PERU'S SHORT-RUN ECONOMIC PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001600020068-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 22, 2016
• Document Release Date: May 17, 2010
• Sequence Number: 68
• Publication Date: May 1, 1969
• Content Type: IM

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, r ?.r %5 j (d 25X1
Secret
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Peru's Short-Run Economic Prospects
Secret
ER IM 69-66
May 1969
Copy No. 55
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
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CENTRAL INTLLLIGL14CE AGL14CY
Directorate of Intelligence
May 1969
INTELLIGENCE MEMORANDUM
Peru's Short-Run Lconomic Prospects
Summary
The threat of impending economic sanctions
under the Hickenlooper and Sugar Act Amendments
and the continuing stabilization program resulted
in a slowdown in economic growth in early 1969
from the 2 percent rate recorded in 1968. Despite
the loss of large amounts of short-term credit,
the existence of relative price stability and a
growing level of foreign reserves has given the
military regime a considerable degree of flexi-
bility in determining its economic policies during
the remainder of 1969, and economic growth may
rise during this period. Imposition of formal
economic sanctions probably would have only a
marginal additional impact on the Peruvian economy
during 1969, and it is unlikely that Peru will
find it necessary for economic reasons to take
steps which would make foreign private investment
in Peru less attractive. The imposition of formal
economic sanctions will, however, dim her long-
term economic prospects.
The Peruvian economy grew at a comparatively
rapid rate during the early 1960's, but growing
budget deficits, rising prices, and worsening
balance of payments problems caused a loss of
business confidence and forced a devaluation in
1967. A stabilization program initiated in mid-
1968 has been successful in cutting the budget
deficit and slowing inflation. Import taxes and
other prohibitions helped to curtail imports
sharply while exports increased 14 percent, largely
as a result of higher world prices for Peru's major
export products.
Note: This memorandum was produced soZeZy by CIA.
It was prepared by the Office of Economic Research
and was coordinated with the Office of Current
Intelligence.
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The Setting
1. Peru achieved one of the highest rates of
economic growth in the hemisphere during the period
1962-67. Concurrently, the economy suffered front
growing problems of inflation and balance-of-
payments disequilibrium, largely as a result of
increasingly large budget deficits which neces-
sitated heavy domestic and foreign borrowing. Due
to a continuing deterioration in the balance of
trade -- as well as widespread capital flight
resulting from a crisis in business confidence --
Peru was forced to devalue the sol by 31 percent
in September of 1967. The devaluation resulted in
an inu-nediate improvement in the balance of trade.
However, bitter factional opposition in the Peruvian
Congress prevented the Belaunde administration from
reforming the antiquated and inelastic tax structure
which was the major cause of the growing budget
deficit. As the economic crisis deepened, wide-
spread capital flight continued.
2. In July 1968, the deteriorating economic
situation finally impelled the Congress to grant
special powers to the Belaunde administration, and
a stabilization program was launched under the
direction of Finance Minister Manuel Ulloa. The
Ulloa program combined tax reforms to substantially
increase revenue with moderate cuts in expenditures
and strong curbs on credit. At the same time, the
government moved to refinance its foreign debt,
scheduled service payments on which had grown to
$133 million by 1968 -- or about 15 percent of
export earnings and 21 percent of government
revenues. Ulloa also attempted to attract new
foreign investment, especially in mining. Future
export earnings from the new productive capacity
would facilitate rescheduled foreign debt payments
falling due in the early 1970's. In addition,
Ulloa arranged a $75 million stand-by loan from
the International Monetary Fund (IMF).
3. Wnen the present military government led
by General Juan Velasco assumed power on 3 October
1969, it adopted the Ulloa program almost in its
entirety and implemented it even more energetically
than had the Belaunde administration. The debt
refinancing operation was successfully completed
before the end of 1968. Additional cuts in
domestic expenditures were made. In order to com-
pensate for a fall in revenues from import taxes,
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the military government also made permanent a 10-
percent surcharge on imports originally adopted
as a balance-of-payments measure in May 1968.
