Reuters | August 10, 2021 |
Peru’s finance minister, Pedro Francke (R) with the country’s new president,
Pedro Castillo. (L) (Credit: Presidencia Peru)
Peru’s finance minister, Pedro Francke, told Reuters on Monday that the new leftist government is confident it can increase mining taxes without affecting private-sector competitiveness, as long as metal prices remain high.
Peru, the world’s No. 2 copper producer, is highly dependent on mining to finance public spending and new President Pedro Castillo has promised to deliver increased spending on social programs to lift the country’s poor.
The election of Castillo, a member of a Marxist-Leninist party, as president in June has spooked markets and investors. On Monday, Peru’s Sol currency fell to a fresh record low against the dollar due to political uncertainty.
Francke, a moderate left-wing economist, told Reuters in an interview that the government is working hard to regain investor confidence.
He said the administration is committed to maintaining fiscal discipline and will reduce the deficit in 2022 by 1 percentage point compared with 2021.
Spending ceiling rules will be reinstated after they were lifted due to the pandemic, he added.
“We will keep to a declining path for the fiscal deficit over time that will keep a debt ceiling at a pretty reasonable level,” Francke said. Peru has one of Latin America’s lowest debt-to-GDP ratios.
Key to that plan is raising taxes on miners, Francke said, though he played down a suggestion by Castillo during his campaign that tax stability deals agreed with some companies would be torn up.
He declined to provide specifics but said they would move fast to come up with a proposal.
“As time passes, you are losing (tax) revenue,” he said.
Francke acknowledged that public spending will grow, but said that tax revenue would rise 24% in 2021 compared with a year earlier, driven by higher metal prices and a reopening of the economy. Those funds, he said, will allow the government to spend more as it reduces the deficit.
Rating agencies have revised Peru’s outlook to negative in recent months. Francke said they will hold meetings with them in the next two weeks in hopes that Peru’s investment-grade rating is not affected.
(By Marco Aquino and Marcelo Rochabrun; Editing by Jonathan Oatis and Matthew Lewis)
Peru’s finance minister, Pedro Francke, told Reuters on Monday that the new leftist government is confident it can increase mining taxes without affecting private-sector competitiveness, as long as metal prices remain high.
Peru, the world’s No. 2 copper producer, is highly dependent on mining to finance public spending and new President Pedro Castillo has promised to deliver increased spending on social programs to lift the country’s poor.
The election of Castillo, a member of a Marxist-Leninist party, as president in June has spooked markets and investors. On Monday, Peru’s Sol currency fell to a fresh record low against the dollar due to political uncertainty.
Francke, a moderate left-wing economist, told Reuters in an interview that the government is working hard to regain investor confidence.
He said the administration is committed to maintaining fiscal discipline and will reduce the deficit in 2022 by 1 percentage point compared with 2021.
Spending ceiling rules will be reinstated after they were lifted due to the pandemic, he added.
“We will keep to a declining path for the fiscal deficit over time that will keep a debt ceiling at a pretty reasonable level,” Francke said. Peru has one of Latin America’s lowest debt-to-GDP ratios.
Key to that plan is raising taxes on miners, Francke said, though he played down a suggestion by Castillo during his campaign that tax stability deals agreed with some companies would be torn up.
He declined to provide specifics but said they would move fast to come up with a proposal.
“As time passes, you are losing (tax) revenue,” he said.
Francke acknowledged that public spending will grow, but said that tax revenue would rise 24% in 2021 compared with a year earlier, driven by higher metal prices and a reopening of the economy. Those funds, he said, will allow the government to spend more as it reduces the deficit.
Rating agencies have revised Peru’s outlook to negative in recent months. Francke said they will hold meetings with them in the next two weeks in hopes that Peru’s investment-grade rating is not affected.
(By Marco Aquino and Marcelo Rochabrun; Editing by Jonathan Oatis and Matthew Lewis)
Peruvian mining sector to pay record $3bn in taxes in 2021, says industry group
Reuters | August 10, 2021
Orcopampa operation. Photo by Buenaventura.
Peruvian mining companies will pay a record 12 billion soles ($3 billion) in taxes in 2021, more than twice what they paid in 2019 before the pandemic, the industry group representing the sector said on Tuesday.
Mining is a key source of tax revenue for Peru, the world’s No. 2 copper producer. Miners have benefited this year from higher prices and a weak local currency, which boosted their revenue and increased their tax bills due to exports sold in dollars.
The National Society of Mining, Oil and Energy said in a statement that miners paid 4 billion soles in taxes in 2020, when output was hit by pandemic restrictions, and about 4.8 billion soles in 2019.
The group – whose members include Compania de Minas Buenaventura and subsidiaries of Anglo American , Hudbay Minerals, Southern Copper Corp and Barrick Gold Corp – also forecasts that the mining sector will pay 17 billion soles in taxes on average each year from 2022 through 2026.
It said this was higher than in any other five-year period.
Peru is under a new left-wing government led by President Pedro Castillo, an elementary school teacher, who is seeking to extract higher taxes from the mining sector but has not yet made any concrete proposal on the issue.
Neighbor Chile, the world’s top copper producer, is also discussing higher taxes for miners in Congress.
The mining industry group said in its statement that the current Peruvian tax system was “considered a good regime by international and national experts.”
Peru’s economy ministry said overall tax revenue in Peru will rise 24% in 2021 compared with a year earlier, and a further 8% in 2022, according to preliminary estimates.
($1 = 4.0661 soles)
(By Marco Aquino and Marcelo Rochabrun; Editing by David Holmes)
Reuters | August 10, 2021
Orcopampa operation. Photo by Buenaventura.
Peruvian mining companies will pay a record 12 billion soles ($3 billion) in taxes in 2021, more than twice what they paid in 2019 before the pandemic, the industry group representing the sector said on Tuesday.
Mining is a key source of tax revenue for Peru, the world’s No. 2 copper producer. Miners have benefited this year from higher prices and a weak local currency, which boosted their revenue and increased their tax bills due to exports sold in dollars.
The National Society of Mining, Oil and Energy said in a statement that miners paid 4 billion soles in taxes in 2020, when output was hit by pandemic restrictions, and about 4.8 billion soles in 2019.
The group – whose members include Compania de Minas Buenaventura and subsidiaries of Anglo American , Hudbay Minerals, Southern Copper Corp and Barrick Gold Corp – also forecasts that the mining sector will pay 17 billion soles in taxes on average each year from 2022 through 2026.
It said this was higher than in any other five-year period.
Peru is under a new left-wing government led by President Pedro Castillo, an elementary school teacher, who is seeking to extract higher taxes from the mining sector but has not yet made any concrete proposal on the issue.
Neighbor Chile, the world’s top copper producer, is also discussing higher taxes for miners in Congress.
The mining industry group said in its statement that the current Peruvian tax system was “considered a good regime by international and national experts.”
Peru’s economy ministry said overall tax revenue in Peru will rise 24% in 2021 compared with a year earlier, and a further 8% in 2022, according to preliminary estimates.
($1 = 4.0661 soles)
(By Marco Aquino and Marcelo Rochabrun; Editing by David Holmes)
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