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International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper describes recent investment dynamics in Peru, and assesses the relationship between private investment and its fundamentals. Over the last decade, average growth in Peru exceeded 6 percent, anchored by a substantial contribution from investment. A series of structural reforms in the 1990s, growing political stability, and the implementation of a solid macroeconomic framework in the early 2000s set the stage for this investment boom. Actions were also taken to strengthen public investment implementation and to enhance the overall investment climate. Now that commodity prices have softened and interest rates are expected to rise, addressing the next generation of structural reforms will be crucial to sustain investment and growth.
Mr. Antonio David and Mr. Daniel Leigh
This paper presents a new database of fiscal consolidations for 14 Latin American and Caribbean economies during 1989-2016. We focus on discretionary changes in taxes and government spending primarily motivated by a desire to reduce the budget deficit and long-term fiscal health and not by a response to prospective economic conditions. To identify the motivation and budgetary impact of the fiscal policy changes, we examine contemporaneous policy documents, including Budgets, central bank reports, and IMF and OECD reports. The resulting series can be used to estimate the macroeconomic effects of fiscal consolidation for these economies
Alejandro M. Werner

infrastructure would be optimal. Reforms in tax policy and in public financial management have helped Peru achieve solid fiscal accounts. In Chapter 8 , Ricardo Fenochietto, Laura Calderón, Marco Camacho, and Patricio Castro describe the Peruvian authorities’ efforts to broaden the tax base, simplify tax rates, and reduce evasion and avoidance in an environment plagued by noncompliance and informality issues. Key components include the ongoing modernization of the tax collection agency ( Superintendencia Nacional de Administración Tributaria ) and mining taxation reform

International Monetary Fund. Western Hemisphere Dept.

,345 0.63 29.3 Jamaica 2011 23.3 8,485 0.63 37.0 Argentina 2011 34.7 15,501 0.67 52.0 Guyana 2012 22.4 6,054 0.68 32.7 Uruguay 2013 26.6 18,966 0.74 35.9 Brazil 2013 29.6 14,555 0.87 34.2 Un-weighted average without Peru 21.0 11,322 0.59 35.6 Sources: Fenochietto y Pessino (2013) and IMF’s World Economic Outlook. 1/ Tax and social contributions as percent of GDP. Box 2. Peru: Mineral Taxation In September 2011, the mining taxation reform was

International Monetary Fund. Western Hemisphere Dept.

agreements established by law between the central government and resource producing regions (in particular, under the law known as Canon Minero ). These regions, in turn, are required to spend funds on infrastructure and education projects ( Figure 2 , Table 2 ). 9 Figure 2. Peru: Mining Revenue and Investment 1/ Net of restitutions. 2/ National Accounts data. Source: Ministry of economy and Finance, World Economic Outlook., Fund staff calculations. 11. A mining taxation reform was approved in September 2011, aimed at increasing progressiveness of the tax

Svetlana Vtyurina

’ accumulating financial assets despite running overall deficits ( IMF 2013a ). Based on recommendations of tax experts, mining taxation reform approved in September 2011 aimed to increase the progressivity of the tax system, while preserving the competitiveness of the sector ( Otto 2002 ). The new reforms included (1) new royalties based on operating profits of 1 percent to 12 percent to replace the sales-based royalties for companies with no stability contracts with the government; 7 (2) a new special mining tax (IEM) that goes to the central government and is levied on a

Mr. Ricardo Fenochietto

) accounted for 12 percent of GDP, about 70 percent of total exports (of which minerals accounted for 61 percent), and 12 percent of total fiscal revenues (3.5 percent of GDP). Fiscal revenue from mining (i.e., copper, gold, lead, zinc, iron, and tin) accounted for about 60 percent of total revenue from mining. 21 The mining taxation reform approved in September 2011 aimed to increase progressivity and public revenues while preserving the competitiveness of the sector ( Annex Table 8.2.1 ). Up until then, Peru’s mineral taxation regime had been comprised mainly of the CIT

Mr. Antonio David and Mr. Daniel Leigh

Country Report No. 12/26) discusses the mining taxation reform and its objectives: “The mining taxation reform, approved in September, 2011, would increase progressiveness and public revenues, while preserving competitiveness of the sector”. The reform included a new royalties system based on operating profits; a new special mining tax; and a special (voluntary) levy. The revenue yield of the new regime is estimated at about 0.5 percent of GDP annually. On the expenditure side, the 2013–15 Marco Macroeconomico Multinaual report suggests on page 22 that the

International Monetary Fund

. B. Reform of Mining Sector Taxation 22. The Government of Guinea has embarked upon mining taxation reform in recent years . It is seeking assistance from the World Bank to pursue the reforms, which aim to streamline the current regime and align it with best international practices. 15 The government plans to introduce a standard Mining Convention and a new Mining Code (CM) as part of the reforms, which are expected to modernize and unify mining taxation. 16 23. The authorities plan to adopt the standard convention before the new CM to proceed with the

International Monetary Fund

priority in the new administration program . Peru’s mining sector (mineral and hydrocarbon) represents 11 percent of GDP; 70 percent of total export (of which mineral accounted for 61 percent); and 20 percent of total fiscal revenues (3.5 percent of GDP) in 2010. Fiscal revenue from mining (i.e., copper, gold, lead, zinc, iron and tin) exceeded that from crude oil in around 2004, accounting for slightly more than 60 percent of the total revenue from mining. The mining taxation reform, approved in September, 2011, would increase progressiveness and public revenues