Category: Peru

Peru is to due to launch the tender for its Michiquillay mine later this week. Private investment promotion agency ProInversión, on behalf of the government, is looking for investment of at least $700 million. Michiquillay, located in Cajamarca, close to South America’s largest gold mine Yanacocha, has reserves of copper, gold and silver.

Peru’s economy expanded 9.04% in July, year-on-year, beating analysts’ forecasts and recording the second-highest monthly growth of the year. July’s expansion takes growth for the first seven months of the year to 6.97%, according to the national institute of statistics (INEI). Last year, Peru recorded growth of 6.5%; the target for economic expansion this year is 6.6%.

Peru is planning to save around $1.5 billion in debt servicing costs on debt owed to the Paris Club group of lenders by extending out debt due in 2010 by another three to five years. The country owes around $5.75 billion to the Paris Club in total. Last year, Peru paid down $1.5 billion of its debt to the creditors. The government also says it aims to reduce the ratio of its foreign public debt from 78% of the total to 69%, converting it into domestic debt by the end of next year. The move will help protect Peru from external shocks say economists. Next week the government will make its eighth local-currency bond issue, this time worth $70.7 million. It last sold local-currency sovereign bonds in August, worth $121 million.

Peru’s President Alan Garcia has picked the former chief economic advisor to opposition leader Lourdes Flores, to take control of the country’s central bank. Julio Velarde, currently head of the Latin American Reserve Fund in Colombia and considered an orthodox economist, will become president of the Banco Central De Reserva for the next five years. He replaces acting bank chief Oscar Dancourt.

Ernesto Zavala, formerly Peru’s economy minister under Alejandro Toledo, has joined brewer Backus and Johnston, as corporate affairs director. Robert Priday, managing director of the Peruvian subsidiary of Anglo-South African SABMiller, welcomed Zavala as one of Peru’s brightest young men.

Peru recorded a fiscal surplus in the first half of the year of 4.8% of GDP, compared with a surplus of 2.5% of GDP for the same period last year. The increase in the surplus, which reached $2.16 billion, was a result of a rise of 24% in revenues during the period against a rise of only 9.8% in expenses. Meanwhile, July figures showed a surplus of $48.9 million, versus a deficit of $184 million in July last year, and takes the fiscal surplus for the year through July to $2.42 billion.

Peru’s exports rose 48.3% in July, year on year, taking them to their highest levels for the year to date. The rise to $2.3 billion was attributed to the increase in sales of traditional sectors such as minerals, which accounted for around half of all sales abroad last year. Exports for the seven months through July were up 34.7% to $12.5 billion, compared with the same period in 2005. The government is forecasting exports this year of $22 billion against $17 billion last year. Peru is the world’s third-largest producer of copper and zinc and the fifth-largest gold producer.

Peru’s trade surplus in July widened to record levels of just over $1 billion, a 40% increase from the previous month and 111% up on July 2005. The surplus was driven by a growth in exports, which rose to $2.2 billion for the month, against imports of $1.1 billion. The growth was led by the mining sector, in particular copper and gold, continuing a trend seen in previous months. Exports for the first seven months of the year were up 42%, compared with the same period in 2005, with imports increasing only 7.6%.

GBH-Swissport Aeropuertos, a consortium led by Spanish-owned Swissport, has won the concession to operate 12 of Peru’s regional airports with a commitment to invest at least $115 million and possibly up to $220 million. The 25-year concession has the option to be extended up to 60 years. Swissport was the only bidder remaining following the withdrawal of Colombian group Aeropuertos Unidos. Swissport is the world’s largest airport ground and cargo handling service provider, with a presence in 180 airports worldwide. GBH Investments is a local infrastructure group.

Peruvian toll-road concessionaire IIRSA Norte has successfully sold $213 million of securitized bonds under 144A rules in the US to mainly European and US investors. The bonds are backed by the issuance of certificates of annual payments (so-called certificados de reconocimientos de pago annual de obras – CRPAOs) made to the concessionaire by the government of Peru to compensate for construction progress. This the first time a Peruvian company has raised financing via this type of financing mechanism, according to law firm Roselló, which acted as legal advisor to IIRSA Norte. Although the CRPAOs are freely transferable, they do not constitute sovereign debt of Peru which means the country’s indebtedness is not affected. The funds raised will be used to finance the construction of the 960-kilometer stretch of Amazonas Norte highway, part of a larger project – Interoceánica – which is part of the plan for the Integration of the Regional Infrastructure of South America (IIRSA).