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Moody's adjusts Peru's credit rating to Baa1 with a stable outlook and changes economic growth projection from 9% to 12% for 2021

• - The Baa1 rating is in line with Peru's current ratings with Standard & Poor's and Fitch Ratings. Peru remains the country with the second-best credit rating in Latin America, changing from a negative to a stable outlook.
• - Moody's highlights that the stable outlook is supported by a high degree of fiscal strength and economic resilience, underpinned by current Peru's economic model and well-established fiscal and monetary institutions.
  
  

Lima, September 01, 2021.- Moody's adjusted Peru's rating from A3 with a negative outlook to Baa1 with a stable outlook. This rating is equivalent to the current credit level of Standard & Poor's and Fitch Ratings (both BBB+). Therefore, Peru remains the second-best credit rating in Latin America, three notches above investment grade, which maintains access to international markets under favorable conditions, both for the public and private sectors.

In this regard, it is important to point out that Peru's credit rating review takes place in a context in which 49 emerging and developing countries (31% of the total of these economies) and 16 countries in Latin America and the Caribbean (49% of the total of these economies) had their credit ratings downgraded between January 2020 and August 2021.

In contrast to other countries that have had their credit ratings downgraded, mainly due to the weakening of their public finances as a result of the effects of the COVID-19, Peru continues to maintain solid and sustainable public finances. In this regard, Moody's indicates that the stable outlook on Peru's current credit rating incorporates the expectation that its economic policy and institutional framework will be effective in balancing underlying credit risks.

In this regard, in the Multiannual Macroeconomic Framework 2022-2025, a gradual path of consolidation of the country's fiscal deficit is projected: 4.7% of GDP in 2021; 3.7% of GDP in 2022; 2.7% of GDP in 2023; 1.7% of GDP in 2024; and 1.0% of GDP in 2025 and beyond. With this, public debt would peak at 37.4% of GDP in 2023, and then start a downward trajectory, thus remaining at sustainable levels. In the latter, Moody's points out that the country's public debt will remain below 40% of GDP. It should be noted that Peru's public debt in 2020 stood at 34.7% of GDP, well below the average for the region (77.7% of GDP) and emerging economies (64.4% of GDP).

Moody's also highlights that economic activity has rebounded at a good pace in the first half of the year, which has led it to revise its GDP growth forecast from 9% to 12% for 2021. Indeed, economic activity is in the process of recovery and has already surpassed pre-COVID-19 levels. For example, GDP grew 23.4% in June and exceeded its pre-pandemic level (compared to June 2019: 1.1%). With this result, in the first half of 2021, GDP registered a growth of 20.4%, making Peru one of the economies with the highest growth worldwide.

Finally, the Government reaffirms its commitment to fiscal discipline and prudent macroeconomic policies that contribute to the country's economic and financial stability, embodied in the Multiannual Macroeconomic Framework 2022-2025, to promote rapid economic recovery, close the country's structural gaps, enhance competitiveness and productivity, and improve the welfare of the population.

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