IMF approves new $422.8 million loan package for Peru

The board of the International Monetary Fund on Wednesday approved a 26-month $422.8 million stand-by program for Peru, saying economic performance has been "favourable."
In a statement announcing the approval, the IMF generally praises Peru, although it says it was "critical" that more reforms take place to secure growth in the future.
The approval releases immediately $118 million, the IMF said. The program will run through mid-2006.
"Perus recent economic performance has been favourable, with solid growth and low inflation," said Rodrigo Rato, IMF's managing director who assumed his post on Monday.
The program replaces a previous two-year $380 million program which expired earlier this year. Peru, one of Latin America's faster-growing economies, made no drawings under the previous arrangement.
IMF programs are viewed by investors as a seal of good economic policies and make it easier for a country to raise money in international markets.
The Peru program calls for growth of 4 percent in 2004 - in line with government projections - and an average of 4.5 percent over 2004-2006. Inflation this year should be 2.5 percent, repeating the performance of 2003.
Peru also agreed to trim its overall public sector deficit to 1.4 percent of GDP in 2004, from 1.7 percent the year before.
Rato said Peru had a high level of international reserves, a well-capitalised banking system and "there has been progress with structural reforms."
Although Peru has boasted some of Latin America's best economic numbers, President Alejandro Toledo is deeply unpopular as Peru's numerous poor have failed to benefit from the country's growth.
This has weakened the president's political hand as the IMF urged more reforms to reduce unemployment and poverty. Rato said getting political backing was crucial.
"Strengthening political consensus for critical reforms will be crucial to press forward with the reform momentum of recent years," Rato said.
The IMF said in 2004 Peru plans to set up commercial courts and improve collateral registries as a way to foster more private investment.
Also, the government aims to grant more concessions to the private sector, which Rato urged be carried out "in a prudent manner and accounted for transparently in the budget."
Other reforms seek to modify public pension regimes and reduce labour costs.