4. A new dimension was added to the Peruvian
economic scene by the seizure of the Talara
refinery of the International Petroleum Company
(IPC). While the move assured popular support for
the regime, nullification of the Act of Talara* by
the Velasco government set Peru and the United
States on a collision course. The Hicke_nlooper
Amendment to the US Foreign Assistance Act and
similar provisions in the Sugar Act require the
President to cut off all economic and military
assistance and to suspend the sugar quota of any
nation which fails to take steps toward prompt,
adequate, and effective compensation within six
months of expropriating the property of an American
citizen or company. Because the Peruvian govern-
ment assumed an apparently intransigent position
regarding compensation, most observers fully
expected that the sanctions would be invoked in
early April 1969. Four days before the sanctions
were scheduled to be invoked, the US indefinitely
suspended their application in the hope that the
issue could be resolved by an IPC appeal through
Peruvian administrative channels which is scheduled
to be concluded no later than 6 August 1969.
Impact o?" the Stabilization Program
5. Fiscal austerity -- the keynote of the
stabilization program particularly under the
military government -- has brought a dramatic
improvement in the government's budgetary perform-
ance. The original stabilization program included
domestic expenditure cuts of about 1 billion soles
and new tax measures to increase revenues by 2.5
billion soles during fiscal year 1968 (April 1968
to March 1969). The military government cut
domestic expenditures by an additional 0.6 billion
soles while further increasing revenues 0.4 billion
soles by extending the 10-percent import surcharge.
Total expenditures were also reduced by the success-
ful completion of refinancing negotiations which
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postponed scheduled debt repayments. The net
effect of these changes through the end of fiscal
year 1968 is shown in the following tabulation:
Million Soles
Deficit
or Surplus
Calendar Year
Revenues
Expendi-
tures
Deficit
as a
Percent of
GDP
1963
13,808
15,027
-1,219
1.5
1964
13,467
16,185
-2,718
2.9
1965
15,546
19,919
-4,373
3.8
1966
17,593
22,714
-5,121
3.9
1967
20,120
28,344
-8,224
5.5
1968
24,220
29,410
-5,190
2.7
Fiscal year
25,373
27,466
-2,093
1.1
1968 (Apr
68 - Mar 69)
First quarter
6,420
8,693
-2,273
5.1
1968
(annual
rate)
First quarter
7,573
6,749
+824
1.7
1969
(annual
rate)
6. The stabilization program has succeeded in
virtually halting inflation. The consumer price
index for Lima-Callao increased only 1.6.percent
from July 1968 to February 1969. An additional
rise by 3.0 percent in the index for March and
April is not an indication of a.resurgence in
inflationary pressures. The price increase re-
sulted from a temporary shortage of foodstuffs in
Lima because landslides in central Peru blocked
transportation routes. Monthly rates of inflation
from 1966 through early 1969 are presented in the
following tabulation:
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1966
1967
1968
1969
Annual rate of
increase
(December
necember)
to
7.7
20.7
9.8
January
0.7
1.7
1.5
0.4
February
0.8
0
0.6
0.4
March
0.7
0.9
1.1
1.4
April
0.1
0.5
0.7
1.6
May
0.1
1.6
0.8
June
0.6
0.4
2.6
July
1.1
0,. 5
1.3
August
1.0
0.4
0.6
September
-0.5
6.4
-0.4
October
1.2
2.5
0.2
November
-1.1
0.9
0
December
0.3
3.3
0.4
7. The devaluation and subsequent stabiliza-
tion measures combined with rising world market
prices for some key exports have been highly effec-
tive in changing a substantial trade deficit into
a large trade surplus. The value of exports in-
creased by 14 percent in 1968 with earnings from
e-tports of copper, fishmeal, and silver showing
the most rapid increases. At the same time, imports
fell by 23 percent as import costs rose because of
the devaluation and the imposition of an import sur-
charge and as demand for investment goods weakened.
In addition, the heavy stockpiling of imports,
which had taken place in anticipation of the de-
valuation, largely ceased after 1967. A fan on
the import of luxury automobiles was the major
cause of a 58 percent drop in imports of transpor-
tation equipment. Imports of other consumer goods
declined by 8 percent, capital goods by 27 percent,
and industrial raw materials by about 15 percent.
The balance on trade account improved by almost
$300 million in 1968, and a strong export surplus
continued into early 1969 as a result of a continued
high level of exports and a further sharp decline
in imports. The following tabulation of exports
and imports based on customs data compares perform-
an.,--e during this period with that of earlier years:
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Million US $
Jxports
(f.o.b.)
Imports
(f.o.b.)
