Overview
- Fitch Ratings says political uncertainty will stay high until the June 7 presidential runoff, with a fragmented Congress and a newly restored Senate likely to curb sweeping policy shifts and complicate lawmaking.
- The agency contrasts the rivals’ agendas, noting Keiko Fujimori signals disciplined macro policy while Roberto Sánchez proposes a constituent assembly, a larger state role, higher taxes, and even tapping reserves for current spending.
- Despite the turmoil, Fitch highlights relatively strong fiscal metrics, citing a 1.9% of GDP deficit over the 12 months to April and public debt near 30% of GDP, though it doubts the government will meet its 1.8% deficit goal for 2026.
- Fiscal buffers look thin, with the central bank projecting international reserves at 6.5% of GDP by end‑2026 and the Fiscal Stabilization Fund at 0.9% of GDP for 2025, which Peru’s Fiscal Council says raises the risk of debt topping 40% within five years.
- Structural strains persist, as tax revenue sits near 15% of GDP and pay in the public sector has risen 169% since 2010, which could push up borrowing costs for families and firms if the country’s investment grade comes under threat.