Peru's Incoming Government Faces Disordered Public Finances and Spending Gap

The new administration assuming office on 28 July will inherit public finances in disarray, with numerous spending obligations lacking funding. Economy minister Alonso Segura warned that the supplemental credit of 9.695 billion soles – the largest ever and about one percent of GDP – is insufficient to cover commitments created by recently approved high‑impact fiscal laws.

Key liabilities include annual payments of over 3 billion soles for CTS and bonuses to CAS (administrative service) workers, for which the Ministry of Economy and Finance has no budget. Segura indicated the government may seek constitutional challenges to these laws and must rapidly re‑prioritise spending, as the current budget provides no fiscal space. He also noted that additional resources will be needed to address El Niño impacts, which are not covered by the supplemental credit.