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As filed with the Securities and Exchange Commission on November 7, 2002
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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REGISTRATION STATEMENT
UNDER
SCHEDULE B
OF
THE SECURITIES ACT OF 1933
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Republic of Peru
(Name of Registrant)
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Heli Pelaez Castro
Ambassador Consul General of Peru
241 East 49th Street
New York, New York 10017
(Name and address of Authorized Representative
of the Registrant in the United States)
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It is requested that copies of notices and communications
from the Securities and Exchange Commission be sent to:
Carmen Amalia Corrales, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
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Approximate date of commencement of proposed
sale to the public: From time to time after the
effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
- -------------------------------- ------------------- ----------------------- ---------------------- --------------------
Proposed Maximum Proposed Maximum
Title of Each Class of Amount To Be Offering Price Aggregate Offering Amount of
Securities To Be Registered Registered(4)(5) Per Unit(6)(7) Price(4)(5)(6)(7) Registration Fee
- -------------------------------- ------------------- ----------------------- ---------------------- --------------------
Debt Securities (1)(2)
- -------------------------------- ------------------- ----------------------- ---------------------- --------------------
Warrants (1)(3)
- -------------------------------- ------------------- ----------------------- ---------------------- --------------------
Units (1)
- -------------------------------- ------------------- ----------------------- ---------------------- --------------------
Total: $500,000,000 100% $500,000,000 $46,000
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(1) Such indeterminate number or principal amount of debt securities, warrants
and units as may from time to time be issued at indeterminate prices. The
securities registered hereunder shall not have an aggregate offering price
which exceeds $500,000,000 in United States dollars or the equivalent in
any other currency.
(2) Also includes such indeterminate number of debt securities as may be issued
upon conversion or exchange of any debt securities that provide for
exchange into other securities or upon exercise of warrants for such
securities.
(3) Warrants may be sold separately or with debt securities.
(4) In United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency or currencies.
(5) Such amount represents the principal amount of any debt securities issued
at their principal amount, the issue price rather than the principal amount
of any debt securities issued at an original issue discount, the issue
price of any warrants and the exercise price of any debt securities
issuable upon exercise of warrants.
(6) Estimated solely for the purpose of computing the amount of the
registration fee.
(7) Exclusive of accrued interest, if any.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CROSS REFERENCE SHEET
Between Schedule B of the Securities Act of 1933
and the Prospectus
Schedule B
Item Number Location in Prospectus
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1................................... Cover Page
2................................... Use of Proceeds**
3................................... Public Sector Debt, Description of
Securities, Tables and Supplemental
Information*,**
4................................... Public Sector Debt
5................................... Public Sector Finances*
6................................... **
7................................... Authorized Representative
8................................... **
9................................... **
10.................................. Plan of Distribution**
11.................................. ***
12.................................. Validity of the Securities***
13.................................. ***
14.................................. ***
* Information to be provided from time to time by amendment to this
Registration Statement.
** Information to be provided from time to time in Prospectus Supplements to
be delivered in connection with the offering of Debt Securities, Warrants
or Units.
*** Information included in Part II to this Registration Statement or as an
Exhibit thereto or to be filed by one or more amendments to this
Registration Statement.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and we are not soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED November 7, 2002
PROSPECTUS
[Seal of Peru]
The Republic of Peru
Debt Securities
Warrants
Units
The Republic may from time to time offer and sell its debt securities,
warrants and units in amounts, at prices and on terms to be determined at the
time of sale and provided in one or more supplements to this prospectus. The
Republic may offer securities with an aggregate principal amount of up to
US$500,000,000. The debt securities will be direct, unconditional and unsecured
external indebtedness of the Republic. The debt securities will at all times
rank at least equally with all other unsecured and unsubordinated external
indebtedness of the Republic. The full faith and credit of the Republic will be
pledged for the due and punctual payment of all principal and interest on the
securities.
The Republic will provide specific terms of these securities in one or
more supplements to this prospectus. You should read this prospectus and any
prospectus supplement carefully before you invest. This prospectus may not be
used to make offers or sales of securities unless accompanied by a prospectus
supplement.
The Republic may sell the securities directly, through agents
designated from time to time or through underwriters or dealers. The names of
any agents or underwriters will be provided in the applicable prospectus
supplement.
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You should read this prospectus and any prospectus supplements
carefully. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of these documents.
--------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------
The date of this prospectus is , 2002.
[Map of Peru]
You should rely only on the information contained in this prospectus or
the information to which the Republic has referred you. The Republic has not
authorized anyone to provide you with different information. The Republic is not
making an offer of these securities in any jurisdiction where the offer is not
permitted. This prospectus may be used only where it is legal to sell these
securities. The information in this document may be accurate only on the date of
this document.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS........................................................i
CERTAIN DEFINED TERMS AND CONVENTIONS.......................................ii
FORWARD-LOOKING STATEMENTS.................................................iii
SUMMARY......................................................................1
USE OF PROCEEDS..............................................................8
THE REPUBLIC OF PERU.........................................................9
THE ECONOMY.................................................................21
BALANCE OF PAYMENTS AND FOREIGN TRADE.......................................50
THE MONETARY SYSTEM.........................................................64
PUBLIC SECTOR FINANCES......................................................85
PUBLIC SECTOR DEBT..........................................................99
DESCRIPTION OF THE SECURITIES..............................................109
TAXATION...................................................................124
PLAN OF DISTRIBUTION.......................................................126
OFFICIAL STATEMENTS........................................................128
VALIDITY OF THE SECURITIES.................................................128
AUTHORIZED REPRESENTATIVE..................................................128
WHERE YOU CAN FIND MORE INFORMATION........................................128
TABLES AND OTHER SUPPLEMENTAL INFORMATION..................................A-1
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ABOUT THIS PROSPECTUS
This prospectus provides you with a general description of the
securities that the Republic may offer. Each time the Republic sells securities
covered by this prospectus, it will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. If the information in this prospectus differs from any prospectus
supplement, you should rely on the information contained herein as updated by
the prospectus supplement. You should read both this prospectus and the
accompanying prospectus supplement, together with additional information
described below under the heading "Where You Can Find More Information."
CERTAIN DEFINED TERMS AND CONVENTIONS
Certain Defined Terms
All references in this prospectus to the "Republic" are to the issuer,
and all references to the "Government" are to the central government of the
Republic and its authorized representatives.
The terms set forth below have the following meanings for the purposes
of this prospectus:
o Gross domestic product, which we refer to in this prospectus as "GDP,"
is a measure of the total value of final products and services
produced in a country in a specific year. Nominal GDP measures the
total value of final production in current prices. Real GDP measures
the total value of final production in constant prices of a particular
year, thus allowing historical GDP comparisons that exclude the
effects of inflation. In this prospectus, real GDP figures are based
on constant 1994 prices, the year used by the Banco Central de Reserva
del Peru, which we refer to in this prospectus as the "Central Bank,"
for purposes of maintaining real GDP statistics. GDP growth rates and
growth rates for the various sectors of the Republic's economy are
based on real figures.
o For balance of payments purposes, imports and exports are calculated
based upon statistics reported to the Republic's customs upon entry
and departure of goods into Peru on a free-on-board basis at a given
point of departure, which we refer to in this prospectus as "FOB"
basis. Export data include the gross value of marine resource catches
by non-resident vessels operating with fishing licenses and the value
of goods sold to non-resident transport companies. Import data include
data on imports through the Tacna Special Processing Area, the only
one of Peru's five free trade zones that is currently active,
purchases of goods abroad by resident transport companies and ship
repairs by non-residents.
o The inflation rate provides an aggregate measure of the rate of change
in the prices of goods and services in the economy. The Republic
measures the inflation rate by the percentage change between two
periods in the consumer price index, which we refer to in this
prospectus as the "CPI," unless otherwise specified. The CPI is based
on a basket of goods and services identified by the Instituto Nacional
de Estadistica e Informatica, which we refer to in this prospectus as
the "INEI." The price for each good and service that makes up the
basket is weighted according to its relative importance in order to
calculate the CPI. The annual percentage change in the CPI is
calculated by comparing the index as of a specific December against
the index for the immediately preceding December. The average annual
percentage change in the CPI is calculated by comparing the average
index for a 12-month period against the average index for the
immediately preceding 12-month period. INEI also compiles statistics
to calculate the wholesale price index, which is used to measure the
evolution in prices of a representative group of goods sold in the
wholesale market in 25 cities.
Currency of Presentation and Exchange Rate
Unless we specify otherwise, references to "U.S. dollars," "dollars"
and "US$" are to United States dollars, and references to "nuevos soles" and
"S/." are to Peruvian nuevos soles. Unless otherwise indicated, we have
converted nuevos soles into dollars and dollars, or any other denomination, into
nuevos soles for each year at the year's average exchange rate, calculated by
averaging the exchange rates for each calendar day of the year. We have included
all currency conversions, including conversions of nuevos soles into U.S.
dollars, for the convenience of the reader only and you should not construe
these conversions as a representation that the amounts in question have been,
could have been or could be converted into any particular denomination, at any
particular rate or at all.
On March 31, 2002, the nuevo sol/U.S. dollar exchange rate was S/. 3.446
per US$1.00. See "The Monetary System--Foreign Exchange and International
Reserves--Foreign Exchange."
Presentation of Financial Information
The Republic has presented all annual information in this prospectus
based upon January 1 to December 31 periods, unless it has indicated otherwise.
Totals in some tables in this prospectus may differ from the sum of the
individual items in those tables due to rounding.
Certain statistical information included in this prospectus is
preliminary in nature and reflects the most recent reliable data readily
available to the Republic as of the date hereof. The Central Bank conducts a
review process of the Republic's official financial and economic statistics.
Accordingly, certain financial and economic information presented in this
prospectus may be subsequently adjusted or revised to reflect new or more
accurate data or in accordance with the Republic's ongoing maintenance of its
economic data. In particular, certain information and data contained in this
prospectus for 1998, 1999, 2000, 2001 and 2002 are preliminary and subject to
routine revisions and possible adjustments by the Central Bank to ensure their
accuracy. Any revised data will be made public in accordance with the Republic's
normal practices for releasing data. The Government believes that this review
process is substantially similar to the practices of industrialized nations. The
Government does not expect revisions of the data contained in this prospectus to
be material, although it cannot assure you that it will not make material
revisions.
FORWARD-LOOKING STATEMENTS
This prospectus and any prospectus supplement relating to the
securities to be offered by this prospectus may contain forward-looking
statements. Forward-looking statements are statements that are not historical
facts. These statements are based on the Republic's current plans, estimates,
assumptions and projections. Therefore, you should not place undue reliance on
them. Forward-looking statements speak only as of the date they are made, and
the Republic undertakes no obligation to update any of them in light of new
information or future events.
Forward-looking statements involve inherent risks. The Republic
cautions you that many factors could affect the future performance of the
Peruvian economy. These factors include, but are not limited to:
o external factors, such as:
- interest rates in financial markets outside Peru;
- the impact of changes in the credit ratings of the Republic;
- the impact of changes in import tariffs and exchange rates;
- the impact of changes in the international prices of commodities;
- recession or low economic growth affecting Peru's trading
partners; and
- the decisions of international financial institutions, such as
the International Monetary Fund, which we refer to in this
prospectus as the "IMF," the Inter-American Development Bank,
which we refer to in this prospectus as the "IDB," the
International Bank for Reconstruction and Development, which we
refer to in this prospectus as the "World Bank," and the Andean
Development Corporation, which we refer to in this prospectus as
the "CAF," regarding the terms of their financial assistance to
the Republic; and
o internal factors, such as:
- general economic and business conditions or political or military
events in Peru;
- natural events, such as earthquakes and floods;
- present and future exchange rates of the Peruvian currency;
- foreign currency reserves;
- the ability of the Government to enact key economic reforms;
- the level of domestic debt;
- domestic inflation;
- the level of foreign direct and portfolio investment; and
- the level of Peruvian domestic interest rates.
Summary
This summary highlights information contained elsewhere in this
prospectus. It is not complete and may not contain all the information that you
should consider before investing in the securities. You should read the entire
prospectus and any prospectus supplement carefully.
The Republic
Introduction
Peru is a representative democracy located in western South America,
with an estimated population as of December 31, 2001 of 26.7 million people.
Peru's population is multi-racial and multi-cultural, and the country's official
languages are Spanish, Quechua and Aymara. The World Bank classifies Peru as a
lower-middle-income developing country.
Peru is emerging from more than a decade of rule by former President
Alberto Fujimori, who liberalized the country's economy and controlled domestic
terrorism, but also dismantled democratic institutions. Fujimori presided over
the reform of protectionist laws and policies, strengthened the tax system,
achieved price and exchange rate stability and privatized many state entities
during the 1990s. He also managed to largely break up terrorist cells acting in
Peru in the 1980s and early 1990s.
Fujimori's administration ended in November 2000, when, after damaging
disclosures about corruption in his administration and increasing public
protests and discontent, Fujimori fled the country for Japan. Political
instability, coupled with a series of external shocks, limited economic
development during the final years of the Fujimori administration leading to
high rates of underemployment, unemployment and poverty, and a lack of access to
basic health and public services. Charges of corruption are still pending
against Fujimori, who remains in Japan where he has thus far successfully evaded
the Republic's extradition attempts. In July 2002, his close ally Vladimiro
Montesinos, former advisor to Peru's intelligence agency, was sentenced to nine
years in prison after being convicted of usurping office for seizing control of
the intelligence agency while serving as an advisor. More than 70 criminal
charges are still pending against Montesinos ranging from corruption to arms
smuggling and murder.
Goals of the Toledo Administration
In June 2001, the Peruvian people elected Alejandro Toledo Manrique to
the presidency based on a platform that rejected Fujimori's legacy of political
coercion and financial misdealings, but still recognized the value of an open
economic system. President Toledo vowed to restore democracy, fiscal discipline
and transparency to the government, while increasing the living standards of the
poor and disadvantaged, who constitute a majority of the population, through
improvements in education, health and employment opportunities. He also promised
to continue the economic reforms and privatization program first advanced by the
Fujimori administration.
Toledo assumed the presidency in July 2001 against a backdrop of high
unemployment and underemployment, economic recession and social need more severe
than had been acknowledged by the Fujimori administration. Despite the economic
strides achieved between 1990 and 2000, poverty remains a persistent problem in
Peru with more than half of the population living below the poverty line, which
the World Bank defines as a monthly income of less than US$60 per capita,
adjusted to reflect differences in purchasing power. A significant number of
Peruvians live on an income of less than US$30 per capita per month.
President Toledo implemented a number of proposals to stimulate the
Republic's economy, including privatization and fiscal austerity programs.
Toledo's policies spurred moderate economic growth in the fourth quarter of 2001
and the first quarter of 2002. Despite this economic growth, the Toledo
administration faced social protests and unrest spurred by disappointment that
the President's policies had not immediately led to a significant reduction in
the high rates of underemployment, unemployment and poverty.
