Peru Economy Minister targets tax evasion and pension laws to manage deficit

Peru's Minister of Economy and Finance, Elmer Cuba, has announced a conservative economic outlook, projecting a growth rate of 3.5% for the current year. While growth could have reached 4.5% without the impact of the El Niño phenomenon, the government is prioritizing a fight against tax evasion to strengthen state revenue.

The administration is facing a fiscal deficit driven by three main factors: the El Niño phenomenon, citizen security, and social policies. To manage these costs, the cabinet is working to generate savings of approximately S/ 2,500 million. Cuba noted that the public debt is expected to remain stable at around 30% of GDP.

Additionally, the Ministry of Economy and Finance intends to file unconstitutionality lawsuits before the Constitutional Court against four laws deemed to impose excessive costs on the state. These include laws regarding pensions for military personnel, police, and retired teachers, as well as benefits for CAS workers. Cuba argued that current pension structures for retired teachers, which mirror active salaries, are unsustainable and that maintaining certain worker gratifications would require an unpopular increase in the IGV (sales tax).