PERU: ECONOMIC SITUATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900020075-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 9
• Document Creation Date: December 19, 2016
• Document Release Date: July 29, 2005
• Sequence Number: 75
• Publication Date: April 17, 1974
• Content Type: REPORT

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The attached S-Project, Peru: Curro'
Approved For Release 2005/08/22 : CIA-RDP85T00875R001900020075-4
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Approved For Release 2005/08/22 : CIA-RDP85T00875R001900020075-4
 Approved For Release 2005/08/22
Peru: Current Economic Situation
1. Although Peru's economic situation appears relatively
good, it is still plagued by budgetary deficits and rapidly
increasing external debt.
A. Gross domestic product grew by 5.6% in 1973, to
about $8 billion with industry contributing 7% and
agriculture recovering slightly from its sl+imp in
1972.
H. Output in the mining sector decreased by 9.7%,
however, export earnings from minerals increased
by 35% to almost $550 million due to high world
prices.
C. Agricultural performance, depressed since the
implementation of the agrarian reform in 1969,
showed an improvement of about 2.3% last year.
D. Inflation reached 14% in 1973, high for Peru, which
usually maintairs an 8%-10% range.
E. Peru's external debt has now reached about $1.6
bil).ton. Amortizations and prepayments amounted
to $462 million last year, almost 65% of total
harrowing.
II. The outlook in the fishmeal industry is improving but
its contribution to GDP will not reach previous levels
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in 1974 and probably not in 1975.
A. The anchovy catch is expected to be 3 ni3 lion
rtatric tons, a 60% increase over last year, but
still 7 million netric tons less than the average
peak year levels.
B. Fishmeal production should range between 600,000
and 700,000 tons. Latest estir.ates set a risximua
of 630,000 tons available for export. At a
conservative average price of $4C0/ton, Peru's
income from sales abroad should be about $252
zillion cor.pared with a 1973 level of $136 million.
III. Peru has a half billion dollars in credits and foreign
in est-.ert under negotiation drspite its uncertain
invest_:.ent clir..ate. Successful compensation negotiations
with the t5 has opened the Dray for greater US participation
in Peru's development.
A. Peru obtained over $700 zillion in t?:estern development
credits in the last 15 months and is presently seeking
an additional $500 million.
B. Since 1971, about 16 foreign oil companies signed
joint venture contracts with the State oil Company
(Petrcperu) to develcp Peru's petroleum resources.
Chile r..cst of these companies are still in the early
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stages of exploration, promising finds have been
reported.' Six test wells have yielded about
17,00'0 bpd. On the strength of these finds,
Petroperu is pushing for the construction of the
Transandcan pipeline from the interior to the
coast. Limited shipments of crude from the new
wells are presently being transported by barge down
the amazon to Brazil.
C. Negotiations for a $400 million financing package
for the construction of the pipeline is under way
with a consortium of banks headed by Bank of America.
Peruvian officials hope for successful completion
of these negotiations and are opposed to having to
obtain piecemeal credits for the construction project.
IV. The Southern Peru Copper Corporation is in the process of
completing financing for the Cuajonc Copper project,
scheduled for completion in 1976.
A. Now that tensions have eased between the US and Peru,
Export-Import Bank participation is guaranteed. Total
credits for the $650 million project now total over
$450 million dollars including a $55 million credit
from Ex-Im.
B. Cuajonc, when completed will add another 180,000 tons
of copper annually to Peru's current production of
240,000 tons.
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CONI iuI6 ilTILL
V. Peru has increased its economic ties with communist
countries, thereby generating nwnerous joint ventures,
credits and trade.
A. Peru maintains a positive trade balance of about
$90 million with communist countries; copper and
fishmeal comprise the largest percentage of their
acquisitions.
B. Communist aid extended to Peru last year totaled
$25 million.
C. Romanian interest in joint ventures increased with
the visit of President Ceausescu. Romania is
investing about $60 million in the development of
the Antar.tina copper deposits.
D. Negotiations are underway for Polish participation
in the develipment of Peru's coal deposits. No
agreements have yet been announced.
E. The Soviets may provide economic and technical
assistance for hydroelectric and steel projects
costing in excess of $500 million.
F. TheSovicts ha~e succeeded in selling arms to Peru
and already have delivered 25-35 tanks and 5 helicopters.
Additional purchases are being negotiated.
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 Approved For Release 2005/08/22 : CIA-RDP85T00875R001900020075-4
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