In an effort to maintain his political alliances and quell public
unrest, Toledo changed his cabinet. At the beginning of July 2002, several
ministers viewed as proponents of neo-liberal economic policies resigned their
posts, including Prime Minister Roberto Danino and Finance Minister Pedro Pablo
Kuczynski, whose pro-private investment policies had angered many Peruvians. On
July 12, 2002 President Toledo swore in a new cabinet.
The Toledo administration has established the following priorities:
o achieving and sustaining economic growth;
o increasing exports of Peruvian goods;
o reducing unemployment, underemployment and poverty;
o reforming the tax system, primarily by improving tax collection
mechanisms;
o fostering private investment by reinvigorating structural reforms and
promoting investment through concessions, joint ventures and other
similar business forms;
o increasing public investment in education, public health, job
training, low-income housing and other social programs while reducing
overall public spending;
o maintaining low inflation and a floating exchange rate system;
o improving the efficiency of the pension system by fostering
participation in the private pension system;
o stimulating growth in private sector credit by enhancing creditors'
rights;
o reducing public sector debt;
o improving oversight of the financial system and adopting transparency
guidelines and requirements in regulated sectors of the economy;
o improving the efficiency of the public sector; and
o maintaining open trade policies.
These priorities are the basis for various projects and initiatives
that the Toledo administration has pursued since assuming office. These projects
and initiatives include the following:
o adopting a private investment promotional program for 2002;
o submitting a 2002 budget, approved by Congress in November 2001, that
projects a fiscal deficit of 2.2% of GDP, as compared to the 2.4% of
GDP fiscal deficit for 2001;
o increasing the corporate income tax rate from 20% to 27%;
o reducing the payroll tax, known as the Extraordinary Solidarity Tax,
from 5% to 2%;
o initiating a temporary-jobs placement program in impoverished areas of
the country;
o increasing public sector wages 9%;
o creating an agrarian bank to provide the agricultural sector with
greater access to credit;
o transforming Mivivienda, a public development fund offering subsidized
mortgages, into a mortgage securitization agency, with the goal of
increasing mortgage lending and addressing the scarcity of affordable
low-income housing; and
o securing a commitment from donor nations to provide the Republic with
US$1.8 billion for social and economic development programs.
Because President Toledo's political party, Peru Posible, does not have
an absolute majority in Congress, the Toledo administration must seek alliances
with members of other parties to enact its policies and there can be no
assurances that these policies will be enacted or implemented.
The Economy
History and Background. During the 1980s, Peru was beset by
hyperinflation, significant fiscal and current account deficits, a high debt
burden and recession. This economic disequilibrium was provoked by high
government spending, the collapse of private investment brought about by the
attempted nationalization of the banking system and other key industries, and
the destruction of property and human lives unleashed by domestic terrorist
groups such as the Shining Path and Tupac Amaru.
During the period between 1990, the year Alberto Fujimori was first
elected President, and 1996, the country evolved from a closed, protected
economy to a more open and deregulated economic system. GDP grew during this
period and economic sectors that had suffered as a result of terrorism and the
hyperinflationary conditions of the late 1980s began to expand.
1997-2001. During the five-year period from 1997 to 2001, Peru experienced
the following economic results:
o The economy grew by 6.7% in 1997, primarily as a result of increasing
exports, high foreign and domestic investment and consumer confidence.
o The economy contracted by 0.5% in 1998 and grew by only 0.9% in 1999,
primarily as a result of several external shocks, including the Asian
and Russian financial crises, the negative impact of the El Nino
atmospheric phenomenon in 1998 on the Peruvian fishing and
agricultural industries, and the devaluation of the Brazilian real,
which led to the flight of short-term capital and a complete halt in
investment and consumer decisions.
o The economy grew by 3.1% in 2000, expanding significantly during the
first half of the year primarily as a result of increased government
spending and investment reflecting the Fujimori administration's turn
to more populist economic measures to gain public support. The economy
slowed during the second half of the year primarily as a result of the
political turmoil surrounding Fujimori's controversial election to a
third term and his eventual resignation in November 2000.
o The economy grew by 0.2% in 2001, declining in the first half of the
year due to a reduction in public spending and to the continued
political fallout from Fujimori's resignation that weakened domestic
demand and lead to a decline in private investment. In August 2001,
the economy began to expand in response to a government-implemented
fiscal stimulus package that included reducing from 5% to 2% the
special payroll tax, starting a temporary jobs program in the most
impoverished areas of the Republic and increasing public sector
pensions and wages by 9%. In addition, the Republic experienced an
average inflation rate of only 2.0% and record gold, silver and zinc
production that offset a sharp drop in world metals prices.
Recent Economic Developments. The following are preliminary economic
results for the first three months of 2002:
o the consolidated public sector fiscal deficit expanded to 1.5% of GDP,
as compared to a deficit of 0.7% of GDP for the first three months of
2001;
o the average inflation rate for the twelve months ending March 31, 2002
was 2%, as compared to 3.7% for the twelve months ending March 31,
2001;
o the net international reserves of the Central Bank increased 2% to
US$8.8 billion, as compared to US$8.6 billion as of December 31, 2001;
and
o the current account deficit decreased to 2.6% of GDP, as compared to a
current account deficit of 3.8% of GDP for the first three months of
2001.
Balance of Payments
Between 1997 and 2001, the Republic's current account deficit decreased
from 5.8% of GDP in 1997 to 2.0% of GDP in 2001. In 1998, the current account
deficit increased to 5.9% of GDP, as compared to 5.8% of GDP in 1997. In 1999,
the current account deficit decreased to 2.9% of GDP. In 2000, the current
account deficit remained stable at 2.9% of GDP. In 2001, the current account
registered a deficit of 2.0% of GDP. The Republic's yearly surpluses in its
capital account during 1997 and 2001 served to offset current account deficits.
In the period from 1998 to 2000, however, the capital account surplus contracted
and was not sufficient to offset current account deficits, leading to annual
deficits in the Republic's balance of payments.
Changes in the balance of payments account resulted from the following:
o In 1997, the Republic imported a significant number of capital goods
necessary for the modernization of various economic sectors, as well
as consumer and other goods. Exports did not keep pace with imports,
leading to a trade deficit that was primarily responsible for the
current account deficit. At the same time, in 1996 and 1997,
substantial foreign capital flows contributed to increasing surpluses
in the capital account.
o In 1998, the negative effects from El Nino further depressed exports
while imports continued at high levels. The capital account surplus
contracted, although still reaching a surplus, as a result of
significant withdrawals of short-term capital from the country in
response to the adverse effects of the Asian and Russian financial
crises and El Nino's devastating effect on Peru's primary export
market.
o In 1999, exports began to recuperate as the El Nino weather phenomenon
abated and imports declined significantly as capital investments
within the country leveled off. The capital account surplus continued
to shrink.
o In 2000, exports grew significantly, leading to a narrowing of the
trade deficit. In 2000, the capital account surplus edged higher as
compared to 1999.
o In 2001, a decline in imports, due to weaker domestic demand, and an
increase in the volume of the Republic's primary exports reduced the
trade deficit, and the capital account surplus grew in large part due
to a significant increase in foreign direct investment, US$267 million
of which was related to privatization.
For the first three months of 2002, the capital account surplus grew by
63.1% over the same period in 2001, due in part to the issuance of Global Bonds
in February 2002. See "Balance of Payments and Foreign Trade--Balance of
Payments."
Since 1992, the Government has privatized the vast majority of its
assets, including those in the finance, fishing and telecommunications sectors.
Significant progress has also been made in other sectors. The Government has
privatized a majority of its assets in the mining, manufacturing, hydrocarbons,
electricity and agriculture sectors. The more than 258 privatizations that have
been completed in Peru since 1992 have generated revenues of approximately
US$9.8 billion.
The Government has currently suspended its privatization program in
response to violent protests and political opposition until at least after the
November 2002 regional elections. With the resignation of pro-privatization
ministers, there can be no assurances the privatization program will resume or
that the Government will be able to find alternative sources of revenues for
expected privatization proceeds.
Monetary Policy
The Central Bank serves as the Republic's monetary authority. The
Central Bank's primary goal is to maintain a stable monetary environment with
low levels of inflation. Subject to occasional intervention by the Central Bank
in the foreign exchange market to prevent drastic exchange rate fluctuations,
exchange rates and interest rates are allowed to float freely.
The economic and monetary program that the Government implemented
during the early 1990s achieved a drastic reduction in inflation. Prices during
2001 demonstrated significant stability, with an average inflation rate of 2.0%
for 2001, as compared to 3.8% for 2000. See "The Monetary System--Monetary
Policy" and "--Inflation."
The Fujimori administration liberalized interest rates and eliminated
exchange rate controls. These and other reforms fueled significant growth of the
financial sector. The number of financial institutions operating in Peru grew
from 38 in 1990 to 68 by March 31, 2002. Peru's financial system is open to
foreign investment and has benefited from the participation of numerous foreign
banks and institutions. See "The Monetary System--Financial Sector."
The Central Bank maintained a policy during the 1990s of accumulating
international reserves. The Central Bank's net international reserves were
US$10.2 billion in 1997, falling to US$8.2 billion by 2000, but increasing to
$8.6 billion in 2001. As of March 2002, net international reserves amounted to
$8.8 billion. See "The Monetary System--Foreign Exchange and International
Reserves." The Toledo administration plans to continue this policy.
Public Sector Finances
The non-financial public sector registered a surplus of US$93 million,
or 0.2% of GDP, in 1997 and an overall deficit every year from 1998 to 2001. The
deficits registered during this period ranged from a low of US$475 million, or
0.9% of GDP, in 1998 to a high of US$1.7 billion, or 3.2% of GDP, in 2000. The
principal reason for the increase in the fiscal deficit was that tax collections
fell significantly in 1999 and 2000, as compared to earlier years in the
1997-2001 period. Fiscal expenditures decreased in 1999 and 2001, but not
sufficiently to offset the decrease in tax collections. Debt service remained
flat during the period.
For the first three months of 2002, the non-financial public sector
registered a deficit of US$198 million, or 1.5% of GDP, a 318% decrease from the
US$91 million surplus for the same period in 2001. The Republic projects a
consolidated public sector deficit of 2.3% of GDP in 2002. See "Public Sector
Finances--Consolidated Public Sector."
Public Sector Debt
Ninety-two percent of the Republic's public sector external debt
consists of foreign currency denominated debt. As of December 31, 2001, public
external debt totaled US$19.0 billion, or 35.1% of GDP, compared to US$19.2
billion, or 35.9% of GDP, as of December 31, 2000. Since 1997, the Republic's
public sector external debt as a percentage of GDP and as a percentage of total
exports of goods and services has fluctuated. Public sector external debt
increased substantially between 1997 and 1999, from 31.8% of GDP or 206.2% of
total exports of goods and services in 1997, to 37.7% of GDP or 233.6% of total
exports in 1999. Public sector external debt has since leveled off at 35.9% of
GDP and 205.4% of total exports in 2000 and 35.1% of GDP and 205.5% of total
exports in 2001. This fluctuation was due to decreases in nominal GDP from 1997
to 1999 and increases in nominal GDP in 2000 and 2001.
During the period from 1997 to 2001, multilateral debt represented, on
average, 28.6% of the Republic's public sector external debt. The Republic's
principal multilateral creditors are the World Bank, representing, on average,
42.6% of outstanding multilateral debt each year from 1997 to 2001, and the IDB,
representing, on average, 44.6% of outstanding multilateral debt each year from
1997 to 2001.
The Republic has signed a letter of intent with the IMF to establish a
two-year US$316 million stand-by credit facility for 2002-2004. In this letter,
the Republic agreed to economic targets and performance criteria upon which IMF
support will be conditioned, including enacting comprehensive tax reform aimed
at improving the tax systems neutrality and equity and an ambitious agenda of
privatizations. The Republic has, at present, suspended its privatization
program due to political opposition and public protest. The IMF has accordingly
agreed to adjust both the 2002 and 2003 targets for the consolidated public
sector deficit from 1.9% to 2.2% of GDP.
From 1997 to 2001, total public sector external debt service ranged, as
a percentage of total fiscal revenue, from a low of 19.5% in 1998 to a high of
26.9% in 2000. Public sector external debt service measured as a percentage of
total exports of goods and services increased from 21.9% in 1997 to 24.3% in
1999, before dropping to 21.6% in 2001. During 2002, the Republic expects public
sector external debt service to represent 22.8% of total fiscal revenue and
33.6% of total exports of goods and services. As a percentage of GDP, public
sector external debt service increased from 3.4% in 1997 to 4.0% in 2000 before
dropping to 3.7% in 2001. It is expected to decrease to 3.2% in 2002.
In February 2002, the Republic launched its first international bond
offering in 74 years. The Republic issued and sold the U.S. Dollar-Denominated
Global Bonds due 2012, to which we refer in this prospectus as the Global Bonds,
raising $500 million. At the same time, the Republic retired $1.2 billion in
principal amount of Brady bonds in exchange for a further $923 million in
principal amount of the Global Bonds. The exchange lowered the Republic's debt
by $281 million and freed up a further $50 million in collateral backing the
Brady bonds. The issuance of the Global Bonds increased total debt by $170
million.
Debt Record
In 1984, the Republic suspended payment on its external commercial bank
debt. By the end of 1984, the Republic had failed to make scheduled payments of
US$1.0 billion in principal and interest on its commercial bank debt. In three
rounds of negotiations between 1991 and 1996, the Republic rescheduled
approximately US$12.8 billion of its short-term external debt held by the Paris
Club. In 1997, the Republic renegotiated its debt with international commercial
banks under the Brady program. The Brady restructuring reduced the Republic's
international commercial bank debt from US$10.6 billion to US$4.9 billion.
Investor Considerations
In the past, Peru has experienced economic and political instability
and terrorist insurgency. At present, the country is a stable democracy. We
cannot assure you that Peru will not face political, economic or social problems
in the future and that these problems will not interfere with the Republic's
ability to service its indebtedness, including the Securities. In addition,
developments in other emerging countries, such as Argentina and Brazil, may have
an adverse effect on other countries in the region, including Peru.