Balance
1964
667
580
+87
1965
667
729
-62
1966
764
817
-53
1967
757
819
-62
1968
866
630
+236
First quarter
1967
188
208
-20
First quarter
1968
229
167
+62
First quarter
1969
212
136
+76
8. In 1968, Peru's net foreign reserves in-
creased'by $50 million, compared with a loss of
$120 million in 1967. Largely as a result of the
sharp improvement in the balance of trade in 1968,
the balance on current account showed a surplus
after several years of large deficits. Moreover,
despite a sharp drop in loan disbursements, the
net inflow of official capital again totaled some
$105 million, thanks to a reduction in debt repay-
ment. The net outflow of short-term capital,
however, reached an estimated $100 million. The
shift to a negative balance on importers' credits --
estimated at some $75 million in 1968 -- largely
reflected the reduced need for short-term financing
as imports fell by about $190 million. Part of the
contraction in short-term credit outstanding, how-
ever, probably stemmed from increasing reluctance
on the part of lenders to extend credit while Peru
was under the threat of sanctions by the United
States.
9. Largely as a result of the stabilization
program, economic growth slowed from 4.6 percent in
1967 to roughly 2 percent in 1968, compared with
a rate of growth in population of about 3 percent.
It is probable that the rate of economic growth
slowed even further in early 1969. Most of this
slowdown resulted from the stringent controls on
fiscal and credit operations which were imposed
under the austerity program and which have been
('1, rr+
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progressively tightened through the first quarter
of 1969. In addition, uncertainty over the new
regime's economic policies probably reduced invest-
ment activity after Octoher, thus further compli-
cating existing recessionary conditions. The
economic slowdown undoubtedly has contributed to a
rise in unemployment as additions cc the rapidly
growing labor force have been increasingly difficult
to absorb.
10. Per capita private consumption, however,
probably has been maintained largely at the expense
of investment in inventories and machinery. Despite
the decline in per capita GDP and in imports, it is
doubtful if there has been any appreciable shortage
of consumer goods and raw materials. In anticipa-
tion of devaluation, inventories had been heavily
built up in 1966 and 1967. During this period,
inventory investment averaged 4.4 percent of GDP,
well above the average rate of about 2.5 percent
in the early 1960's. Moreover, pockets of pros-
perity continue to exist in important sectors of
the eccnomy. Output of export industries and
import-competing industries in particular has grown
during the period since devaluation.
Peruvian Options in the Face of US Economic Sanctions
11. The threat of sanctions had the effect of
reinforcing the recessionary effects of the stabili-
zation program. Business confidence dropped and
economic activity slowed, as uncertainty over im-
pending sanctions delayed management decisions. As
the six-month deadline for the imposition of
economic sanctions approached, this uncertainty had
an increasing effect on the Peruvian economy. US
and foreign bankers and businessmen began to curtail
bank credits and supplier loans and to temporarily
defer intended investments in Peru. This, in turn,
imposed an added burden on domestic credit sources --
already strained by she credit restraints of the
stabilization program -- as borrowers who had tra-
ditionally depended on foreign credit were forced
to turn to domestic sources. The -uvian authori-
ties nevertheless opted to pursue`ry conservative
fiscal and monetary policies during this period.
12. Because of the success of the administra-
tion's austerity program, the Peruvian economy
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should be able to absorb the additional short-run
impact of actual sanctions. It should be able to
do so, moreover, without finding it necessary for
economic reasons to take retaliatory actions which
would adversely affect much-needed foreign invest-
ment. The relative price stability and improvement
in foreign reserves thus far achieved gives the
Peruvian government considerable flexibility in
its economic policy options during the remainder
of 1969. The government could choose to ac'here
rigidly to the stabilization program in order to
accumulate foreign reserves at a rapid rate. On
the other hand, the aovernment is in a position
to adopt more expansionary programs, although at
some cost in reserves and a resurgence of a degree
of inflationary pressure. At this point, it should
be possible for the Peruvian authorities to inject
a. degree of liquidity into the economy sufficient
to maintain output and perhaps achieve some growth
without driving the rate of inflation to ? damaging
level at least in the short run. The Peruvian
government now appears to be moving toward the
adoption of this alternative.
Short-Run Prospects
13. Peru's short-run economic prospects are
for a slow expansion. Real economic growth during
1969 will probably be less than the 3 percent
annual rate of growth in population. Although the
rate of growth was very low in the first qu?rter,
it will probably rise in the course of the year.
