Peru proposes 2027 budget of $79.5 billion, a 3.5% increase

Peru's government has unveiled its proposed public budget for 2027, a significant financial blueprint totaling 266.5 billion soles, equivalent to roughly $79.5 billion. This figure represents a 3.5% increase compared to the budget approved for 2026, signaling a planned expansion in public spending.

The budget anticipates considerable borrowing, with provisions for up to 24.4 billion soles (about $7.3 billion). This borrowing will be sourced both internally and externally, including a domestic bond issuance of 17.2 billion soles ($5.14 billion).

A key highlight of the proposed budget is the substantial increase in funding for the "Pensión 65" program, which provides stipends to the elderly in extreme poverty. This initiative was a central campaign promise of President Keiko Fujimori. Funds for "Pensión 65" are set to nearly triple, rising from 1.3 billion soles ($390 million) in 2026 to 3.5 billion soles ($1.05 billion) in 2027. This will enable approximately 825,000 beneficiaries to receive a bi-monthly payment of 700 soles ($209).

The budget also allocates significant funds to infrastructure projects, with the Ministry of Transport and Communications receiving the largest share. Notably, 1.15 billion soles ($344 million) are earmarked for the construction of Line 2 of the Lima Metro, and 454 million soles ($135 million) for the Vía Expresa Santa Rosa, aimed at improving access to Jorge Chávez International Airport. Additionally, 440 million soles ($131 million) are designated for the construction of a new airport in Cusco, a vital gateway for international tourists visiting Machu Picchu.

However, the government's financial planning is not without its projected challenges. The budget identifies the impending El Niño phenomenon, expected between November and early 2027, as a risk factor. This climate event could potentially reduce Peru's economic growth by up to 1% in 2026 and 0.6% in 2027. Further exacerbating these risks, a potential escalation of the conflict in the Middle East could lead to a fiscal revenue shortfall of up to 5 billion soles ($1.5 billion) and increase public debt by 1.1 percentage points.