Selected Economic Information
(in millions of U.S. dollars, except as otherwise indicated)
For the Three
Months Ended and
For the Year Ended and as of December 31, as of March 31,
----------------------------------------------------- --------------------
1997 1998 1999 2000 2001 2001 2002
--------- --------- --------- --------- --------- --------- ----------
Domestic economy
GDP (at current prices)(1)................... US $58,870 US$56,907 US$51,630 US$53,512 US$54,025 US$12,686 US$13,359
Real GDP (in millions of S/. at constant
1994 prices)(1)............................ S/.117,110 S/.116,485 S/.117,590 S/.121,267 S/.121,513 S/.29,093 S/.29,963
Real GDP growth rate(1)..................... 6.7% (0.5)% 0.9% 3.1% 0.2% (2.4)% 3.0%
Consumer price index (annual average change). 8.5% 7.3% 3.5% 3.8% 2.0% (0.3)% 0.54%
Unemployment rate(2)......................... 7.7% 7.8% 8.0% 7.4% 7.9% N/A N/A
Underemployment rate(3)...................... 45.0% 43.9% 43.2% 43.1% 47.6% N/A N/A
Balance of payments
Total current account....................... US$(3,412) US$(3,357) US$(1,478) US$(1,568) US$(1,094) US$ (488)US$ (343)
Of which:
Trade balance............................ (1,721) (2,466) (630) (317) (90) (186) (41)
Total capital account....................... 5,978 1,854 571 890 1,059 249 406
Of which:
Foreign direct investment................ 2,055 1,582 1,812 662 1,063 276 224
Errors and omissions(4)..................... (122) 253 102 547 452 177 38
Overall balance of payments, excluding
impact of gold valuation adjustment(5) 2,444 (1,250) (805) (131) 417 (63) 101
Change in Central Bank net international
reserves (period end).................. 1,628 (986) (779) (224) 433 (502) 675
Central Bank net international reserves
(period end)................................. 10,169 9,183 8,404 8,180 8,613 8,111 8,786
Public sector balance
Central government revenue(6)................ US$ 9,452 US$ 9,083 US$ 7,635 US$ 8,011 US$ 7,703 US$ 1,907 US$ 1,787
As a % of GDP.............................. 16.0% 16.0% 14.8% 15.0% 14.3% 15.0% 13.4%
Central government expenditure(7)............ US$ 8,907 US$ 8,662 US$ 8,186 US$ 8,311 US$ 8,068 US$ 1,703 US$ 1,775
As a % of GDP.............................. 15.1% 15.2% 15.8% 15.6% 14.9% 13.4% 13.3%
Central government fiscal balance............ US$ (456) US$ (573) US$(1,564) US$(1,312) US$(1,391) US$ (81) US$ (217)
As a % of GDP.............................. (0.8)% (1.0)% (3.0)% (2.5)% (2.6)% (0.6)% (1.6)%
Overall consolidated public sector fiscal
balance.................................... US$ 93 US$ (475) US$(1,629) US$(1,732) US$(1,380) US$ 91 US$ (198)
As a % of GDP.............................. 0.2% (0.9)% (3.2)% (3.2)% (2.5)% (0.7)% (1.5)%
Public sector debt
Public sector external debt.................. US$18,787 US$19,562 US$19,500 US$19,205 US$ 18,967 N/A US$ 19,113
As a % of GDP.............................. 31.8% 34.4% 37.7% 35.8% 35.1% N/A N/A
Public sector domestic debt(8)............... N/A N/A US$ 4,815 US$ 5,045 US$ 5,741 N/A US$ 5,720
As a % of GDP.............................. N/A N/A 9.3% 9.4% N/A N/A N/A
Total public sector debt..................... N/A N/A US$ 24,315 US$24,250 US$24,708 N/A US$ 24,833
As a % of GDP.............................. N/A N/A 47.0% 45.2% N/A N/A N/A
Public sector external debt service:
Amortizations(9)........................... US$ 955 US$ 738 US$ 971 US$ 1,042 US$ 918 US$ 205 US$ 1,059(11)
Interest payments(9)....................... 1,037 1,032 1,057 1,112 1,076 268 234
--------- --------- --------- --------- --------- --------- ----------
Total external debt service.............. US$ 1,992 US$ 1,770 US$ 2,028 US$ 2,154 US$ 1,994 US$ 473 US$ 1,293
========= ========= ========= ========= ========= ========= ==========
As a % of exports of goods and services(10) 21.9% 21.3% 24.3% 23.0% 21.6% 21.5% 63.7%
Exchange rate (end of period, S/. per US$). 2.73 3.15 3.51 3.53 3.44 N/A 3.45
Exchange rate (average, S/. per US$)....... 2.66 2.93 3.38 3.49 3.51 N/A 3.46
(1) Preliminary data.
(2) Refers to the percentage of the working-age population (14 years old or
older) that, in the week the employment survey was conducted, was seeking
remunerated employment.
(3) Refers to the percentage of the working-age population (14 years old or
older) working part-time who would prefer to work more hours, plus the
percentage of the working-age population that usually works full-time but
who, in the week the employment survey was conducted, worked less than 35
hours per week as a result of economic constraints.
(4) Represents errors and omissions in compiling balance of payments accounts
based on double-entry accounting resulting from incomplete or overlapping
coverage, different prices and incomplete times of recording and conversion
practices.
(5) Includes current account balance, financial account, and errors and
omissions.
(6) Excludes privatization receipts.
(7) Includes interest payments.
(8) Totals for 1996, 1997 and 1998 do not include short-term debt, as
short-term debt data is unavailable for those years.
(9) Excludes Central Bank debt.
(10) Includes exports of goods and services and investment income.
(11) Includes US$902 million in Brady Bonds exchanged for Global Bonds.
N/A = Not Available.
Source: Central Bank, unless otherwise indicated.
USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement, the Republic
will use the net proceeds from the sale of securities offered by this prospectus
for the general purposes of the Government, including financial investment and
the refinancing, repurchase or retiring of domestic and external indebtedness.
THE REPUBLIC OF PERU
Territory and Population
The Republic of Peru is located in western South America. It shares its
borders with Ecuador and Colombia to the north, Brazil and Bolivia to the east
and Chile to the south. Its territory covers an area of approximately 496,222
square miles, including a 1,500 mile-long Pacific Ocean coastline and a 200
mile-wide maritime zone. Peru's major cities are Lima, the nation's capital,
Arequipa, Trujillo, Chiclayo, Iquitos, Piura, Chimbote and Cuzco.
Peru is divided by the Andes Mountains into three sharply different
geographical regions--a narrow strip of desert along the western coast, a
central region of high mountains that form part of the Andes and a large heavily
forested area leading to the Amazonian plains in the east. Peru's climate varies
significantly by region, from tropical rain forests in the east and a dry desert
in the west, to temperate and frigid regions in the mountainous central part of
the country. The Andes rise over 20,000 feet and contain large plateaus and
extensive valleys. Lima and other major cities such as Trujillo and Chiclayo are
located along the coast.
Peru's central coast is occasionally affected by an atmospheric
phenomenon known as El Nino, which raises the temperature of the superficial
coastal waters, causing an increase in air temperature, a decrease in
atmospheric pressure along the coast and an increase in the sea level along the
Peruvian coastline. These conditions produce increased rainfall in the northern
coast, which may result in severe flooding and mudslides. In 1998, the warm
waters caused by El Nino disrupted Peru's fishing and agricultural industries as
marine life migrated to deeper, colder waters, crops were destroyed by the
flooding and the elevated temperatures along the coast gave rise to new crop
pests and plagues. The flooding also led to approximately US$1.2 billion in
damage to Peru's infrastructure. The El Nino weather phenomenon is expected to
recur in 2003 or shortly thereafter. However, the timing of the next recurrence,
its length and the severity of its effects cannot be predicted.
Peru's southern region is located on seismic faults, which makes the
area susceptible to earthquakes. In June 2001, an earthquake measuring 8.4 on
the Richter scale struck along the coast of south-central Peru and killed at
least 80 people, injured over 2,700 people and rendered approximately 47,500
people homeless. Another earthquake measuring 7.6 on the Richter scale struck
the same area in July 2001. The damage from these two earthquakes is estimated
at US$300 million.
Peru's population, estimated to be 26.7 million people as of December
31, 2001, is multi-racial and multi-cultural. Approximately 45% of the
population is Indian, 37% is Mestizo, or mixed Indian and white, 15% is
Caucasian, 2% is of African descent and 1% is of Asian descent. Spanish,
Quechua, and Aymara are the country's official languages. Almost 99% of the
population is Spanish-speaking and approximately 28% resides in rural areas. The
population grew at an estimated average rate of 1.8% per year in the period from
1988 to 2001.
Peru's adult literacy rate is approximately 87.7%. In 2001,
approximately 96.5% of children ages 6 to 11 attended school, while attendance
of children ages 12 to 16 was 88.1%. Approximately 435,637 students were
enrolled in Peru's 75 universities, of which 44% are public and the rest
private. There are 19 private universities and 7 national universities in Lima,
including the Universidad Nacional Mayor de San Marcos, or National University
of San Marcos, which was founded in 1551 and is the oldest university in South
America. The Republic also maintains universities in Arequipa, Cuzco and
Trujillo. Approximately 20.8% of Peruvians between the ages of 17 and 25 pursued
higher education during the 2000 school year.
The World Bank classifies the Republic of Peru as a lower-middle-income
developing country. The following table sets forth comparative GNP figures and
other selected comparative statistics for the periods indicated.
United
Peru Argentina Bolivia Brazil Chile Colombia Ecuador States Venezuela
---- --------- ------- ------ ----- -------- ------- ------ ---------
Per capita GNP(1)....... US$4,799 US$12,377 US$2,424 US$7,625 US$9,417 US$6,248 US$3,203 US$34,142 US$5,794
United Nations index
of human
development (world
ranking)(2).......... 82 34 114 73 38 68 93 6 69
Life expectancy at
birth
(in years)(2)........ 68.8 73.4 62.4 67.7 75.3 71.2 70.0 77.0 72.9
Infant mortality
(% of live
births)(3)........... 3.9% 1.8% 5.9% 3.2% 1.0% 2.3% 2.8% 0.7% 2.0%
Adult literacy rate(2).. 89.9%(8) 96.8% 85.5% 85.2 95.8% 91.7% 91.6% 99.0% 92.6%
% of households below
the poverty line(4).. 54%(9) N/A 51.4%(6) 25.4%(6) 18.4%(5) 28.7%(5) 52.3%(7) N/A 44.6%(6)
(1) 2000 data, adjusted to reflect differences in purchasing power. Source:
World Bank, World Development Report 2002.
(2) 2000 data. Source: United Nations Development Program, Human Development
Report 2002.
(3) 2000 data. Source: United Nations Development Program, Human Development
Report 2002.
(4) The poverty line used in this prospectus is defined as a monthly income of
US$60 per capita per household, or a daily income of US$2 per capita per
household, adjusted to reflect differences in purchasing power.
(5) 1996 data.
(6) 1997 data.
(7) 1995 data.
(8) 2000 data. Source: United Nations Development Program, Human Development
Report 2002.
(9) 2000 data. Source: World Bank, Peru at a Glance 13 September 2001
N/A = Not Available.
Source: World Bank, 2002 Development Indicators, unless otherwise indicated.
History, Government and Political Parties
History
Beginning in the ninth millennium B.C., several developed cultures
settled in Peru, including the Chavin, Sechin, Chimu, Mochica, Paracas, Nazca,
Tiahuanaco and Wari. In the twelfth century A.D., the Quechua-speaking Inca
settled around the Cuzco Valley. By the time the Spanish arrived in 1531, the
Inca had created an empire that encompassed areas of modern Peru, Ecuador,
Bolivia and Colombia. In 1533, the Spanish captured the Inca capital at Cuzco
and by 1542 had consolidated their control over the entire Inca territory. In
1542, the Spanish established the viceroyalty of Lima, which governed vast
portions of Spanish territorial possessions in South America.
Peru remained under Spanish rule until 1821, when Jose de San Martin
proclaimed independence, although the Spanish were not finally defeated until
1824. In the first two decades of the post-independence era, political
fragmentation and political instability plagued the country. Peru was ruled by
at least twenty-four regimes between 1821 and 1845. During this period, the
constitution was rewritten six times. In the 1840s, the country initiated a
period of extraordinary economic growth driven by the exportation of guano, a
form of fertilizer obtained from the droppings of birds in the Chincha Islands.
In 1879, Peru allied itself with Bolivia to fight an unsuccessful war
against Chile over the disputed nitrate-rich Atacama Desert. This war, known as
the War of the Pacific, ended in 1883 with the signing of the Treaty of Ancon,
in which Peru ceded to Chile in perpetuity the nitrate-rich province of Tarapaca
and relinquished, for a period of ten years, the provinces of Tacna and Arica.
Tensions over these two provinces continued until 1929, when the United States
brokered a deal that returned the province of Tacna to Peru but allowed Chile to
retain control over the province of Arica.
From 1895 to 1914, Peru experienced political stability and economic
growth. In 1914, Colonel Oscar Raimundo Benavides (1914-15, 1933-39)
orchestrated a military coup that ended almost two decades of uninterrupted
civilian rule. In the early stages of World War I, Peru experienced a recession
as the war temporarily cut the country off from its export markets. When
overseas trade resumed, demand for Peru's export products increased dramatically
and the country suffered a period of sustained inflation. This inflation had a
particularly negative impact on Lima's working classes and led to a wave of
labor strikes in 1918 and 1919.
In 1919, Augusto Leguia y Salcedo (1908-12, 1919-30) began an
eleven-year rule, known as the oncenio, and created a new, progressive
constitution adopted in 1920 that enhanced the power of the state to carry out a
number of popular social and economic reforms. The regime weathered a brief
postwar recession and then generated considerable economic growth by opening the
country to foreign loans and investment. Leguia's popularity waned, however, as
a result of a border dispute with Colombia involving territory in the
rubber-tapping region between the Rio Caqueta and the northern watershed of the
Rio Napo. Under the U.S.-brokered Salomon-Lozano Treaty of March 1922, the Rio
Putumayo was established as the boundary between Colombia and Peru.
During the 1930s, a popular movement, with origins in Mexico, known as
the Alianza Popular Revolucionaria Americana or American Popular Revolutionary
Alliance, which we refer to in this prospectus as the "APRA," spread to Peru
under the leadership of Victor Raul Haya de la Torre. This continent-wide
popular alliance quickly became a prominent center-left political party in Peru
and a strong antagonist to Peru's armed forces. In the presidential election of
1931, Luis Sanchez-Cerro (1931-33) defeated APRA's Haya de la Torre, who accused
Sanchez-Cerro of fraud. In July 1932, APRA followers staged a popular rebellion
in Trujillo, which resulted in the execution of some sixty army officers and the
deaths of at least 1,000 APRA members and their sympathizers.
Despite the political turmoil, Peru's economy was one of the least
affected by the Great Depression, because of Peru's relatively diversified range
of exports, led by cotton, lead and zinc. Unlike many other Latin American
countries that adopted import-substitution industrialization measures to
counteract the effects of the Great Depression, Peru made relatively few
alterations in its long-term model of export-oriented growth.
In 1939, Manuel Prado y Ugarteche (1939-45), a Lima banker from a
prominent family and son of a former president, was elected president. He was
soon confronted with a border conflict with Ecuador that led to a brief war in
1941. The conflict dated back to the post-independence period. Following
independence, Ecuador had been left without access to either the Amazon River or
the region's other major waterway, the Rio Maranon, and thus, without direct
access to the Atlantic Ocean. In an effort to assert its territorial claims in a
region near the Rio Maranon in the Amazon Basin, Ecuador's military occupied the
town of Zarumilla along its southwestern border with Peru. The Peruvian army
responded and defeated the Ecuadorian army. For a discussion of Peru's relations
with Ecuador, see "--Foreign Policy and Membership in International and Regional
Organizations--Relations with Ecuador" below.