However, continued improvement in the terms of
trade may prevent a decline in the level of per
capita income. It is probable that unemployment
will grow gradually, particularly among new
entries into the labor force. it is unlikely,
however, that industrial unemployment will be
sharply increased by large layoffs or that it will
seriously threaten the stability of the government
over the short run. Although the government re-
cently dismissed several thousand public employees,
its overall policy is likely to stimulate some
increases in employment. The government has
recently announced a 42-percent increase in public
investment expenditures in 1969, and it is probable
that much of this expenditure will be directed
toward public works projects with a high labor
and low import content. Moreover, the recent
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selective relaxation in credit restrictions is also
likely to lead to some small increases in domestic
investment and employment.
14. The budget expenditures for the remainder
of 1969 are projected to increase by 8,3 percent
in current soles over the revised 1968 budget.
The rise in current expenditures is to be held to
2.3 percent in order to facilitate the large in-
crease in capital expenditure. At the same time,
the government has given high priority to further
tax reform, and a tax commission was appointed in
late April to recommend changes by 30 June.
Although no detailed projections of revenue have
been presented, the finance minister has indicated
that financing would be required for a deficit of
only about 1 billion soles. Although actual per-
formance may fall short of the government's expec-
tations, a further reduction in the budget deficit
appears likely during calendar year 1969.
15. Inflation is unlikely to present a major
problem for the regime during the remainder of
1969. Fiscal operations promise to continue to be
much less inflationary than in past years, while
restrictions on domestic credit will also continue
to restrain demand. The slight relaxation in
domestic credit restrictions in April was largely
a response to the contraction in available foreign
credit and is not an indication of an abandonment
of credit restraint. Although further loosening
of credit probably will occur, the Central Bank
can be expected to keep overall credit expansion
within manageable limits.
16. Peru's exports in 1969 should equal or
exceed those of 1968. Copper output should in-
crease by about 5 percent as a result of invest-
ments in small and medium-sized mines in 1968.
Moreover, the average price received thus far in
1969 has exceeded the 1968 average by about 2 per-
cent. Fishmeal shipments should continue at a
high level, although they may decline by as much
as 15 percent from the record levels of 1968.
Although production of meal declined 46 percent
during January and February because of a 30-day
prohibition on anchovy fishing (a normal conserva-
tion measure), fishing began again in early March.
The volume of exports during this period declined
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only 14 percent, however, as shipments were made
from stocks. As of the end of February, Peru had
fishmeal stocks equal to about 15 percent of last
year's record exports and could continue to draw
upon these to compensate for any shortfalls in
the catch. Fishmeal prices are continuing their
upward trend and during the first quarter of 1969
averaged almost 17 percent above the average for
1968. Cotton exports are moving especially wall
thus far in 1969. First quarter shipments exceeded
those of the sante period in 1968 by +33 percent.
Prcduction of sugar, however, has been adversely
affected by continuing drought conditions, and
export;, have declined substantially. The outlook
for Peru's other exports, mostly diversified
mineral products, is for a slight increase in
volume, while prices remain at about their 1968
levels. Table 1 presents exports for 1967 and 1968
as well as an estimate of their probable levels in
1969. .
17. Imports are expected to remain at a low
level in 1969 as a result of the slowdown in the
rate of economic growth, the continuing effects
of the devaluation, continuation of the import
surcharge and the prohibition upon luxury imports,
and some hesitancy on the part of investors. In
addition, the shortage of import financing from
traditional sources is a continuing check on im-
ports. Limited relaxation o credit to the private
sector probably will result in some increase in
import demand. However, given the generally bearish
economic outlook, the lack of devaluation jitters,
and the stricter control now being exercised by the
Central Bank, reversion to widespread stockpiling
by importers is unlikely.
18. Private foreign investment appears to be
on the increase. The inflow of long-term private
capital had virtually ceased during the latter
portion of 1968 and early 1969, but since February
about $64 million in new investment contracts have
been . inalized or are near finalization. In addi-
tion, many international oil companies rushed to
obtain offshore concessions in late 1968. Moreover,
the Minister of Developm^nt has
announced an offer of credit from Japan of more
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than $30 million to refurbish the Talara refinery.
Peru also has obtained $37 million in new official
loans and grants since the beginning of the year
(see Table 2), The outlook for further improvement
in receipts of official loans is un':c1ictable, as
it will be affected by future decisions regarding
the invocation of sanctions.
