Peru 2012 budget to expand 5pc from year before

LIMA: Peru government plans to expand the budget by 5 percent next year and it remains cautious about possible fallout from a global crisis, Finance Minister Luis Castilla said late on Friday.

President Ollanta Humala, who took office a month ago, will present Congress in the coming days with a proposed budget of 95.54 billion soles (about $35 billion). Humala has vowed to ensure Peru's poor benefit more from a booming economy.

"This budget has been drafted carefully, it is a cautious budget given the imminence of an external shock or crisis, but at the same time it will allow us to make progress on the promises we've made," Castilla told a news conference.

The government's 2012 budget bill contemplates economic growth of at least 6 percent next year and a fiscal surplus of 1 percent of gross domestic product.

Castilla said the government will finance part of next year's budget with external financing of up to $2.23 billion as well as domestic credits of up to 2.63 billion soles.

The economy in Peru, a major global metals exporter, expanded at a swift 8.8 percent in 2010 and is on track to grow 6.5 percent this year.

Copyright Reuters, 2011