During the 1950s and 1960s, Peru experienced export-led growth and
increased national and foreign investment. During this time, many peasants
migrated to the coast, the center of the country's economic growth. As a result
of heavy migration, the population of metropolitan Lima increased to over 1.6
million in 1961 from 100,000 in 1940.
In 1968, Peru returned to military rule when General Juan Velasco
Alvarado (1968-1975) overthrew elected President Fernando Belaunde Terry of
Accion Popular, which we refer to in this prospectus as the "AP." Velasco
implemented an extensive program of agrarian reform and nationalized the
fishmeal and oil industries, petroleum companies, and several banks and mining
companies. General Francisco Morales-Bermudez Cerruti replaced Velasco in 1975.
He presided over the transition to civilian rule and the drafting of a new
constitution in 1979.
In 1980, voters reelected Belaunde in the first popular elections since
1968. Belaunde attempted to cut spending and dismantle many of the military
government's populist reforms. Soaring inflation and unemployment, however, made
it difficult to curb public spending. At the same time, Belaunde's government
was destabilized by the rise of subversive movements.
The Sendero Luminoso, which we refer to in this prospectus as the
"Shining Path," was founded in 1970 as an offshoot of the Peruvian Communist
Party. The group espoused Maoist ideology and initiated terrorist activities in
1980 as a means of overthrowing the government. The Movimiento Revolucionario
Tupac Amaru, or Tupac Amaru Revolutionary Movement, which we refer to in this
prospectus as "Tupac Amaru," was founded in 1984 as a radical leftist
organization that promoted communal ownership of property and advocated an armed
struggle against capitalism. These two groups took advantage of mounting social
unrest produced by 12 years of military rule and growing class consciousness
among indigenous communities to recruit members. They raised funds by
establishing a financial alliance with drug traffickers and protecting expanding
coca fields. Drawing on these funds, the Shining Path and Tupac Amaru waged a
guerilla war against the government and engaged in rural terrorism. The social
crisis in the country in the early 1980s was exacerbated by a sharp drop in
international commodity prices and the El Nino weather phenomenon of 1982-1983,
which led to a deepening recession and increasing social instability.
Alan Garcia Perez of the center-left APRA party won the presidency in
1985. The Garcia administration was plagued by terrorist activity and
allegations of corruption. President Garcia pursued a populist agenda, financed
by substantial increases in government spending that led to a record 7,650%
inflation rate in 1990. He attempted to nationalize banks and limited Peru's
debt service payments to no more than 10% of exports. In response, international
creditors refused to extend new credits to the Republic. During the Garcia
administration, GDP decreased by 20% compared to levels achieved in the early
1980s.
In 1990, voters elected Alberto Fujimori of the Cambio 90 party as
president. Fujimori implemented a comprehensive neo-liberal economic program
based on fiscal discipline, a stable monetary policy and aggressive
privatization of state-owned industries. These initiatives succeeded in curbing
inflation, reducing public external debt and fostering economic growth. For a
discussion of Fujimori's economic policies, see "The Economy--History and
Background." Fujimori also launched a successful campaign against the terrorism
of the Shining Path and Tupac Amaru guerrilla movements. In 1992, the army
captured the Shining Path's leader, Abimael Guzman, and the terrorist group's
other principal leaders. In 1997, the Peruvian armed forces killed several Tupac
Amaru leaders, including its principal leader Nestor Cerpa Cartolini, in a
rescue operation to free hostages being held by Tupac Amaru at the Japanese
Embassy in Lima. For a description of subversive activity in Peru, see
"--Subversive Activities" below.
Despite Fujimori's economic and military successes, his harsh governing
style created significant congressional opposition. On April 5, 1992, Fujimori
dissolved Congress and called for a popular referendum on amending the
Constitution. The new 1993 Constitution gave the President authority to issue
emergency decrees relating to economic and financial matters, if such decrees
are in the national interest and do not relate to tax matters. Emergency decrees
have the force of law and do not require previous legislative approval, although
Congress may subsequently modify or derogate such decrees. Under the 1993
Constitution, Congress may censure or obtain a no-confidence resolution against
the President's Consejo de Ministros, which we refer to in this prospectus as
the "Council of Ministers," forcing the removal of all the members of the
Council of Ministers. The President may not dissolve Congress in the last year
of its mandate. Additionally, the 1993 Constitution allows presidents to serve
for two consecutive terms, which was prohibited under the prior 1979
Constitution. Fujimori called for new congressional elections in 1992 and was
reelected for a second term in 1995.
Following his dissolution of Congress in 1992 and the adoption of the
1993 Constitution, Fujimori centralized power in the hands of the presidency,
thus undermining legal mechanisms of accountability, strengthening the powers of
the military and intelligence service, and compromising the autonomy of the
legislature, judiciary and the media. This debilitated Peru's political system,
fostered widespread political corruption, and, in the latter years of Fujimori's
administration, undermined the success of his economic program.
In 1995, Peru and Ecuador fought a brief war over a disputed area of
their border. This dispute dated back to the Protocolo de Rio de Janeiro of
1942, which we refer to in this prospectus as the "Rio de Janeiro Protocol," a
treaty between Peru and Ecuador signed after the brief war these countries
fought in 1941. The dispute was finally settled in 1998. For a description of
this dispute and Peru's relations with Ecuador, see "--Foreign Policy and
Membership in International and Regional Organizations--Relations with Ecuador"
below.
Although the 1993 Constitution allowed presidents to serve for only two
consecutive terms in office, Congress in August 1996 passed an interpretative
law clarifying that this limit applied only to presidential terms beginning
after 1993. In December 1996, the Constitutional Tribunal, with the vote of
three members, with four justices abstaining, ruled that the 1996 interpretative
law did not apply to Fujimori. In May 1997, Congress removed the three justices
who voted in favor of this ruling, on the basis that they had exceeded their
authority by attempting to issue a binding opinion with the vote of only a
minority of the Constitutional Tribunal's members. The president of the
Constitutional Tribunal later resigned in protest over Congress' action. On July
28, 2000, Fujimori began a controversial third term as president in the midst of
allegations of electoral fraud.
In September 2000, a bribery scandal involving Vladimiro Montesinos, a
former army captain and lawyer who became an advisor to Peru's intelligence
agency and a close ally of Fujimori, gave rise to charges of political
corruption within the Fujimori administration. Fujimori responded to increased
criticism and mounting protests by calling for new presidential elections to be
held in April 2001. He also announced that he would not seek re-election. Weeks
later, however, the growing investigation into corruption charges and
condemnation of Montesinos and his ties to the President led Fujimori to resign
while on a trip to Japan. As a symbolic gesture, Congress decided not to accept
Fujimori's resignation, preferring to declare the post of Chief of State vacant
due to abandonment and moral incapacity.
Fearing prosecution and claiming that he could not be tried in Peru
because of his Japanese citizenship, Fujimori refused to return to Peru. Under
the 1993 Constitution, the First Vice President was next in line for the
presidency, but Peru's First Vice President had resigned in October 2000, in
protest against Montesinos' influence within the Fujimori administration. The
Second Vice President also resigned following Fujimori's resignation as a result
of his connection to Fujimori and pressure by opposition congressmen. Under the
1993 Constitution, executive authority shifted to Valentin Paniagua Corazao, the
president of Congress, who took over as president on November 22, 2000.
Presidential and congressional elections were held on April 8, 2001. In
the presidential contest, Alejandro Toledo Manrique of the Peru Posible party
obtained 36.5% of the vote, former President Alan Garcia Perez of APRA obtained
25.8% of the vote and Lourdes Flores Nano of the Unidad Nacional party, which we
refer to in this prospectus as "UN," obtained 24.3% of the vote. In June 2001,
Toledo won the presidency in a runoff election against Garcia, receiving 53.1%
of the vote to Garcia's 46.9%.
On August 27, 2001, Congress voted to remove Fujimori's presidential
immunity. On September 5, 2001, Peru's Attorney General formally charged
Fujimori with the murder of 15 people in 1991, and with the forced disappearance
and murder of nine students and a professor in 1992. There have been calls by
certain political leaders to amend or repeal the 1993 Constitution in order to
rescind measures adopted during Fujimori's term, particularly those relating to
executive power.
Government
Peru is organized as a representative democracy and is geographically
and administratively divided into 24 Temporary Regional Administration Councils,
which we refer to in this memorandum as "Regional Councils," which are in turn
divided into 193 provinces and the constitutional province of Callao, the
country's principal port, adjacent to Lima, and 1,828 districts. Each Regional
Council is governed by an administrative official appointed by the President and
forms part of Peru's central government. Provinces and districts have their own
civil governments, which are independent of the central government. As of
January 1, 2003, the Regional Councils will be replaced by new Regional
Governments, which will be governed by elected officials. The new Regional
Governments may have the authority to levy tax and assume debt.
Congress is in the process of a comprehensive review of the 1993
Constitution, which may lead to the enactment of constitutional amendments.
The 1993 Constitution provides for a presidential system of government
in which national powers are divided among independent executive, legislative
and judicial branches.
Executive power is exercised by the President, who appoints ministers,
enacts the laws passed by the legislative branch and is the commander-in-chief
of the armed forces. The President may subscribe to treaties without prior
congressional approval, except for treaties relating to human rights, the
Republic's sovereignty, national defense, financial obligations to be assumed by
the Government and treaties that create, modify, or repeal taxes or overrule
existing laws. The President of the Republic is popularly elected for a
five-year term. The 1993 Constitution abrogated the ban on presidential
re-election and provided that a President may be re-elected to only one
consecutive term. The constitution was amended in November of 2000, reinstating
the ban on consecutive presidential terms. Former presidents may seek the
presidency again after a presidential term has elapsed.
The 1993 Constitution provides for two electoral rounds. If the first
round does not yield a majority vote for any one presidential candidate, a
majority in the first round being 50% plus one of the total votes cast, a second
round is held between the two presidential candidates that obtained the greatest
number of votes in the first round. The 1993 Constitution introduced the
positions of First and Second Vice President. These officials are popularly
elected but have no constitutional functions unless the President is unable to
discharge his duties. If the President cannot discharge his duties, the First
Vice President assumes the presidency. The Second Vice President assumes the
presidency if the First Vice President is unable to discharge his duties.
After the President, executive authority is vested in the Council of
Ministers, which is headed by a Prime Minister appointed by the President. The
Prime Minister presides over meetings of the Council of Ministers in the absence
of the President. The Council of Ministers oversees and coordinates the
activities of the Republic's various ministries and must approve all legislative
proposals sent by the President to Congress. However, it may not approve laws
without the President's approval. Each member of the Council of Ministers may
approve ministerial resolutions without the President's consent, but these are
regulations that do not have the force of laws approved by Congress and are
superseded by laws proposed by the Council of Ministers and approved by the
President.
The legislative branch consists of a unicameral congress composed of
120 members who are elected for a five-year term, with all seats subject to
re-election at the end of each five-year period. There are 25 electoral
districts and the number of members elected by each district is proportional to
the district's population. Lima, the most populous district, elects 35 members.
The next congressional elections are scheduled for April 2006. In addition to
passing laws, Congress is empowered to approve the Government's budget and to
approve treaties as described above. Congress may delegate to the executive
branch, for definite periods of time, legislative authority over specific
matters.
The highest courts in Peru are the 18-member Supreme Court of Justice
and the seven-member Constitutional Tribunal. The Peruvian judicial system is
also composed of:
o justices of the peace, who preside over district court proceedings
related to alimony, landlord-tenant, personal debt, and real and
personal property disputes, and who function as arbiters but cannot
issue legally-binding decisions;
o courts of first instance, which include civil, penal and
special-chamber courts having jurisdiction over all cases not under
the express jurisdiction of other courts and a series of specialized
courts dealing with matters such as drug-related cases, and which were
established to reduce the backlog of cases pending final action in the
other courts of first instance;
o military courts, which adjudicate charges of criminal conduct brought
against members of the armed forces and the police while discharging
their duties, and criminal charges for national treason and terrorism
brought against civilians; and
o superior courts, which review judgments rendered by all lower courts,
except military courts.
All judges in the Peruvian judicial system, with the exception of the
justices of the peace, who are elected by popular vote, and the members of the
Constitutional Tribunal, who are elected by Congress, are appointed, and may
only be removed, by the Consejo Nacional de la Magistratura, or National Council
of the Judiciary, which we refer to in this prospectus as the "Judiciary
Council." This independent body is composed of seven members who are elected for
five-year terms by several national entities, through secret votes, as follows:
one by the Supreme Court of Justice, one by the Junta de Fiscales Supremos, or
Board of Supreme Prosecutors, one by the members of the bar associations, two by
the country's other collegiate associations of professionals, one by the
presidents of the national universities, and one by the presidents of the
private universities. The Judiciary Council itself can elect two additional
members. The Judiciary Council reviews and ratifies all judges every seven
years, including the members of the Supreme Court of Justice and justices of the
peace.
The Supreme Court of Justice has ultimate jurisdiction over all matters
adjudicated by the superior courts and over military court rulings in which the
death penalty is imposed. Its members must be older than 45 years of age and
must retire by age 70. The Judiciary Council may remove, or fail to ratify, a
member of the Supreme Court of Justice only because of physical or mental
incapacity, or for engaging in conduct incompatible with his or her duties.
The Constitutional Tribunal is the final arbiter of the Constitution.
Its members are appointed by Congress for five-year terms, are not subject to
re-election and cannot be removed before their term expires, unless Congress
determines that a magistrate has:
o become physically incapacitated or morally unfit;
o engaged in conduct incompatible with his or her duties; or
o been adjudicated and found guilty of a crime.
Political Parties
With the exception of APRA and AP, Peru's political parties do not have
deep historical roots and often change, merge or dissolve. Currently, the
principal political parties in Peru are Peru Posible, APRA, UN, AP, Frente
Independiente Moralizador, which we refer to in this prospectus as "FIM," and
Union por el Peru, which we refer to in this prospectus as the "UPP."
The following is a brief explanation of the political orientation of
each of these parties.
Peru Posible. Peru Posible seeks to promote economic growth through a
liberal economic program designed to foster domestic and foreign investment and
fiscal and macroeconomic stability, while investing in social programs designed
to alleviate poverty and create employment. Peru's current president, Alejandro
Toledo, founded the party in 1994. Because this party does not have an absolute
majority in Congress, the Toledo administration must seek alliances with members
of other parties to enact its policies.
APRA. Initially left wing in its outlook, APRA became a conservative
force during the 1950s and is now a center-left party. Alan Garcia, a member of
APRA, became President in 1985. Despite the fact that his presidency is
associated with hyperinflation and economic mismanagement, Garcia obtained
significant support in the 2001 election, forcing a runoff in which Alejandro
Toledo prevailed. Although defeated in the latest presidential elections, APRA
wields significant political influence, as it is the party with the second
highest representation in Congress.
UN. The UN is an electoral alliance formed by three parties: Partido
Popular Cristiano, Solidaridad Nacional and Avancemos. It supports socially
oriented market policies with a focus on promoting Christian values. In April
2001, Lourdes Flores Nano ran as the UN's presidential candidate.
