Peru Congress passes budget after row with finmin

By Patricia Velez and Terry Wade

LIMA, Nov 30 (BestGrowthStock) – Peru’s Congress late on Monday
approved the country’s budget for 2011 after a row between
Finance Minister Ismael Benavides and leaders of the ruling
APRA party as presidential elections approach.

Benavides had rejected requests from APRA and other
legislators to significantly boost spending — by about 10
percent more than planned under the budget.

The Congress passed the budget as initially planned without
any additional large increases.

The budget for 2011, which was approved largely unchanged,
had already included at 8 percent spending hike to 88.4 billion
soles ($31.6 billion), compared with this year’s budget of 81.8
billion soles. APRA leaders and some legislators wanted to
increase spending by another 10 percent or more.

Peru is forecast to post a deficit next year of about 1
percent of gross domestic product.

Despite swift economic growth of more than 8 percent this
year, Benavides had said that the country needed to carefully
manage its fiscal position to maintain investment-grade credit
ratings and have a cushion in case European debt woes impact
the world economy.

Benavides so stridently opposed the new requests — made by
leaders of the ruling APRA party last week — that at one point
he said he would rather resign that approve a big spending
increase but is now expected to stay on, a government source
said over the weekend.

Benavides, a former banker who is a political independent,
was hired by President Alan Garcia in September. Peru holds the
first round of its presidential election in April.

Garcia cannot run for a second straight term, but his APRA
party has fielded a candidate for the presidential race —
former Finance Minister Mercedes Araoz, who is trailing in
polls.
(Writing by Terry Wade, Editing by Chizu Nomiyama)

Peru Congress passes budget after row with finmin