December 8, 2008 / 4:18 AM / 11 years ago

RPT-Peru's Garcia announces $13 bln stimulus package

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LIMA, Dec 7 (Reuters) - Peru will spend up to $13.2 billion next year on housing, highways and other projects, to maintain economic growth amid a global slowdown, President Alan Garcia said on Sunday.

Garcia said Economy and Finance Minister Luis Valdivieso would unveil further details of the economic stimulus package on Monday.

“The plan is to increase (government) spending by 10 billion sols ($3.2 billion), to seek to finalize $3 billion in previously signed loans and to take on another $7 billion in loans if the thing gets really atrocious,” Garcia said in an interview on Panamericana television.

Peru is already feeling the effects of the worldwide economic crunch, as tumbling prices for copper and other minerals meant the value of its exports fell in October for the first time in more than six years and down 11.4 percent from the same month last year.

In September Peru registered a trade deficit for the first time in more than five years, followed by a $506 million shortfall in October.

“We don’t govern the world, it’s governed by the United States and China. And if things are going to be worse for them we need to take measures,” Garcia said.

He said the government would invest in public works, housing and highways, and social programs but did not say where the funds would come from.

Economists have said the South American country will post a fiscal deficit next year if it boosts spending. The forecast this year is for a fiscal surplus of 2.7 percent of gross domestic product and the government has already cut its outlook for 2009 to a fiscal surplus of 1 percent.

Peru’s economy is expected to expand this year by at least 9 percent, similar growth to last year’s but the government expects growth to slow to 6.5 percent next year. (Reporting by Marco Aquino; Translating by Fiona Ortiz; Editing by Kazunori Takada)

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