AP. The AP supports a moderate reform program that emphasizes
modernization and development through an activist public sector. Fernando
Belaunde, who served as Peru's president from 1963 to 1968 and from 1980 to
1985, founded the AP in 1956. The AP's membership includes Valentin Paniagua,
who became Peru's president during the transition government that followed
Fujimori's resignation in 2000. The party continues to base its platform on
Belaunde's governing philosophy.
FIM. The FIM places an emphasis on measures to eliminate and expose
corruption in government, promoting an activist Congress that maintains proper
checks on executive power. The party's economic platform focuses on reducing
income taxes and increasing public sector wages. Fernando Olivera Vega, the
former Minister of Justice, founded FIM in 1990.
UPP. The UPP adheres to socially oriented market policies focused on
job creation, labor protection and environmental initiatives. Javier Perez de
Cuellar founded the UPP in 1995, when he unsuccessfully challenged Fujimori in
the elections. In the 2001 elections, the UPP formed an alliance with two
smaller movements, Movimiento por la Democracia and Movimiento Social Democratas
Independientes.
Congressional representation of each of the political parties since the
most recent election in 2001 is as follows:
Congress
Seats %
Peru Posible.................................... 45 37.5%
APRA............................................ 28 23.3
UN.............................................. 17 14.2
Union Parlamentaria Descentralista(1)........... 13 10.8
FIM............................................. 11 9.2
Independent Parliamentary Group(2).............. 6 5.0
------ ------
Total.......................................... 120 100.0%
====== ======
(1) Coalition of UPP, Somos Peru and AP.
(2) An informal group of independent members of Congress and representatives of
Peru 2000.
Source: Economist Intelligence Unit, "Country Briefings: Peru" 12 February 2002.
Foreign Policy and Membership in International and Regional Organizations
Peru has not been involved in any significant international conflicts
since the end of its border dispute with Ecuador in 1998. A brief diplomatic
dispute erupted in 2001 between Peru and Venezuela in connection with the
capture of the former advisor to Peru's intelligence agency, Vladimiro
Montesinos, in Venezuela. The Republic alleged that Venezuela had temporarily
hidden and protected Montesinos after formal charges had been brought against
him in Peru, a claim that Venezuela denied. Venezuela temporarily severed
relations with Peru between June 28 and July 28, 2001, but relations between the
two countries have since been completely restored.
The Republic has expressed concern over Japan's refusal to extradite
Fujimori to Peru to face charges for homicide and forced disappearance. Japan
granted Fujimori citizenship in December 2000 due to his Japanese ancestry and
Fujimori has since claimed that as a Japanese national he may not be legally
extradited. The Toledo administration will continue to seek Fujimori's
extradition, but it does not expect the Republic's commercial and other ties
with Japan to be adversely affected by the dispute.
The Republic maintains diplomatic relations with 153 countries and is a
member of 146 regional and international organizations and forums, including:
o the United Nations;
o the Organization of American States;
o the Community of Andean Nations, formerly known as the Andean
Pact;
o the World Trade Organization, which we refer to in this
prospectus as the "WTO";
o the Economic Commission for Latin America and the Caribbean;
o the Latin American Integration Association;
o the IDB;
o the IMF;
o the World Bank;
o the International Finance Corporation;
o the CAF;
o the Group of 15;
o the Asia-Pacific Economic Cooperation; and
o the Free Trade Area of the Americas.
Peru joined the General Agreement on Tariffs and Trade in 1951 and is a
founding member of the WTO, which was established in January 1995. In addition,
Peru participates in several regional initiatives designed to promote trade and
foreign investment. The most significant of these initiatives are the following:
o Since 1980, Peru has been a member of the Latin America
Integration Association, which promotes and coordinates bilateral
trade agreements between its member countries. Under the auspices
of this association, Peru has signed preferential tariff
agreements with Argentina, Brazil, Cuba, Mexico, Paraguay and
Uruguay.
o Since 1990, Peru has been a member of the Community of Andean
Nations, which also includes Colombia, Ecuador, Venezuela and
Bolivia. The objective of this organization is to promote
economic integration and cooperation with a view towards gradual
development of a common market by 2005. The common market will
provide for the free trade of goods, services, capital and people
between its member countries. A tariff reduction schedule has
been in place since 1997, which currently applies a 15% to 100%
tariff reduction on various products. In April 1998, the
Community of Andean Nations signed a framework agreement with the
Common Market of the South, or MERCORSUR, whose members are
Argentina, Brazil, Paraguay and Uruguay, to create a free trade
zone between the two economic blocs. The Community of Andean
Nations has also reached bilateral agreements with Brazil and
Argentina as a first step towards the creation of free-trade
arrangements with these countries.
o Since 1990, Peru has been a beneficiary of the General System of
Preferences for the Andean Countries, a program of unilateral
trade preferences granted by the European Union that is intended
to promote economic development in the Andean region. Under the
program, the European Union sets zero tariffs for fishing,
agriculture and textile products from Peru. This program was
scheduled to expire on December 31, 2001, but was automatically
renewed for three more years on December 10, 2001. The renewed
program will be in effect from January 1, 2002 until December 31,
2004, when a new round of negotiations on the terms and
conditions of the program will take place.
o Since 1991, Peru has been, together with Ecuador and Colombia, a
beneficiary of the U.S. Andean Trade Preferences Act, a program
of unilateral trade preferences granted by the United States,
which is intended to promote export diversification and
broad-based economic development as an alternative to drug-crop
production in the Andean region. Peru supplies about 42.6% of the
products that enter the U.S. market under this program. The Act
expired on December 4, 2001. Preliminary data suggests that the
expiration of the Act has adversely affected Peru's exports. On
August 8, 2002, the U.S. renewed the Act for five years. The
renewed Act provides benefits retroactively to December 2001 and
expands the Republic's low-tariff benefits to products including
Peruvian textiles, footwear, fruits and tuna.
o In 1994, the Republic participated in the Summit of the Americas
in Miami, which led to the establishment of the Free Trade
Agreement of the Americas. This agreement seeks to create a free
trade zone in the Western Hemisphere by 2005, which, if
implemented, would grant preferential treatment to Peruvian goods
and services exported to other member countries.
o In June 1998, Peru signed an agreement with Chile as a first step
towards establishing a free-trade zone with this neighboring
country. This agreement, which took effect on July 1, 1998,
gradually eliminates all custom duties between the two countries,
provides for a substantial reduction in tariffs over a ten-year
period and establishes a framework for cooperation in the areas
of foreign investment, customs procedures, tourism, services
trade, dispute resolution and sanitary requirements.
o Since November 1998, Peru has been a member of the Asia-Pacific
Economic Cooperation, which aims to achieve free trade in the
Asia-Pacific region through a progressive reduction in member
countries' tariffs. This organization establishes trade rules in
areas of foreign investments, rules of origin, customs
procedures, technical barriers to trade, unfair trade practices,
promotion of competition, intellectual property and dispute
resolution.
Relations with Ecuador
Peru has had several territorial disputes with Ecuador dating back to
colonial times. A significant military clash occurred in 1941, which came to an
end in 1942 with the signing of the Rio de Janeiro Protocol. This settlement,
sponsored by Argentina, Brazil, Chile and the United States, established
territorial limits between the two nations but failed to delineate clearly the
countries' border in a 78-kilometer section of the Andean foothills. Further
disputes over the border in this region led to additional clashes in 1981 and
1995. In the latest clash, thousands of soldiers from both sides fought an
intense but localized war in the disputed territory of the upper Cenepa valley.
A peace agreement brokered in February 1995 by the four sponsors of the
Rio de Janeiro Protocol led to the cessation of hostilities and established the
Military Observers Mission to Ecuador-Peru to monitor activities in the disputed
zone. In 1996, Peru and Ecuador began a series of meetings that led to the 1998
Brasilia Agreement, which defined the border in the disputed area. The agreed
upon border tracks the peaks of the Cordillera del Condor mountain range. The
1998 Brasilia Agreement granted Ecuador private ownership of a hill known as
Tiwinza, but it was agreed that the hill would remain under Peruvian
sovereignty. In May 1999, a complete demarcation of the border was completed.
The 1998 Brasilia Agreement also established terms of bilateral trade and
navigational understandings between the two nations and created the Bi-National
Commission for Border Integration. This commission led to the launch of a US$3.0
billion regional development program to improve social and economic conditions
along the border.
Peru currently maintains strong political and economic relations with
Ecuador. The two governments have signed further agreements on border
development, navigation, security and trade. On July 30, 1997, Peru reached an
agreement with the other members of the Community of Andean Nations for its full
incorporation into the Community of Andean Nations' Free Trade Area. The
Community of Andean Nations approved a tariff reduction schedule that became
effective on August 1, 1997 and which will end no later than 2005. As part of
this process, Peru and Ecuador signed the Agreement on Acceleration and Further
Development in October 1998 and the corresponding Instrument of Execution in
August 1999, allowing the elimination of tariffs between the two countries on a
variety of exports in 2003.
Subversive Activities
In the 1980s and early 1990s, the Shining Path and Tupac Amaru
conducted indiscriminate bombings and selective assassinations in Peru. From
1980 to 1995, the Republic estimates that the Shining Path's terrorist
activities led to the death of over 30,000 people. The capture in 1992 of the
Shining Path's leader, Abimael Guzman, his subsequent life sentence and the
jailing of most of the organization's central committee, considerably weakened
the Shining Path.
In December 1996, Tupac Amaru assaulted the residence of the Japanese
ambassador to Peru and held 42 hostages for more than four months. In April
1997, Peruvian armed forces stormed the residence, rescued all but one of the
remaining hostages and killed 14 members of the group, including Nestor Cerpa
Cartolini, the group's leader. As a result of that defeat, the group weakened
dramatically and no longer poses a significant terrorist threat.
Between 1996 and 2000, there were several violent incidents in Peru's
jungles, but there is no evidence that these incidents were connected to the
activities of the Shining Path or Tupac Amaru. In 2001, there were a few signs
of terrorist activities. In August 2001, individuals believed to be members of
the Shining Path killed four police officers in the Amazon province of Satipo.
In November 2001, the Ministerio del Interior, or Interior Ministry, announced
that it had thwarted a plan to attack the United States embassy in Lima. In
December 2001, terrorists believed to be members of the Shining Path bombed an
electricity tower 30 miles east of Lima. In response to these possible signs of
terrorist activity, the U.S. State Department issued a public announcement in
December 2001 advising U.S. travelers to Peru and U.S. residents of Peru to
exercise caution when in the country.
In March 2002, three days before a visit to Lima by U.S. President
George W. Bush, a car bomb exploded at a Lima shopping center across the street
from the U.S. Embassy, killing ten persons and wounding 30. Of the three
suspects arrested for the incident, two were members of the Shining Path. In
response to the incident, the U.S. State Department issued another warning
alerting U.S. travelers to Peru of the continued potential for terrorist
activity in Peru.
Although the Shining Path is no longer as powerful as it was during the
1980s and early 1990s, an estimated 300 to 400 members still operate in remote
Upper Huallaga and Apurimac valleys, where military patrols have decreased due
to military spending cutbacks. Shining Path members have formed alliances with
coca farmers and drug traffickers in these drug-growing areas to provide armed
protection against the Government's interdiction efforts. In response to this
activity, security forces in Peru continue to monitor subversive activities and
have maintained their efforts to prevent the resurgence of a significant
terrorist threat, including reactivating anti-terrorist bases in the valleys and
heightening security in Lima. We cannot, however, assure you that there will not
be a resurgence in terrorism of Peru, or that, if there is such a resurgence, it
will not have a material adverse impact on the economy and prospects of the
country.
Anti-Narcotics Efforts
In the 1970s and 1980s, Peru experienced a surge in coca cultivation,
becoming, until the mid-1990s, the world's largest coca producer. Coca
cultivation was initially concentrated in the Upper Huallaga valley but later
expanded to other regions of the country as international demand for cocaine
increased and traffickers and terrorists formed alliances to protect
cultivation.
Beginning in 1970s, the Republic worked to reduce illegal drug
production, traffic and consumption. In 1996, the Government established
Contradrogas, a government agency responsible for designing, coordinating,
planning and supervising the Government's anti-narcotics efforts. This agency is
also responsible for securing and negotiating the terms of financial assistance
from foreign governments and international organizations directed to Peru's
anti-narcotics programs. The agency has collaborated with several countries and
international agencies, including the U.S. Agency for International Development,
or USAID, to implement alternative development programs in the leading
coca-growing areas of the country.
The Government's coca alternative development program, together with
interdiction by the Peruvian air force, eradication of coca fields and
laboratories, seizures of drugs and precursor chemicals, effective prosecution
of drug traffickers and a significant reduction in international demand for
cocaine, have contributed to a significant reduction in drug cultivation and
production in Peru. From 1997 to 2001, there was a reduction of approximately
51% in coca cultivation, from approximately 68,800 hectares under cultivation in
1997 to 34,000 hectares by the end of 2001.
During 2001, however, evidence of an increase in the production of coca
and poppies, the source of heroin, has emerged. Peru's coca crop remained
stable, covering 34,000 hectares, a similar figure to that for 2000, despite the
eradication of 6000 hectares in 2001. In addition, 135 hectares of poppies, the
source of heroin, were eradicated in 2001, up from 26 hectares in 2000.
Estimates of the poppy crop are sketchy as poppies grow at high altitudes, above
the ceiling of police helicopters.
The increase is attributable to a shift in production from Colombia to
Peru as Colombia's government has stepped up the eradication of drug crops and
the price of suitable substitute crops for Peruvian farmers, such as coffee,
have dropped below the cost of production. U.S. officials have acknowledged the
affect on Peru of Colombia's stepped-up drug eradication efforts and tripled
anti-drug aid for Peru in 2002 to US$156 million. In June 2002, however, the
Government agreed to suspend coca eradication programs in the Huallaga River
valley and in August 2002 agreed to ease eradication operations in the
Ene-Apurimac river basin in response to protests by coca farmers, claiming that
private organizations that run anti-coca programs absorb aid money provided by
USAID and poor coca farmers see little benefit. The Huallaga region and the
Ene-Apurimac river basin accounted for nearly 65% of Peru's coca cultivation in
2001.
To prevent money laundering in connection with drug trafficking and
other activities, the Republic requires financial institutions to conduct
employee training in preventive methods, obtain basic knowledge about their
clients and adhere to a code of conduct.
THE ECONOMY
History and Background
Between 1930 and the mid-1960s, Peru had one of the most successful
economies in Latin America. During this time, Peru generally deviated from the
import substitution model adopted by other countries in the region. Peru
adhered, except for brief intervening periods, to laissez-faire,
non-interventionist economic policies. The Government encouraged foreign
investment through tax incentives and legislation guaranteeing equal treatment
of foreign and domestic investors. Aided by its main exports, consisting of fish
and fish products, copper, petroleum and agricultural products, Peru's economy
grew steadily during this period.
