Peru approves $2.8 billion budget hike ahead of Fujimori transition

LIMA, July 15 - Peru's Congress approved late Tuesday a $2.8 billion budget expansion to fund infrastructure projects, essential services and other purposes, offering financial support ahead of the July 28 inauguration of President-elect Keiko Fujimori.

The measure was passed by the legislature's Permanent Commission with 17 votes in favor and five against, and will also help fund safety measures for heavy El Niño rains.

• About half the new funds will go toward completing public works to ensure essential services; the remainder will cover public sector salaries, crime initiatives and flood-prevention infrastructure.

• The measures will particularly focus on preventing the El Niño climate phenomenon, which could trigger widespread flooding and hurt the agricultural and fishing sectors.

• Fujimori said on Thursday she may issue emergency decrees to activate further preventative measures.

• Interim President Jose Balcazar has already declared a 60-day state of emergency in nearly 40% of Peru's districts due to imminent danger from intense El Niño rains.

• El Niño could leave Peru with losses of 16 billion soles ($4.70 billion) between 2026 and 2027, mainly due to damage to infrastructure on the northern coast, according to a Credicorp Capital Asset Management report published this week.

• Peru's fiscal council, an autonomous body that monitors public finances, expressed "concern" last week over the fiscal outlook after reviewing the supplementary credit proposal.

• The council said the government had chosen to expand the budget rather than use the unexpected revenue windfall to build precautionary savings or contain spending pressures.

• Despite the climate risks ahead, Peru's central bank recently raised its economic growth forecast for this year to 3.4% from 3.2%, citing strong domestic demand and private investment. REUTERS