1. Republic of Peru Republic of Peru Republica del Peru Republica del Peru Capital: Lima Capital: Lima By Nitish Rajbhandary

2. General Information Government: Constitutional Republic Government: Constitutional Republic President: Alan Garcia Perez President: Alan Garcia Perez Climate: Arid and mild in coastal area, temperate to frigid in the Andes, and warm and humid in the jungle onwards. Climate: Arid and mild in coastal area, temperate to frigid in the Andes, and warm and humid in the jungle onwards. Natural Resources: Iron ore, copper, gold, silver, zinc, lead, fish, petroleum, natural gas, and forestry. Natural Resources: Iron ore, copper, gold, silver, zinc, lead, fish, petroleum, natural gas, and forestry. Currency: Peruvian Nuevo Sol (PEN) Currency: Peruvian Nuevo Sol (PEN) Exports: Gold, copper, fishmeal, petroleum, zinc, textiles, apparel, asparagus and coffee. Exports: Gold, copper, fishmeal, petroleum, zinc, textiles, apparel, asparagus and coffee. Major Markets: U.S., China, Chile, Canada, Switzerland, Japan, Spain, Netherlands. Major Markets: U.S., China, Chile, Canada, Switzerland, Japan, Spain, Netherlands. Imports: Machinery, vehicles, processed food, petroleum, steel. Imports: Machinery, vehicles, processed food, petroleum, steel. Major Suppliers: U.S., China, Brazil, Ecuador, Colombia. Major Suppliers: U.S., China, Brazil, Ecuador, Colombia.

3. Characteristics Country Area: 1,285,220 sq km (3 rd largest in Latin America) Country Area: 1,285,220 sq km (3 rd largest in Latin America) Population: 28,674,757 (July 2007 est.) (5 th most populous in the region) Population: 28,674,757 (July 2007 est.) (5 th most populous in the region) Population Density: 22/sq. km Population Density: 22/sq. km Population Growth: 1.289% Population Growth: 1.289% Net Migration Rate: -0.99 migrant(s)/1000 population Net Migration Rate: -0.99 migrant(s)/1000 population Life expectancy: Total 70.14 / Male 68.33 /Female 72.04 Life expectancy: Total 70.14 / Male 68.33 /Female 72.04 Ethnic groups: Amerindian 45%, mestizo 37 %, white 15%, black, Japanese, Chinese, and other 3% Ethnic groups: Amerindian 45%, mestizo 37 %, white 15%, black, Japanese, Chinese, and other 3% Religions: Roman Catholic 81%,Seventh Day Adventist 1.4%, other Christian 0.7%, other 0.6%, unspecified or none 16.3% Religions: Roman Catholic 81%,Seventh Day Adventist 1.4%, other Christian 0.7%, other 0.6%, unspecified or none 16.3%

4. Economy GDP (PPP): $181.8 billion GDP (official exchange rate): $76.09 billion GDP (per capita): $6,400 (half of Chile) GDP Growth Rate: 6.5%/ ( 2002 – 2006 ) 5.7% GDP (by sector): agriculture: 8.5%; industry: 26.4%; services: 65% Inflation Rate: 2.1% / (2002 – 06) 1.9% Unemployment Rate: 7.2% Government Budget: revenues: $25.5 billion expenditures: $25.18 billion; including capital expenditures of $1.8 billion Debt: 33.8% of GDP Current Account Balance: $1.515 billion FDI inflows (% of GDP): 2.8

5. Fiscal Policy Current Account balance: ‘02 (-$1,150 m), ‘03 (-$958 m), ‘04 ($19.3m), ‘05 ($1,105 m), ‘06 ($2,456 m) Current Account balance: ‘02 (-$1,150 m), ‘03 (-$958 m), ‘04 ($19.3m), ‘05 ($1,105 m), ‘06 ($2,456 m) Very low tax base hence low flexibility. Very low tax base hence low flexibility. Aims towards increasing tax up to 17% of GDP from current 15% by eliminating tax exemptions and altering tax code. Aims towards increasing tax up to 17% of GDP from current 15% by eliminating tax exemptions and altering tax code. Tax code will be pro- contributor and pro-investor. Tax code will be pro- contributor and pro-investor. Cutting tariffs to encourage competition. Cutting tariffs to encourage competition. Increase quality of public spending by simplifying programs. Increase quality of public spending by simplifying programs.

