurance and Freight D.L - DecMo Lcgslatvo (Lgisatie Decree) D.S. - Decreto Supremo (Supreme Decree) ECASA - Empresa de Comercializacidn del Arroz SA (Rice Marketing Company) ENCI - Empresa Naciontl de Comercializaa6n de Insumos (National Inputs Marketing Company) FENT - Fondo de ExportaonOs No Tradiconales (Fund for Non-Taditional Exports) F.AR - Fondo latinoeicno de Reservas (latin America Reserve Fund) FONCODES - Fondo Nacional de Compensaci6o y De ollo Soial (National Fund for Socal Compensation and Development) GATT - General Agreement on Tariffs and Trade GDP - Gross Domestic Product 17T - Deutsche Gsldhft Mir Teclnisdhe Zusammenarbeit (German Company for Technical Cooperation) IFIs International Fnancial Institutions IBRD - International Bank for Reconstruction and Daelopment ICB - International Competitive Bidding ICE - Instituto de Comermio Extior (Institute for Foreign Trade) IDB - Inter-American Development Bank IMF - International MoUetaly Fund MICm - Ministerto de Industria, Comercio Interior, Tuismo e Integracidn (Minitry of Industry, Commerce, Tourism and Integmation) NOOs - Non-Governmental Organiations PETROPERU - Petrdleos del Perd, SA (Peru Oil) RAP - Rights Accutmulation Progam SAL - Structural Adjustment Loan SUNAD - Supe utendencia Nacional de Aduanas (Customs Administration) SUNAT - Superintendencia Nacdonal do Admhtacdon Tributaria (Tax Administration) SDR ^ Special Drawing Right SOE - Statement of Expenditure UNDP - United Nations Development Programme UNICEF - United Nations International Chidren's Emegemy Fund VAT - Value Added Tax I/ On July 1, 1991, a new monetary unit, the Nuevo Sol (S/.), was introduced at a converaion factor of St.1.00 = I/m.1.00. The so- caUed Inti MillMn (EIm.) - equivalent to one million Intis (11.1,000,O0M) - was instituted on December 16,1990, as a devie, eliminating the last sx digits of any value in Intis, to simplify acounting and as a means of transition between the Inti and the Nuevo Sol.  FOR OFFICIAL USE ONLY PERU TADE POLICY REFORM LOAN Table of Contents page Loan and ProgramSummary ........................................ v L The Project, the Debt Workout, and Country Strategy. 1 The Project Context .I The Bank's Approach in a Country with Protracted Arrears1 . I The Bank's Approach in Peru ...... .......................... 1 IL The Economy ........................................ 6 The Economy Inherited ................... 6 The Economic Reforms of the Fujimori Administration. 7 The 1991-1992 Macroeconomic Stabilization Program .10 Risks and Assessment of the Stabilization Program .11 Monitoring the Stabilization Program .13 The Agenda for Structural Reforms .14 The Medium-Term Outlook. 15 m. ExternalFinancing .16 The External Debt Problem . ................................ 16 The External Financing Plan for 1991 and 1992 .16 External Fiancing Beyond the Performance Period .20 IV. External Trade: Performance and Policies .21 V. Trade Policy Reform ........ ... 22 Actual and Planned Reforms .23 The Expected Impact of Trade Policy Reform .26 The Agenda for Trade Policy .26 |This report was prepared by Geoffrey Shepherd, based on the findings of a preappraisal mision to Peru In June, 1991, and appraisal in September. Contributors to the report were: Roberto Abusada, Carlos Rodriguez, and Katerina Taigasides (consultants and preappraisal miseion members) i Valeriano