Fiscal Rules for Peru

This study examines the effectiveness of fiscal rules in the Peruvian economic context, focusing on the Fiscal Prudence and Transparency Act passed in 1999. The research highlights the importance of implementing quantitative rules that limit the public sector’s fiscal deficit to a maximum of 1% of gross domestic product (GDP) and restrict the growth of spending in real terms. The experiences of various countries are analyzed, demonstrating how the institutionalization of fiscal rules contributes to economic stability and responsible fiscal management by reducing discretion and the risk of recurring deficits. Through an empirical approach, the study finds that the adoption of these rules—accompanied by transparency standards and a robust budgetary process—tends to facilitate positive fiscal performance. The implications for Peruvian economic policy suggest that the effective implementation of these rules is crucial for achieving sustainable macroeconomic stability and building agents’ confidence, despite the challenges posed by external and cyclical factors. (Abstract and audio: Department of Economic Publications)