Peru has secured a $550 million loan from the Inter-American Development Bank (IDB) to implement fiscal reforms designed to stimulate economic growth by enhancing productivity and encouraging private investment. This operation is the first of two under a broader program aimed at addressing structural gaps in state capacity. The reforms focus on strengthening fiscal policy and management to improve public spending efficiency and enhance the performance of the tax system.
The funding will support improvements in public investment management, budgeting, procurement processes, and the corporate governance of state-owned enterprises. Measures include better prioritization, review, and execution of public investment projects, particularly at the subnational level. The project will also promote more effective resource allocation and regulate the new public procurement law, incorporating value-for-money and sustainability criteria, while encouraging participation from women-led businesses and enterprises employing people with disabilities.
Tax system reforms are another key component of the program. The project aims to simplify tax regimes, promote formalization of small and medium-sized enterprises, improve e-commerce tax collection, and strengthen transfer pricing regulations for multinational companies in line with OECD standards. Additional measures will facilitate tax compliance, including the introduction of a cooperative compliance program for large taxpayers, ensuring greater sufficiency, certainty, and efficiency in tax administration.
The IDB policy-based loan, approved by its Board of Executive Directors, carries a 19-year term with a 6.5-year grace period and an interest rate tied to SOFR. This initiative is expected to provide Peru with the tools to modernize its fiscal framework, improve governance, and support sustainable economic growth.
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