RIO DE JANEIRO, BRAZIL - The Negative Outlook reflects Peru's weakened government balance sheet, deterioration of policy predictability as a result of congressional passage of populist measures in recent months, and Fitch's expectation of continuing challenges to reduce fiscal deficits to levels consistent with debt stabilization.
The weakening of political cohesiveness and institutions since 2016 could undermine the capacity of the next government to implement wide-ranging fiscal, political, and productivity-enhancing economic reforms. In addition, periodic executive-legislative tensions and political instability cannot be ruled out in the coming years.
Peru's strong macro institutions and external finances . . .