Beginning in the mid-1960s, the Peruvian economy sustained a series of
setbacks. Public sentiment began to turn resolutely against foreign investment.
Pressure for change in economic policies increased as a result of:
o class and social conflicts, characterized by populist resentment
against the small economic elite that ruled the country and against
the presence of foreign companies in industries related to Peru's
national resources, such as petroleum and mining, and in other
prominent sectors of the economy;
o an economic slowdown brought about by a reduction in production and
exports due principally to a sudden drop in fish catch and reduced
mining and metal processing following the exhaustion of a number of
the principal copper and other mines; and
o the increased cost of living brought about by higher domestic food
prices.
In 1968, the military government headed by General Juan Velasco
Alvarado nationalized numerous private enterprises and conducted a campaign
against foreign participation in the Peruvian economy. In 1969, the Velasco
administration enacted the Ley de Reforma Agraria, or Agrarian Reform Law, which
took away large estates from wealthy owners and turned them into cooperatives
run by the former workers of the estates, and adopted high tariffs in order to
shield local industry and manufacturing from foreign competition.
Peru's currency became overvalued, making exports less competitive, and
its debt grew sharply during the 1970s. Peru experienced large current account
deficits and the Velasco administration borrowed abroad to finance these
deficits rather than change its policies. Many cooperative farms, operated by
people with little management experience, went bankrupt and agricultural
production suffered.
In 1975, General Francisco Morales-Bermudez Cerruti implemented an
economic austerity program designed to correct the economic disequilibrium
reflected in the country's fiscal and current account deficits and its high
external debt burden. The Government implemented fiscal and monetary restraints
and devalued the currency. These measures coincided with increases in world
prices of Peru's main exports. The fiscal deficit narrowed and by 1979 Peru had
achieved a significant current account surplus.
In 1980, the civilian government led by Fernando Belaunde reinstituted
high spending and borrowing but was forced to adopt more restrained spending
policies in later years. Alan Garcia Perez, who assumed the presidency in 1985,
brought the country to a deepening economic crisis. Garcia increased spending,
declared a debt moratorium and attempted to nationalize the banking system and
other key industries. Private investment collapsed, the public sector deficit
increased and exports dwindled. By 1990, the inflation rate had increased to
7,650%, net international reserves had been completely depleted and the economy
had entered its third year of recession. The Garcia administration was also
beset by the terrorist activities of the Shining Path and Tupac Amaru.
In 1990, Alberto Fujimori, a university professor, won the presidential
election on a campaign platform that emphasized his "outsider" status and his
opposition to "traditional" politicians. Fujimori inherited an economy beset by
recession, hyperinflation and high levels of external debt. Fujimori immediately
moved to cut public spending, increase taxes, tame inflation and open domestic
markets to foreign investment.
Within the first few years of his presidency, Fujimori dismantled
protectionist and interventionist laws and policies to create a liberal economy
dominated by private sector and market forces. In order to encourage foreign
investment, the Fujimori administration undertook an ambitious privatization
program, strengthened and simplified the country's tax system, opened the
country to foreign investment and lifted exchange controls and restrictions on
remittances of profits, dividends and royalties. While the Fujimori
administration succeeded in privatizing many state entities, the privatization
program waned in the later years of the administration because of adverse market
conditions and the President's adoption of a more populist stance prior to the
2000 elections.
As time went on, Fujimori's administration became increasingly
authoritarian, as evidenced by his dissolution of Congress in 1992, his
consolidation of power in the hands of the presidency following adoption of the
1993 Constitution and his allegiance with Vladimiro Montesinos. Fujimori's
authoritarianism exacted a price on Peru's political system and undermined the
success of his economic program. The Fujimori administration eventually failed
to redistribute the benefits of economic growth to the poor and, in the last
years of the administration, provoked civil unrest and political instability,
which deterred foreign investors.
On November 20, 2000, President Fujimori resigned his post and Valentin
Paniagua assumed the presidency on a provisional basis. The Paniagua
administration adopted fiscal policies to reduce spending, restore confidence,
reform the tax system and otherwise stabilize the economy.
In June 2001, the Peruvian people elected Alejandro Toledo Manrique to
the presidency based on a platform that rejected Fujimori's legacy of political
coercion and financial misdealings, but still recognized the value of an open
economic system. President Toledo vowed to restore democracy, fiscal discipline
and transparency to the government, while increasing the living standards of the
poor and disadvantaged, who constitute a majority of the population, through
improvements in education, health and employment opportunities. He also promised
to continue the economic reforms and privatization program first advanced by the
Fujimori administration.
Toledo assumed the presidency in July 2001 against a backdrop of high
unemployment and underemployment, economic recession and social need more severe
than had been acknowledged by the Fujimori administration. Despite the economic
strides achieved between 1990 and 2000, poverty remains a persistent problem in
Peru, with more than half of the population living below the poverty line, which
the World Bank defines as a monthly income of less than US$60 per capita,
adjusted to reflect differences in purchasing power. A significant number of
Peruvians live on an income of less than US$30 per capita per month.
President Toledo implemented a number of proposals to stimulate the
Republic's economy, including privatization and fiscal austerity programs.
Toledo's policies spurred moderate economic growth in the fourth quarter of 2001
and the first quarter of 2002. Despite this economic growth, the Toledo
administration faced social protests and unrest spurred by disappointment that
the President's policies had not immediately led to a significant reduction in
the high rates of underemployment, unemployment and poverty.
In an effort to maintain his political alliances and quell public
unrest, Toledo changed his cabinet. At the beginning of July 2002, several
ministers viewed as proponents of neo-liberal economic policies resigned their
posts, including Prime Minister Roberto Danino and Finance Minister Pedro Pablo
Kuczynski whose pro-private investment policies had angered many Peruvians. On
July 12, President Toledo swore in a new cabinet.
Developments from 1997 to 2001
Introduction
During the period from 1997 to 2001, Peru experienced intermittent
periods of economic growth and contraction. The economy continued to grow
strongly in 1997, but contracted slightly in 1998. The economy rebounded,
growing slightly in 1999 and moderately in 2000, but stagnated in 2001. Set out
below is a discussion of the trends and events affecting economic results during
the period.
1997
GDP growth in 1997 was spurred by the Fujimori administration's
strategy of macroeconomic adjustment and structural reform. The main aspects of
this strategy were:
o lowering inflation;
o improving fiscal results through the strengthening of tax
administration and conservative fiscal expenditure policies;
o narrowing the current account deficit;
o managing the exchange rate system consistent with the Government's
inflation and balance of payments objectives; and
o deepening structural reforms, including through privatization, reform
of the pension system and trade liberalization.
Real GDP grew by 6.7% in 1997, reflecting increases in private and
public sector investment, exports and consumer confidence. Foreign investment
grew during this period as a result of privatization and capital investment.
Inflation fell to 8.5%, the lowest level Peru had achieved during the preceding
25 years. The net international reserves of the Central Bank increased 19.2% in
1997 to US$10.2 billion. Peru also successfully completed a debt and
debt-service reduction package with its commercial creditors in 1997.
1998 and 1999
In 1998 and 1999, the Peruvian economy suffered a sharp reversal. This
downturn in economic activity reflected the occurrence of several external
shocks, including:
o The Asian crisis, which began at the end of 1997 after several Asian
countries encountered severe economic problems and were forced to
devalue their currencies and, in some instances, default on their
debt. Foreign investors retreated from investing in emerging markets
as a whole, including Latin American markets, such as Peru, that were
located far from the locus of the crisis.
o The Russian crisis in late 1997 and 1998, which arose when Russia
devalued its currency and defaulted on its debt. This crisis
exacerbated the lack of investor confidence in emerging markets
provoked by the Asian crisis.
o El Nino in 1998, which had an adverse impact on the agriculture and
fishing industries in Peru.
o The devaluation of the Brazilian real in 1999 after Brazil encountered
economic problems and the consequent regional contagion affecting
Argentina and other neighboring countries.
In addition, a decrease in fishing, agricultural production and
commodity prices led to a decrease in exports. The Fujimori administration's
tight monetary and fiscal policies exacerbated these economic problems. GDP
stagnated, contracting 0.5% in 1998 and growing 0.9% in 1999. The stagnation in
the economy during these years depressed the banking sector and led to a credit
crunch and increasing bad loan portfolios. Nonetheless, the presence of foreign
banks in the system, strict provisioning requirements and a federal program to
facilitate commercial debt restructuring helped the banking system endure the
stagnation more successfully than did other banks in the region during the same
period.
2000
During 2000, GDP grew 3.1%, spurred by growth of 5.5% during the first
half of 2000, which shrunk to 0.9% during the second half of 2000, as compared
to the corresponding periods in 1999. The growth in the first half of the year
resulted from increased government spending and investment reflecting the
Fujimori administration's turn to more populist economic measures to gain public
support for Fujimori's third presidential bid. Economic growth stagnated
following Fujimori's controversial election to a third term in May 2000,
primarily as a result of the political controversy that led to Fujimori's
resignation in November 2000 and cutbacks in government spending in an attempt
to balance the Republic's fiscal accounts.
The fiscal deficit expanded in 2000 due to lower-than-expected tax
receipts and an increase in expenditures. Bank credit declined and bank loan
quality continued to deteriorate. The current account deficit totaled US$1.6
billion by the end of 2000, representing 2.9% of GDP.
The pace of the Government's privatization program slowed during the
years prior to the 2000 election, even as privatization proceeds could have
helped bridge the current and fiscal account deficits. This was due to
Fujimori's turn toward more populist policies ahead of the 2000 election and to
poor market conditions.
2001
Despite the Government's efforts to stabilize the economy following
Fujimori's resignation in November 2000, the economy grew only 0.2% during 2001.
This nearly flat growth was primarily due to a reduction in public spending, as
the Government sought to stabilize the Republic's fiscal accounts following
Fujimori's spending increase leading to the 2000 elections. Uncertainty during
the first half of 2001 over the outcome of the elections scheduled for April
2001 and the lack of investor confidence and private investment in the Latin
American region also contributed to the economic downturn during this period.
The following are the economic results for 2001:
o the consolidated public sector fiscal deficit was 2.5% of GDP, as
compared to 3.2% in 2000;
o the average inflation rate for 2001 was 2.0%, as compared to 3.8%
for 2000;
o the net international reserves of the Central Bank increased 5.3%
to US$8.6 billion, as compared to US$8.2 billion as of December
31, 2000; and
o the current account deficit decreased 30.2% to US$1.1 billion, as
compared to a US$1.6 billion current account deficit for 2000.
2002
First Three Months of 2002
During the first three months of 2002, the economy grew an estimated
3.0% compared to the first three months of 2001, during which Peru was
experiencing a recession. This growth resulted from improvements in a few narrow
sectors, primarily mining, as production from Antamina, the world's largest
copper and zinc mining project, increased and construction and other sectors
benefiting from increased public building projects. Mining accounted for more
than a third of GDP growth in the first three months of 2002, despite its
relatively small contribution to GDP.
The current account deficit during the first three months of 2002
decreased 29.7% to a deficit of US$343 million, as compared to a current account
deficit of US$488 million for the first three months of 2001. This reduction was
largely a result of a reduced trade balance. Additionally, inflation at the end
of the period was 0.54%.
Argentina Crisis and Developments in Brazil
Argentina is experiencing a severe economic crisis as well as political
and social unrest. In December 2001 the crisis led to Argentina declaring a
moratorium on its payments under its public external indebtedness. Brazil has
recently experienced economic difficulties in the months leading up to the
election of Luiz Inacio Lula, of the Workers' Party, as President of Brazil on
October 27, 2002, and Brazilian markets continue to be volatile. While the
Brazilian difficulties are more limited in scale in comparison to Argentina's
profound economic and social crisis, in each case negative investor reaction to
developments in those countries could adversely affect the market for securities
issued by countries in the region, cause foreign investors to decrease the flow
of capital into Latin America and cause uncertainty about plans for further
integration of regional economies, all of which could potentially affect Peru.
The Economic Policies of the Toledo Administration
Upon taking office in July 2001, the Toledo administration faced
continuing economic weakness that was more severe than had been acknowledged by
the Fujimori administration.
The Toledo administration's focus on improving social conditions
created high expectations among Peru's lower classes that improvement would
result quickly. President Toledo's policies led to moderate economic growth in
the fourth quarter of 2001 and the first quarter of 2002. Despite this economic
growth, the Toledo administration faced social protests and unrest spurred by
disappointment that a significant reduction in the high rates of
underemployment, unemployment and poverty was not immediate. In response, Toledo
replaced six ministers who had most favored neo-liberal economic policies,
including the Prime Minister and the Finance Minister, whose pro-private
investment policies angered many Peruvians.
Despite public opposition to the Toledo administration's neo-liberal
economic policies, the Toledo administration established and continues to
support the following priorities:
o achieving and sustaining economic growth;
o increasing exports of Peruvian goods;
o reducing unemployment, underemployment and poverty;
o reforming the tax system, primarily by improving tax collection
mechanisms;
o fostering private investment by reinvigorating structural reforms
and promoting investment through concessions, joint ventures and
other similar business forms;
o increasing public investment in education, public health, job
training, low-income housing and other social programs, while
reducing overall public spending;
o maintaining low inflation and a floating exchange rate system;
o improving the efficiency of the pension system by fostering
participation in the private pension system;
o stimulating growth in private sector credit by enhancing
creditors' rights;
o reducing public sector debt;
o improving oversight of the financial system and adopting
transparency guidelines and requirements in regulated sectors of
the economy;
o improving the efficiency of the public sector; and
o maintaining open trade policies.
These priorities are the basis for various projects and initiatives
that the Toledo administration has pursued since assuming office. These projects
and initiatives include the following:
o adopting a private investment promotional program for 2002;
o submitting a 2002 budget, approved by Congress in November 2001,
that projects a fiscal deficit of 2.2% of GDP, as compared to the
2.4% of GDP for 2001;
o increasing the corporate income tax rate from 20% to 27%;
o reducing the payroll tax, known as the Extraordinary Solidarity
Tax, from 5% to 2%;
o initiating a temporary-jobs placement program in impoverished
areas of the country;
o increasing public sector wages 9%;
o creating an agrarian bank to provide the agricultural sector with
greater access to credit;
o transforming Mivivienda, a public development fund offering
subsidized mortgages, into a mortgage securitization agency, with
the goal of increasing mortgage lending and addressing the
scarcity of affordable low-income housing; and
o securing a commitment from donor nations to provide the Republic
with US$1.8 billion for social and economic development programs.
The Toledo administration's key economic targets for 2002, as revised,
include:
o GDP growth of 3.5% to 4.0%;
o a consolidated public sector deficit of 2.3% of GDP;
o net international reserves of the Central Bank of approximately
US$9.3 billion by the end of 2002;
o a current account deficit of 2.3% of GDP; and
o 2.5% inflation.
The initial targets were reflected in a letter of intent that the
Republic negotiated in January 2002 with the IMF. In light of the postponement
of the privatization program, the Republic recently negotiated with the IMF
targets which would yield a fiscal deficit of 2.3% of GDP for 2002 and 1.9% of
GDP for 2003. The changes are pending final IMF approval. For a description of
the letter of intent, see "Public Sector Debt--External Debt" below.