19. The level of reserves is expected to con-
tinue to improve in 1969 -- perhaps at an annual
rate of about $80-$90 million if sanctions are not
imposed and if Peru continues to pursue conserva-
tive economic policies -- despite somewhat lower
levels of net official lending and further con-
tractions in-foreign short-term and import credit
(see Table 3). Net Central Bank reserves increased
by $28 million for the first quarter of 1969. The
March figures may have been inflated by some window-
dressing operations, however. In particular, profit
remittances reportedly have been held up in process-
ing by a special committee in the Central Bank.
Such action, which is contrary to the IMF standby
agreement, would artifically inflate the reserve
figures. Most of the reserve increase has been
real, however, and It is probable that Peru will
be able to meet both t' 'e reserve and expenditure
requirements under the IMF standby aqreement.
Thus, provided that the restrictive j.ractices are
halted, Peru may be eligible to draw the May tranche
of $17.5 million.
Effects of the Imposition of Sanctions
20. Invocation of the Hickenlooper and Sugar
Act Amendments is unlikely to cause serious addi-
tional short-run economic problems for Peru.
Further losses in economic assistance would be
slight during 1969, as there have been few US
assistance loans to Peru since 1967, and most dis-
bursements on existing loans are presently being
delayed indefinitely. Although no new loans would
be forthcoming from the Export-Import Bank, the
IBRD, or the special funds of the IDB, disbursements
on existing loans from these agencies would continue.
Total receipts of official capital in 1969 are ex-
pected to run at close to their 1968 level, regard-
less of whether or not sanctions are imposed.
21. Similarly, imposition of formal sanctions
will not have a large impact on the sugar industry
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or on Peru's foreign exchange earnings in 1969. As
a result of drought, Peru will have only about
300,000 tons of exportable sugar, in contrast to a
normal exportable surplus of 450,000 tons or more.
Of the amount available for export, it is likely
that 2U0,000 tons or more will have been shipped
by the time sanctions are imposed. The prospects
for the sugar industry for 1970 would be dismal
as a result of the sanctions, however, as domestic
production costs are considerably above the current
world market price. Given a normal level of ex-
ports, Peru stands to lose some $25-$35 million in
foreign exchange earnings in 1970 if its quota is
revoked.
22. Even if the sanctions are invoked in August
1969 or earlier, Peru's net foreign exchange re-
serves will probably continue to increase at least
until the year's end. Peru probably will not find
it economically necessary to interfere with profit
remittances by US or other foreign companies, but
could do so for political reasons. Imposition of
the sanctions would have little impact on export
receipts and long-term credit inflows during 1969.
Sanctions probably would lead to further losses in
short-term credit and import financing, and stronger
exchange controls might be necessary to contain an
increase in capital flight. These losses would be
limited, however, by several factors: competitive
pressures will induce many suppliers to continue
financing imports; foreign banks are likely to con-
tinue to accommodate their old and trusted customers;
foreign subsidiaries operating in Peru account for
a sizable portion of Peru's imports of industrial
raw materials and can be expected to continue to
receive accommodation from their parent companies;
and, of the estimated $350-$400 million in total
short-term credit outstanding at the beginning of
1968, a large part of the credit subject to rapid
recall probably already has been called back.
Outstanding short-term credit declined by approx-
imately $75-$100 million in 1968 and probably has
declined by an additional $30-$40 million thus far
in 1969.
23. The outlook for Peru's long-term economic
development will be severely dimmed by the imposi-
tion of sanctions. The strength of US influence
in many international lending agencies makes it
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very unlikely that Peru will be able to obtain
sufficient new official loans to replace more than
a portion of those presently being disbursed. It is
likely, however, that there would be an increase in
government-guaranteed supplier credit from Western
European countries and Japan. The long-anticipated
mining investments by U.S companies -- valued at
some $600-$700 million -- will be further delayed
by the sanctions, as many of them depend heavily
upon financing from the Export-Import Bank. In
addition, the sanctions could dissuade other US
banks and companies from investing in or lending
to Peru. However, if Peru takes no discriminatory
action against private foreign investors in reaction
to the imposition of formal sanctions, other foreign
investments -- especially those by non-US companies --
may be expected to continue on a nearly normal basis.
