LIMA: Peru's budget deficit will rise to 2 percent of gross domestic product this year as the government boosts spending to try to jump-start sluggish economic growth, a finance ministry report estimated on Thursday.
The finance ministry had forecast a deficit of 0.4 percent of GDP in its last macroeconomic report in August before the government began rolling out additional measures to counter a sharp economic slowdown.
Last year Peru posted a deficit of 0.2 percent of GDP.
Peru's mining-fueled economy expanded by 2.35 percent in 2014, its weakest pace in five years, on falling metals exports and mining investment.
The ministry now expects the economy to perk up this year, growing between 3.5 and 4.5 percent, according to its official forecast. Finance Minister Alonso Segura has said the economy will likely grow by around 4 percent with a downward bias.
On Wednesday, the government of President Ollanta Humala proposed stimulus measures valued at about 5 billion soles ($1.6 billion), including import-duty cuts and an extension of stimulus policies.
Peru's sol currency , which has been trading around a six-year low against the dollar this year, will likely end 2015 at about 3.20 soles per dollar, the finance ministry said, revising its previous view of 2.90 soles per dollar.
The ministry also raised its view of 2015 inflation to 2.7 percent from 2 percent.
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