Gross Domestic Product and Structure of the Economy
During the period from 1997 to 2001, private consumption and gross
investment were highest in 1997 and have declined since that time. Private
consumption fluctuated from 1998 to 2001, while gross investment gradually
decreased over the same period. The overall decrease in private consumption and
gross investment after 1997 reflected a decrease in the confidence of foreign
investors and Peruvian consumers. Modest increases in government consumption and
in exports throughout the period partially offset the declines in private
consumption and private investment. The increase in government consumption was
spurred by the adoption of more populist measures by the Fujimori administration
in the later years of the administration and higher spending prior to the 2000
elections. The increase in exports after 1997 reflected recuperating export
commodity prices and a rebound from the adverse effects of El Nino on
agricultural and fishing exports.
During 2001, private consumption increased, as consumers did not adjust
their spending to the downturn in economic activity. Gross investment decreased
as a result of capital flight during the first part of the year when the
uncertainty of the April 2001 elections deterred capital investment. Exports
decreased slightly during this period due to a decrease in the provision of
services resulting principally from a reduction in revenues generated in the
travel, transportation, insurance and reinsurance sectors, as well as greater
austerity in non-financial public sector spending.
For the three-month period ending March 31, 2002, private consumption
increased as compared to the same period in 2001, due to increased imports of
non-durable consumer goods and greater sales of agricultural products, food and
drinks. Gross investment decreased during this period because of hesitance by
investors to enter into the Peruvian market and Latin American markets
generally. Exports decreased during this period as compared to the first three
months of 2001, due to a decrease in sales of certain non-traditional products.
The following tables set forth GDP by expenditure for the periods
indicated.
Gross Domestic Product by Expenditure
(in millions of U.S. dollars, at current prices)
For the first 3
months of:
--------------------
1997 1998 1999(1) 2000(1) 2001(1) 2001(1) 2002(1)
--------- --------- --------- --------- --------- --------- ---------
Government consumption............ US$ 5,797 US$ 6,004 US$ 5,626 US$ 5,979 US$ 6,035 US$ 1,342 US$ 1,401
Private consumption................. 41,521 40,542 36,109 37,774 38,841 9,339 9,938
Gross investment:
Public sector..................... 2,584 2,551 2,494 2,119 1,743 341 328
Private sector.................... 11,442 10,833 8,687 8,649 8,160 2,071 1,939
Change in inventories........... 126 31 (90) (8) 39 (5) (13)
--------- --------- --------- --------- --------- --------- ---------
Total gross investment.......... 14,152 13,415 11,092 10,761 9,942 2,408 2,254
Exports of goods and services....... 8,337 7,545 7,640 8,553 8,544 2,001 1,923
Imports of goods and services....... 10,937 10,599 8,838 9,555 9,337 2,405 2,156
--------- --------- --------- --------- --------- --------- ---------
Net (exports) imports............. (2,600) (3,054) (1,197) (1,002) (793) (403) (233)
--------- --------- --------- --------- --------- --------- ---------
GDP................................US$58,870 US$56,907 US$51,630 US$53,512 US$54,025 US$12,686 US$13,359
========= ========= ========= ========= ========= ========= =========
(1) Preliminary data.
Source: Central Bank.
Gross Domestic Product by Expenditure
(in millions of nuevos soles, at constant 1994 prices)
For the first 3
months of:
---------------------
1997 1998 1999(1) 2000(1) 2001(1) 2001(1) 2002(1)
---------- ---------- --------- ---------- ---------- ---------- ----------
Government consumption............S/. 10,565 S/.10,832 S/. 11,210 S/. 11,784 S/. 11,729 S/. 2,617 S/. 2,713
Private consumption............... 84,081 83,376 83,055 86,288 87,425 21,705 22,234
Gross investment:
Public sector................... 5,124 5,276 5,657 4,788 3,879 765 730
Private sector.................. 23,395 22,834 19,330 18,944 17,877 4,541 4,281
Change in inventories........... 306 145 (532) (178) (93) (15) (40)
---------- ---------- --------- ---------- ---------- ---------- ----------
Total gross investment........ 28,825 28,255 24,455 23,554 21,663 5,291 4,971
Exports of goods and services..... 16,362 17,274 18,594 20,069 21,453 4,700 4,955
Imports of goods and services..... 22,723 23,251 19,724 20,428 20,757 5,219 4,909
---------- ---------- --------- ---------- ---------- ---------- ----------
Net (exports) imports........... (6,362) (5,977) (1,130) (359) 696 (519) 45
---------- ---------- --------- ---------- ---------- ---------- ----------
Real GDP..........................S/.117,110 S/.116,485 S/.117,590 S/.121,267 S/.121,513 S/. 29,093 S/. 29,963
========== ========== ========= ========== ========== ========== ==========
(1) Preliminary data.
Source: Central Bank.
Gross Domestic Product by Expenditure
(as a percentage of total GDP, at current prices)
For the first 3
months of:
---------------------
1997 1998 1999(1) 2000(1) 2001(1) 2001(1) 2002(1)
---------- ---------- --------- ---------- ---------- ---------- ----------
Government consumption........... 9.8% 10.6% 10.9% 11.2% 11.2% 10.6% 10.5%
Private consumption.............. 70.5 71.2 69.9 70.6 71.9 73.6 74.4
Gross investment:
Public sector.................. 4.4 4.5 4.8 4.0 3.2 2.7 2.5
Private sector................. 19.4 19.0 16.8 16.2 15.1 16.3 14.5
Change in inventories.......... 0.2 0.1 (0.2) 0.0 0.1 0.0 (0.1)
---------- ---------- --------- ---------- ---------- ---------- ----------
Total gross investment....... 24.0 23.6 21.5 20.1 18.4 19.0 16.9
Exports of goods and services.... 14.2 13.3 14.8 16.0 15.8 15.8 14.4
Imports of goods and services.... 18.6 18.6 17.1 17.9 17.3 19.0 16.1
---------- ---------- --------- ---------- ---------- ---------- ----------
Net (exports) imports.......... (4.4) (5.4) (2.3) (1.9) (1.5) (3.2) (1.7)
---------- ---------- --------- ---------- ---------- ---------- ----------
GDP.............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
========== ========== ========= ========== ========== ========== ==========
(1) Preliminary data.
Source: Central Bank.
Gross Domestic Product by Expenditure
(percentage change from previous year, at constant 1994 prices)
For the first 3
months of:
---------------------
1997 1998 1999(1) 2000(1) 2001(1) 2001(1) 2002(1)
---------- ---------- --------- ---------- ---------- ---------- ----------
Government consumption........... 7.6% 2.5% 3.5% 5.1% (0.5)% 2.0% 2.4%
Private consumption.............. 4.3 (0.8) (0.4) 3.9 1.3 (6.9) 3.7
Gross investment:
Public sector.................. 10.9 3.0 7.2 (15.4) (19.0) (31.9) (4.5)
Private sector................. 16.3 (2.4) (15.3) (2.0) (5.6) (6.4) (5.7)
Change in inventories.......... N/A (52.6) (466.9) 66.5 47.8 N/A (166.7)
---------- ---------- --------- ---------- ---------- ---------- ----------
Total gross investment....... 14.9 (2.0) (13.4) (3.7) (8.0) (12.2) (6.0)
Exports of goods and services.... 13.1 5.6 7.6 7.9 6.9 1.8 5.4
Imports of goods and services.... 12.2 2.3 (15.2) 3.6 1.6 6.4 (5.9)
---------- ---------- --------- ---------- ---------- ---------- ----------
Net (exports) imports.......... (9.8) 6.0 81.1 68.2 294.0 (82.0) 108.7
---------- ---------- --------- ---------- ---------- ---------- ----------
Real GDP......................... 6.7 (0.5) 0.9 3.1 0.2 (2.4) 3.0
========== ========== ========= ========== ========== ========== ==========
(1) Preliminary data.
N/A = Not Available.
Source: Central Bank.
From 1997 to 2001, Peru experienced a 26.8% increase in private
savings, which was partially offset by a 79.5% decrease in public savings.
Private savings increased in large part as a result of decreased private
consumption after 1997, reflecting the weakening confidence in the Peruvian
economy. Public savings decreased, particularly in 1999 and 2000, because of
increased government expenditures by the Fujimori administration to gain
political support. Government petroleum subsidies in 1999 and 2000, when world
oil prices rose significantly, also caused a decrease in public savings.
Domestic investment decreased 19.3% between 1997 and 2001.
During 2001, private savings as a percentage of GDP declined 4.9%, as
compared to 2000, reflecting an increase in private consumption. In 2001, public
savings did not change, as compared to 2000, as a result of cutbacks in
government expenditures following Fujimori's election in July 2000 and his
subsequent resignation in November 2000. Domestic investment decreased 8.5%
during this period due primarily to political uncertainty ahead of the April
2001 elections.
During the first three months of 2002, private savings increased 15.9%,
as compared to the same period of 2001, as a result of renewed focus on savings
rather than on consumption. Public savings decreased 69.7%, as compared to the
same period of 2001, as a result of a decrease in the current revenue of the
central government. Domestic investment decreased 6.2% during this period due
primarily to a substantial decrease in private investment.
Investment and Savings
(as a percentage of current GDP)
For the first
3 months of:
--------------------
1997 1998 1999(1) 2000(1) 2001(1) 2001(1) 2002(1)
---------- ---------- --------- ---------- ---------- ---------- ---------
Domestic savings:
Public savings................ 5.2% 3.9% 1.8% 0.8% 0.8% 3.3% 1.0%
Private savings............... 13.0 13.8 16.8 16.4 15.6 13.8 16.0
---------- ---------- --------- ---------- ---------- ---------- ---------
Total domestic savings...... 18.2 17.7 18.6 17.2 16.4 17.1 17.0
External savings................ 5.8 5.9 2.9 2.9 2.0 3.8 2.6
---------- ---------- --------- ---------- ---------- ---------- ---------
Total savings......... 24.0% 23.6% 21.5% 20.1% 18.4% 20.9 19.6
Domestic investment............. 24.0% 23.6% 21.5% 20.1% 18.4% 20.9% 19.6%
========== ========== ========= ========== ========== ========== =========
(1) Preliminary data.
Source: Central Bank.
As the table below indicates, from 1997 to 1999, the real standard of
living of the population fell, with an average decline of 15.3% in per capita
GDP, reflecting the overall economic instability. In 2000, per capita GDP rose
1.9% as economic growth was restored by increased government expenditures. In
2001, per capita GDP fell by 0.7% due to population growth that exceeded the
flat growth in GDP.
Per Capita GDP(1) and Per Capita Income(2)
(in U.S. dollars, at current prices)
For the first 3
months of:
--------------------
1997 1998(3) 1999(1)(3) 2000(1)(3) 2001(1)(3) 2001(3) 2002(3)
Per capita GDP............. US$2,416 US$2,295 US$2,046 US$2,085 US$2,071 US$1,945 US$2,015
---------- ---------- --------- ---------- ---------- ---------- ---------
Per capita income.......... 2,411 2,231 1,951 1,984 1,962 1,874 1,913
(1) Without adjustment to reflect changes in purchasing power.
(2) Per capita national disposable income, which is equal to national gross GDP
plus net investment and financial income from abroad plus foreign
remittances, divided by the country's population.
(3) Preliminary data. Source: Central Bank.
Principal Sectors of the Economy
The principal economic activities in Peru are services, including
wholesale and retail trade, transportation and tourism, manufacturing, and
agriculture, fishing and livestock. The following tables set forth the
distribution of GDP in the Peruvian economy, indicating for each sector its
percentage contribution to GDP and its annual growth rate for the years
indicated, in each case as compared to the previous year.
Gross Domestic Product by Sector
(in millions of nuevos soles, at constant 1994 prices)
For the first 3
months of:
--------------------
1997 1998 1999(1) 2000(1) 2001(1) 2001(1) 2002(1)
---------- ---------- ---------- ----------- ---------- ---------- ---------
Primary production:
Agriculture and livestock(2).. S/. 9,099 S/. 9,240 S/.10,325 S/.10,968 S/.10,892 S/. 2,432 S/. 2,612
Fishing....................... 574 497 642 700 598 158 123
Mining and hydrocarbons(3).... 5,501 5,708 6,445 6,600 7,337 1,581 1,956
---------- ---------- ---------- ----------- ---------- ---------- ---------
Total primary production.... 15,174 15,445 17,412 18,269 18,828 4,171 4,691
Secondary production:
Manufacturing................. 17,758 17,188 17,095 18,241 18,045 4,397 4,364
Construction.................. 7,245 7,289 6,521 6,244 5,867 1,392 1,536
Electricity and water......... 2,237 2,423 2,485 2,600 2,699 662 701
---------- ---------- ---------- ----------- ---------- ---------- ---------
Total secondary production.. 27,240 26,900 26,100 27,085 26,612 6,451 6,602
Services:
Commerce...................... 17,352 16,797 16,482 17,322 17,313 4,137 4,132
Other services................ 57,344 57,344 57,596 58,591 58,761 14,334 14,538
---------- ---------- ---------- ----------- ---------- ---------- ---------
Total services.............. 74,696 74,140 74,077 75,913 76,074 18,471 18,670
---------- ---------- ---------- ----------- ---------- ---------- ---------
Total GDP................. S/.117,110 S/.116,485 S/.117,590 S/.121,267 S/.121,513 S/.29,093 S/.29,963
========== ========== ========== =========== ========== ========== =========
(1) Preliminary data.
(2) Includes forestry.
(3) Includes non-metallic mining.
Source: Central Bank.
Gross Domestic Product by Sector
(as a percentage of GDP, at constant 1994 prices)
For the first 3
months of:
--------------------
1997 1998 1999(1) 2000(1) 2001(1) 2001(1) 2002(1)
---------- ---------- ---------- --------- --------- --------- --------
Primary production:
Agriculture and livestock(2).. 7.8% 7.9% 8.8% 9.0% 9.0% 8.4% 8.7%
Fishing....................... 0.5 0.4 0.5 0.6 0.5 0.5 0.4
Mining and hydrocarbons(3).... 4.7 4.9 5.5 5.4 6.0 5.4 6.5
---------- ---------- ---------- --------- --------- --------- --------
Total primary production.... 13.0 13.3 14.8 15.1 15.5 14.3 15.7
Secondary production:
Manufacturing................. 15.2 14.8 14.5 15.0 14.9 15.1 14.6
Construction.................. 6.2 6.3 5.5 5.1 4.8 4.8 5.1
Electricity and water......... 1.9 2.1 2.1 2.1 2.2 2.3 2.3
---------- ---------- ---------- --------- --------- --------- --------
Total secondary production.. 23.3 23.1 22.2 22.3 21.9 22.2 22.0
Services:
Commerce...................... 14.8 14.4 14.0 14.3 14.2 14.2 13.8
Other services................ 49.0 49.2 49.0 48.3 48.4 49.3 48.5
---------- ---------- ---------- --------- --------- --------- --------
Total services.............. 63.8 63.6 63.0 62.6 62.6 63.5 62.3
---------- ---------- ---------- --------- --------- --------- --------
Total GDP................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
========== ========== ========== ========= ========= ========= ========
(1) Preliminary data.
