Bloomberg News

Peru Not Planning to Raise Tax ‘At the Moment,’ Lerner Says

September 28, 2011

(Updates with Lerner’s comment in third paragraph.)

Sept. 28 (Bloomberg) -- The Peruvian government, which will sign a law today increasing royalties on mining companies, has no plans “at the moment” to ask other industries to pay more tax, Cabinet Chief Salomon Lerner said.

Increased revenue isn’t needed now because rising metal prices and economic growth has left the government with a bigger-than-expected budget surplus this year equivalent to 1.7 percent of gross domestic product, Lerner said.

“We’re not going to create new taxes now when we have a fiscal surplus,” Lerner said at a news conference in Lima today. “ We don’t have that in our agenda at the moment, but the world is very changeable. No one was expecting the crisis in Europe.”

President Ollanta Humala was elected June 5 on pledges to boost state control of the country’s oil and gas reserves and impose a mining windfall tax. Business confidence plunged after Humala’s election victory sparked concern the windfall tax would jeopardize $50 billion of mine expansions over the next decade. The government expects the tax increase, which legislators approved last week, will generate an additional $1.1 billion in annual revenue.

Humala’s government will take a stronger role in the domestic energy industry by expanding oil production at Petroleos del Peru SA and a investing in a natural gas pipeline in the south of the country, Lerner said.

The government is considering investing in a $1.7 billion hydroelectric plant in the southern jungle and a thermal power plant, and will partner Repsol YPF SA in a project to increase gas supply to households, he said.

State bank Banco de la Nacion will seek a larger share of the microfinance market to meet the needs of the 40 percent of the country that doesn’t have access to credit, Lerner said.

“This is a different state,” Lerner said. “The state is going to participate in areas that aren’t risky and that are necessary to complement the work of foreign investors.”

The sol weakened 0.3 percent to 2.7715 per dollar at 3:15 p.m. New York time from 2.7633 yesterday.

--Editor: Robert Jameson

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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