Peru leads the region with the most international reserves

Despite the difficult economic context and the economic slowdown, Peru leads the largest number of Net international reserves (RIN) in the region, the level of which reached 74,282 million USD, or 30% of the gross domestic product (GDP), informed the Institute of Economics and Business Development (IEDEP) of the Chamber of Commerce of Lima (CCL).

The number given by the Central Reserve Bank of Peru (BCRP) As of February 22, it reveals an increase in NIRs of $2,399 million compared to the end of 2022.

According to the issuing entity, 77% of international reserves of Peru are invested in liquid securities of high credit quality, while 20% in deposits with foreign banks and 3% in gold.

As it concerns portfolio qualityat the end of 2022, 63% were maintained in entities rated AAA, 24% rated AA and 13% rated A.

It should be mentioned that with the $74,282 million Peruvian international reservesPeru also has a good performance in its Public finances with a budget deficit of 1.6% of PBI and a public debt of 34.1% of GDP, indicators that stand out in the region and demonstrate the solidity of its economy.

“The ace Peruvian RIN in terms of PBIovertook economies like Brazil (16.7%) and Colombia (17.6%), countries that closed 2022 with a budget deficit of 4.7% and 5.6%, respectively,” said the leader of the CCL’s IEDEP, Óscar Chávez.

During this time, the countries with lower INR ratios these are Bolivia (3.5%) and Argentina (6.5%). Óscar Chávez argued that, in the case of the highland country, it presents public finance problems with a budget deficit 7.9% of PBIthe highest in the region, and a Public debt of 85.1% of PBIthe second highest.

“Meanwhile, Argentina is registering similar budgetary problems, but a little less, in addition to a deficit of 3.3% and a debt of 69.5% of the PBI“, specified the economist.

In terms of months of imports, the reserves of Bolivia and Argentina are equivalent to two and seven months respectively. In the case of Peru, it also exceeds the rest of the countries in the region, since its reserves are equivalent to 16 months of imports.

In view of the above, Óscar Chávez considered it important for countries to maintain an adequate level of international reservessince it guarantees the ability to pay the external debt, in addition to absorbing sudden fluctuations in the exchange rate and demonstrating solidity in the local currency.

The ace Net international reserves (RIN) They constitute the international liquidity that a country has to deal with adverse macroeconomic shocks, according to the BCRP.

“Increasing financial globalization implies a greater mobility of capital in our economy which is not always associated with economic fundamentals (fiscal and monetary discipline). In some cases this capital flows It occurs as a result of “contagion” through adverse events in other countries. In these circumstances, there is always the possibility of a possible sudden outflow of capital and in order to be able to cope with the effects that this would have, it is necessary to have liquidity in foreign currencies”, explained the monetary authority.

In this sense, the NIR allow coping with unexpected capital outflows and reduce the volatility of exchange rate. In the event of capital outflows, the BCRP uses international reserves to provide currency funds to entities of the Financial systemmitigating the effects of the contraction in liquidity and preventing possible drastic reductions in credit to the private sector.

Similarly, in dollarized economies, international reserves allow the BCRP can act as a lender of last resort, against possible withdrawals of deposits, contributing to build trust there soundness of the financial system.