Peru says boosting stabilization fund to $5.7 bln

LIMA, April 4 (Reuters) – Peru’s president said on Monday
he was more than doubling the country’s emergency stabilization
fund to $5.7 billion, as he works to blunt criticism of heavy
spending and create a big rainy day fund for the Andean
country.

“We have put out a decree that lifts the fund to $5.7
billion, which means we have savings in a fund that can’t be
touched,” President Alan Garcia said a week before presidential
elections in which he cannot run.

“If there’s a big external crisis in the next government,
or a big quake or natural disaster, the next government will be
protected with this stabilization fund,” he said on local
radio.

Finance Minister Ismael Benavides has said the fund, which
would now be equivalent to around 3.8 percent of gross domestic
product, could be turned into a sovereign wealth fund for
strategic investments.

Garcia downplayed criticism he was spending too heavily in
one of the world’s fastest growing economies, where inflation
of about 3 percent is expected this year and a small fiscal
surplus is expected.

Left-wing nationalist Ollanta Humala is leading polls
before the April 10 vote, though most investors are betting he
would lose in a run-off on June 5 to a more market-friendly
candidate.

“We want to govern responsibly,” Garcia said. “We don’t
want to spend all the money at the end without giving any
guarantees to the next government that it won’t have any big
economic problems,” Garcia said.
(Reporting by Patricia Velez and Terry Wade; Editing by Diane
Craft)

Peru says boosting stabilization fund to $5.7 bln