6. Monetary Policy & Exchange Rate Compared to other Latin countries, subdued inflation at an average of 2%. Main worry with real GDP rising. Compared to other Latin countries, subdued inflation at an average of 2%. Main worry with real GDP rising. Diversifying economy and falling debt levels. Diversifying economy and falling debt levels. Interest rates might increase by 25 basis points to 4.75% from 4.5% last year. Interest rates might increase by 25 basis points to 4.75% from 4.5% last year. Rapid growth in spending with concentration on dollar lending a cause for long-term concern hence reserve requirement of 30% for dollars as compared to 6% for sol. Rapid growth in spending with concentration on dollar lending a cause for long-term concern hence reserve requirement of 30% for dollars as compared to 6% for sol. Exchange rate system is free-floating since the 90’s. Exchange rate system is free-floating since the 90’s. Sol expected to depreciate by 1.5% next year. Sol expected to depreciate by 1.5% next year.

7. Social Policies Suffrage: 18 years; universal and compulsory until the age of 70. Suffrage: 18 years; universal and compulsory until the age of 70. Big emphasis on education. Over 30,000 schools throughout the country. Big emphasis on education. Over 30,000 schools throughout the country. Rising crime rates and illegal narcotic industry due to penetration by the Colombians. Rising crime rates and illegal narcotic industry due to penetration by the Colombians. Plans to increase impact of social programs by emphasizing basics like food, clean water and education. Plans to increase impact of social programs by emphasizing basics like food, clean water and education. Decrease administration costs. Decrease administration costs.

8. External Relations Border conflicts with Chile have been settled but still disputes over maritime limits in the Pacific Ocean with Chile and Bolivia. Border conflicts with Chile have been settled but still disputes over maritime limits in the Pacific Ocean with Chile and Bolivia. In October 1998, Peru and Ecuador signed a peace accord to resolve border differences. In October 1998, Peru and Ecuador signed a peace accord to resolve border differences. Member of the Andean community of Nations with Bolivia, Colombia, Ecuador and Venezuela (in process of leaving). Member of the Andean community of Nations with Bolivia, Colombia, Ecuador and Venezuela (in process of leaving). Free Trade agreements with individual Mercosur nations. Free Trade agreements with individual Mercosur nations. Associate member of Mercosur. Associate member of Mercosur. Member of Asia-Pacific Economics Cooperation (APEC) forum and also a member of UN since 1949. Member of Asia-Pacific Economics Cooperation (APEC) forum and also a member of UN since 1949. Strong relations with U.S. and major trade partner. Strong relations with U.S. and major trade partner. U.S. – Peru Trade Promotion Agreement and Peru – India Trade pact in process. U.S. – Peru Trade Promotion Agreement and Peru – India Trade pact in process.

9. References Background note: Peru. (2007). Retrieved 5/19, 2007, from http://www.state.gov/r/pa/ei/bgn/35762.htm Background note: Peru. (2007). Retrieved 5/19, 2007, from http://www.state.gov/r/pa/ei/bgn/35762.htm http://www.state.gov/r/pa/ei/bgn/35762.htm Historical Exchange Rate Regimes. (2000). Retrieved 5/20, 2007, from http://intl.econ.cuhk.edu.hk/exchange_rate_regime/index.php?cid=16/ Historical Exchange Rate Regimes. (2000). Retrieved 5/20, 2007, from http://intl.econ.cuhk.edu.hk/exchange_rate_regime/index.php?cid=16/ http://intl.econ.cuhk.edu.hk/exchange_rate_regime/index.php?cid=16/ Country Study: Peru. (2005). Retrieved 5/19, 2007, from http://lcweb2.loc.gov/frd/cs/petoc.html Country Study: Peru. (2005). Retrieved 5/19, 2007, from http://lcweb2.loc.gov/frd/cs/petoc.html http://lcweb2.loc.gov/frd/cs/petoc.html CIA world factbook: Peru. (2007). Retrieved 5/19, 2007, from https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html CIA world factbook: Peru. (2007). Retrieved 5/19, 2007, from https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html The Economist: Country Briefings: Peru (2007) Retrieved 5/19, 2007, from http://www.economist.com/countries/Peru/profile.cfm?folder=Profile- FactSheet The Economist: Country Briefings: Peru (2007) Retrieved 5/19, 2007, from http://www.economist.com/countries/Peru/profile.cfm?folder=Profile- FactSheet http://www.economist.com/countries/Peru/profile.cfm?folder=Profile- FactSheet http://www.economist.com/countries/Peru/profile.cfm?folder=Profile- FactSheet