LIMA, Aug 28 (Reuters) - Peru plans to open part of its $7 billion fiscal stabilization fund to investments abroad in a bid to protect spending capacity from swings in global mineral prices and dips in mining output, the government said on Wednesday.
Finance Minister Luis Miguel Castilla said modifications to the fund were in the works, but did not specify how much its current $7.1 billion might be freed up for investments.
“Concepts related to the use of the fiscal stabilization fund are going to be modified... to be able to make some of its assets profitable,” Castilla told lawmakers in a televised presentation on the economy.
Castilla also said President Ollanta Humala wants Congress to pass adjustments to current fiscal rules to decouple government spending from swings in the Andean country’s mineral exports. The bill will be sent to Congress next month.
“This is critical if we want to close the infrastructure gap while obviously still being fully responsible in terms of spending and fiscal discipline,” Castilla said.
Mineral exports make up around 60 percent of Peru’s overall export earnings, and about 20 percent of government revenue comes from mining.
Castilla said fiscal policies designed to counter the ups-and-downs of metals markets and mining output are long overdue in Peru, where economic growth has slowed more than expected this year due to slumping exports and weaker prices.
“We are moving toward a concept of structural accounts and that is where the world is moving with a new generation of fiscal rules that we want to establish,” Castilla said.
Neighboring Chile has used two sovereign wealth funds since 2006 to capture and invest windfalls from its copper exports.
Last month the Humala administration proposed establishing a rainy-day fund to house some of the millions of dollars that provinces receive from mining.
Peru is the world’s second-largest copper producer after Chile and the sixth-largest gold producer.
Peru’s government expects the economy to expand by 5.7 percent this year, instead of by 6.3 percent as forecast earlier.