In addition, Japanese companies, which already import
almost all of Peru's iron ore production and much
of Peru's output of lead, silver, and zinc, are
likely to take advantage of the situation to expand
their interests in Peru -- even to the extent of
being willing to take over existing mining conces-
sions hold by US companies. Moreover, the attractive-
ness of Peruvian concessions (which might be lost if
they remain unexploited for much longer) may eventually
induce the US mining companies to seek alternative
sources of financing in order to develop them.
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Table 1
Commodity Composition of Exports
Million US $
1967
1968
1969 a/
Assumptions
Fish and derivatives
204.0
234.3
245
Volume
lion
price
decrease from 2.074 mil-
tons to 1.9 million tons,
increase of 17 percent.
Copper
Volume increase from 206,800
tons to 215,000 tons as a
result of new Chapi mine.
Silver
42.3
67.9
70
Iron ore
62.1
63.3
65
Sugar
53.1
62.7
34 to 41
200,000 tons to the United
States under quota equals
$27.4 million; 100,000 tons
on the world market at $0.035
per pound equals $7.0 million.
If sanctions are not invoked,
all sugar would be sold to the
United States under quota for
about $41 million.
Cotton
54.8
55.8
70
Recovery to more normal levels.
Coffee
29.1
35.7
38
Zinc
35.7
33.2
33
Lead
30.2
29.4
30
Petroleum
8.5
11.3
10
Wool
8.2
9.4
10
Other
30.7
29.1
30
Total
757.0
866.1
880 to 887
a. Est- Sanitized Copy Approved for Release 2010/11/01 : CIA-RDP85T00875RO01600020068-5
 Sanitized Copy Approved for Release 2010/11/01: CIA-RDP85T00875RO01600020068-5
Table 2
Known Contracted Private Investment and Authorization of Official Capital
During Early 1969
Foreign Private Investment Projects
Activity
Company
Timespan
Date
Finali
d
Foreign Capital
Content
ze
(Million US $)
Iron mining
I
Marcona Mining (US)
1969-70
March
ron mining
Marcona Minin
)
1969-70
3
Electricity
Lima Light - Power
Pending
25
Chemicals
Company (Swiss)
B
1969-73
March
24 a/
ayer (West Germany)
1969-70
April
12
Official Grants and Loans
Lender
Purpose
Disbursement
P
i
d
Date
Amount
er
o
Authorized
(Million US $)
Netherlands
Union of South
Africa
Interame ri can
Development
Bank
Irrigation
Housing
1969-71
1969-74
1969-74
February
April
April
10.5
14.0
12.5
a. 17.5 million of this
i
sum
s to be financed by
IBRD in 1967. Swiss finan
i
a loan authorized by the
c
ng for the remainder was arranged in March 1969.
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SECRET
Table 3
Estimated Balance of Payments
Million US $
1967
1968
1969
Current account balance
-248.3
44.6
57
Exports (f.o.b.)
755.1
866.1 /
890
Imports (f.o.b.)
797.7
630.0 /
630
Trade balance
-42.6
+236.1
+260
Freight and insurance
-82.1
-65.0 /
-65 9'
Interest payments
-46.6
-60.5
-68
Other investment income
-93.3
-90.0
-90
Transfers and other serv
ices 16.6
24.0
20
Official capital
106.4
105.4
88
Disbursements
169.5
126.8
123
Amortizations
-63.1
-59.4
-113
Refinancing proceeds
38.0
78
Long-t.eYnn private capital
26.6
10.0 /
20 d/
Short-term capital
23.9
-100.0
-80
Credit to importers
28.1
-75.0 1
-50
Peruvian commercial banks
29.5
-5.0
-5
Other
-33.7
-20.0 f/
-25.0
Errors and omissions
-29.2
-9.5
Surplus (+) or deficit (-)
-120.6
50.5
85
a. Except an noted, estimates are derived from material
provided by the Embassy. Estimate for 1969 is based on the
assumption that applications of sanctions will remain in
suspension and that Peru will continue to pursue conserva-
tive economic policies. Imports would rise somewhat in
response to an adoption of more expansionary policies.
b. From customs data. This data is normally revised for
balance of payments purposes. Since 1963 these revisions
have reduced imports by an average of $40 million while
increasing exports by an average of $15 million.
c. Based on the ratio of freight and insurance payments
to imports in 1967.
d. Based on probable inflow on committed investment.
e. Based on estimated reduction in import financing due to
decline in imports and lower credit availability as a result
of threat of sanctions.
f. Estimated capital flight.
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