(2) Includes forestry.
(3) Includes non-metallic mining.
Source: Central Bank.
Gross Domestic Product by Sector
(percentage change from previous year, at constant 1994 prices)
For the first 3
months of:
--------- --------- ------- -------- ------- -------------------
1997 1998(1) 1999(1) 2000(1) 2001(1) 2001(2) 2002(3)
--------- --------- ------- -------- ------- --------- -------
Primary production:
Agriculture and livestock(2).. 5.4% 1.5% 11.7% 6.2% (0.6)% (1.7)% 7.4%
Fishing...................... (1.8) (13.4) 29.2 9.1 (13.3) (6.6) (22.0)
Mining and hydrocarbons(3)... 9.0 3.8 12.9 2.4 11.2 (3.5) 23.7
-------- -------- ------- ------- ------- -------- -------
Total primary production... 6.4 1.8 12.7 4.9 1.9 (3.2) 9.4
Secondary production:
Manufacturing............... 5.3 (3.2) (0.5) 6.7 (1.1) (3.2) (0.8)
Construction................ 14.9 0.6 (10.5) (4.3) (6.0) (15.7) 10.3
Electricity and water....... 12.7 8.3 2.5 4.7 3.8 2.3 6.1
-------- -------- ------- ------- ------- -------- -------
Total secondary production. 8.3 (1.2) (3.0) 3.8 (0.2) (2.2) (0.2)
Services:
Wholesale and retail trade.. 7.8 (3.2) (1.9) 5.1 0.0 (0.2) (0.1)
Other services.............. 6.5 0.1 (0.7) 0.9 N/A N/A N/A
-------- -------- ------- ------- ------- -------- -------
Total services............ 6.3 (0.7) (0.1) 2.5 0.7(4) (1.1) (4) 1.4(4)
Total GDP.............. 6.7 (0.5) 0.9 3.1 0.2 (2.4) 3.0
======== ======== ======= ======= ======= ======== =======
(1) Preliminary data.
(2) Preliminary data - First quarter 2001.
(3) Preliminary data - First quarter 2002.
(4) Excludes trading.
N/A = Not Available.
Source: INEI and Central Bank.
Primary Production
Primary production in Peru encompasses agriculture, livestock and
forestry, fishing, and mining and the extraction of hydrocarbons. Of these, the
most important activities in terms of their contribution to GDP are agriculture
and livestock, which, together with forestry, accounted for 9.0% of GDP in 2000
and 9.0% in 2001. In total, the primary sector contributed 15.1% to GDP in 2000
and 15.5% in 2001. The sector experienced its highest growth rate of the
1997-2001 period in 1999, when it grew 12.7% primarily due to the recovery of
the fishing and agricultural sectors following El Nino.
The following table sets forth the production of selected primary goods
for the years indicated.
Selected Primary Goods Production
(in millions of nuevos soles, at constant 1994 prices)
For the first 3
months of:
----------------------
1997 1998 1999 2000 2001 2001 2002
----------- ---------- ---------- ---------- ---------- ---------- ----------
Agriculture:
Cotton.................. S/. 233.5 S/. 152.5 S/. 216.1 S/. 246.2 S/. 214.6 S/. 59.9 S/. 73.5
Rice.................... 525.3 557.3 703.5 680.9 730.0 125.6 162.1
Coffee.................. 361.7 384.2 464.2 507.1 512.4 28.2 35.9
Sugar cane.............. 470.8 387.6 426.5 484.7 501.7 109.1 129.4
Corn.................... 503.0 577.0 651.0 742.0 766.0 162.1 166.2
Potato.................. 967.5 1,044.7 1,237.1 1,320.9 1,081.3 202.4 293.6
Wheat................... 132.0 158.0 171.0 187.0 175.5 0.4 1.0
Vegetables.............. 745.7 726.2 821.9 896.8 913.0 237.8 175.9
Fruits.................. 1,031.9 963.0 1,076.2 1,126.5 1,112.8 297.3 312.8
Tubers.................. 371.0 413.0 420.0 429.0 424.0 96.0 97.2
Other agricultural...... 1,932.0 1,915.3 2,034.7 2,121.4 2,116.2 479.3 506.6
----------- ---------- ---------- ---------- ---------- ---------- ----------
Total crops........... S/.7,274.4 S/.7,278.8 S/.8,222.2 S/.8,742.5 S/.8,547.5 S/.1,798.1 S/.1,954.2
=========== ========== ========== ========== ========== ========== ==========
Livestock:
Poultry................. S/.2,203.0 S/.2,433.4 S/.2,747.7 S/.3,026.4 S/.3,087.6 S/. 740.1 S/. 820.8
Eggs.................... 313.7 324.4 338.7 340.8 341.9 82.7 83.8
Milk.................... 480.6 506.0 513.7 541.0 565.3 144.7 150.5
Lamb.................... 262.3 275.5 363.4 378.3 387.1 85.2 90.0
Pork.................... 399.6 418.3 428.6 436.8 438.0 101.6 101.2
Beef.................... 1,025.3 1,074.4 1,158.1 1,181.6 1,195.1 283.2 288.8
Other................... 371.4 391.7 412.2 430.2 430.7 134.2 129.6
----------- ---------- ---------- ---------- ---------- ---------- ----------
Total livestock....... S/.5,055.9 S./5,423.7 S/.5,962.4 S/.6,335.1 S/.6,445.7 S/.1,571.7 S/.1,664.9
=========== ========== ========== ========== ========== ========== ==========
Fishing................... S/. 573.7 S/. 497.0 S/. 641.9 S/. 700.1 S/. 607.0 S/. 158.3 S/. 126.4
Source: INEI.
The following table sets forth the annual percentage change in
production of selected primary goods for the years indicated, based on constant
1994 prices.
Selected Primary Goods Production
(percentage change from previous year, at constant 1994 prices)
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Agriculture:
Cotton................... (45.7)% (34.7)% 41.7% 13.9% (13.0)%
Rice..................... 21.3 6.1 26.2 (3.2) 7.2
Coffee................... 6.0 6.2 20.8 9.2 1.0
Sugar cane............... 13.3 (17.7) 10.0 13.6 3.5
Corn..................... 2.2 14.7 12.8 14.0 3.2
Potato................... 3.9 8.0 18.4 6.8 (18.2)
Wheat.................... (8.3) 19.7 8.2 9.4 (6.1)
Vegetables............... 5.4 (2.6) 13.2 9.1 1.8
Fruits................... 2.4 (6.7) 11.8 4.7 (1.3)
Tubers................... 13.5 11.3 1.7 2.1 (1.2)
Other agricultural....... 4.7 (0.9) 6.2 4.3 (0.3)
Livestock:
Poultry.................. 8.1 10.5 12.9 10.1 2.0
Eggs..................... 14.9 3.4 4.4 0.6 0.3
Milk..................... 4.8 5.3 1.5 5.3 4.5
Lamb..................... 5.9 5.0 31.9 4.1 2.3
Pork..................... 4.3 4.7 2.5 1.9 0.3
Beef..................... 7.4 4.8 7.8 2.0 1.1
Other.................... 5.3 5.5 5.2 4.4 0.1
Fishing.................... (1.8) (13.4) 29.2 9.1 (13.3)
Source: INEI.
Agriculture and Livestock
The Peruvian agriculture and livestock sector employs approximately
8.8% of the population and is dominated by small-scale producers. The sector
represented 9.1% of total exports in 2001. Approximately 3.0% of Peru's land
area is devoted to arable production and permanent crops. Subsistence farming
predominates and productivity is low due to drainage and salinity problems,
although productivity increased during the 1990s.
The agriculture and livestock sector grew every year in the period from
1997 to 2000, despite the adverse effects of El Nino in 1998, increasing its
annual contribution to GDP from 7.8% in 1997 to 9.0% in 2001. In 1998, floods
and landslides caused by El Nino resulted in the loss of arable land and led to
irrigation deficiencies and plagues. The damage adversely affected growth of
agricultural output, which caused an increase in local prices of primary goods.
Despite the damage, the agriculture and livestock sector as a whole grew 1.5% in
1998, partly due to improved livestock-breeding conditions that resulted from
increased rainfall. The recovery from the effects of El Nino began in the fourth
quarter of 1998.
Normal weather conditions and several assistance and development
programs undertaken by the Ministerio de Agricultura, or Ministry of
Agriculture, led to 11.7% growth in 1999 and 6.2% growth in 2000. In 2001, this
sector declined by 0.6%, due to a 2.3% decline in agricultural production
because of a reduction in the area of land farmed, offset in part by a
simultaneous 1.7% growth in the amount of livestock raised as a result of the
increased production of milk, chicken and cattle.
Peru's main agricultural products are vegetables, potatoes and fruits,
which together accounted for approximately 36.3% of Peru's agricultural
production in 2001. Peru's traditional agricultural products include cotton,
sugar, coffee and rice. Agricultural production has increasingly focused on
non-traditional export products destined primarily for the winter markets of
Europe and the United States. The northern coast of Peru is the main area for
cultivation of non-traditional export crops such as asparagus, mangoes, passion
fruit and oranges. Animal husbandry--sheep, poultry and cattle--is predominant
in southern regions of the country.
Peru's main agricultural export products are coffee, sugar, asparagus
and paprika, which together accounted for approximately one-third of
agricultural exports in 2001. Other important export crops include cochineal,
cocoa, carmine and marigold flour. In recent years, there has been a boost in
fruit production for the export market, particularly of mangoes and grapes.
Cotton, rice and sugar are produced for both the domestic and the export
markets.
The Government, during the 1990s, gave priority to farming as part of
its program to channel resources to poorer regions and increase the
self-sufficiency of subsistence farmers. The highest priority crops included
rice, corn and wheat. By reviving traditional irrigation and terracing methods,
the Government extended cultivation through the use of marginal land, while also
promoting modern farming techniques.
In 1996, the Government also adopted measures to promote the
development of agriculture. These measures consisted of the following three new
laws:
o The Ley de Saneamiento Economico-Financiero de las Empresas Agrarias
Azucareras, or Law for the Financial Rehabilitation of Sugar
Companies, which established the Programa Extraordinario de
Regularizacion Tributaria, or Extraordinary Program for Tax Reform,
which we refer to in this prospectus as "PERTA." The PERTA program was
designed to facilitate the payment by sugar companies of overdue tax
liabilities through the introduction of various alternative payment
methods and a partial tax amnesty.
o The Ley de Reestructuracion de las Empresas Agrarias, or Law for the
Restructuring of Agricultural Companies, which expanded the PERTA
program to include independent farmers and irrigation companies.
o The Ley de Promocion del Sector Agrario, or Agricultural Sector
Promotion Law, which established a special tax regime for the
agricultural sector.
The Toledo administration expects to foster the development of
agriculture by implementing the following policies:
o improving supervisory standards and technical guidelines, such as seed
quality and growing conditions, to promote the production of important
crops;
o providing technical assistance to small-scale farmers in areas such as
land management, irrigation and sowing techniques; and
o organizing small-scale farmers into farming cooperatives in order to
improve their production and distribution capacity and enhance their
ability to generate jobs.
The Toledo administration supports an agricultural development program
that reduces the tariff on agricultural machinery and equipment from 12% to 7%
and the tariff on imports of agricultural inputs from 12% to 4%, in order to
increase agricultural production.
Fishing
Fishing is a small part of the Peruvian economy, contributing between
0.4% to 0.6% annually to GDP during the period from 1997 and 2001. Fish
products, however, are Peru's second leading export, accounting for 15.8% of
export earnings in 2001.
In the late 1960s, Peru was the world's leading fishing nation. Its
importance as a leading exporter of fishmeal declined during the 1970s and early
1980s due to ecological factors and over-fishing. In later years, Peru recovered
its position as one of the world's leading fishmeal producers and exporters.
At present, Peru's fish-processing industry is made up primarily of the
processing of anchovies into fishmeal. The industry has suffered frequently from
the destruction of fish stocks caused by changes in oceanographic conditions.
The Government, from time to time, imposes seasonal fishing bans based on
factors such as marine wildlife conditions and fish processing capacity.
Although these bans limit fishing extraction, their adverse impact on fishing
production is outweighed by the increased stock of protected species.
The fishing sector contracted 1.8% in 1997 and 13.4% in 1998 as a
result of El Nino, which had a devastating impact on catches for industrial
consumption, particularly of anchovies, that was not compensated by a greater
extraction of other sea species. In 1999 and 2000, the fishing industry
recovered, growing 29.2% in 1999 and 9.1% in 2000. This growth was caused by the
improved oceanographic conditions. In 2001, fishing declined 13.3% due to
climactic changes that dispersed the fish stock. During the first three months
of 2002, fishing industry revenues decreased, primarily due to poor atmospheric
conditions.
Mining and Hydrocarbons
The mining and hydrocarbons sector grew 11.2% in 2001 as a result of a
12.8% growth in the production of metals, which offset a 2.0% decline in the
production of hydrocarbons. Antamina, the world's largest copper and zinc mining
project, began its production phase in July 2001, contributing to the growth in
the volume of copper, zinc and silver extracts.
Mining. Peru is a leading regional producer of gold and the largest
producer in Latin America of silver, tin, copper, lead and zinc. Although mining
constitutes a small part of the country's GDP, contributing on average 4.4% to
GDP between 1997 and 2001, it is Peru's leading export sector, accounting for
44.9% of Peru's total export earnings in 2001. Copper alone accounted for 13.9%
of total export earnings in 2001.
Between 1997 and 2001, investment in the mining sector totaled
approximately US$6.3 billion, with an average annual investment of US$1.3
billion. The most important projects in this period were:
o the Antamina copper and zinc project, in which US$525 million was
invested in 1999, US$825 million in 2000 and US$530 million in 2001;
o the expansion of the Cuajone and Toquepala copper projects, in which
US$259 million was invested in 1998, US$250 million in 1999, US$132
million in 2000 and US$161 million in 2001; and
o the expansion of the Yanacocha gold project, in which US$83 million
was invested in 1998, US$126 million in 1999, US$277 million in 2000
and US$277 million in 2001.
Hydrocarbons. The hydrocarbons sector, which encompasses petroleum and
natural gas production, currently constitutes a minor part of the Peruvian
economy.
The petroleum companies in Peru are oriented towards the exploration
and development of oil fields located mainly in the Amazon jungle. A major part
of Peruvian production consists of heavy crude oil that is, for the most part,
exported and light crude oil used in local refineries. Petroleum products for
industrial and residential use are supplemented with imports.
Between 1997 and 2001, petroleum production decreased consistently due
to the exhaustion of oil producing fields and a reduction in drilling of
exploration wells that was triggered in part by a drop in the international
prices of petroleum.
Peru is currently only a minor producer of natural gas. As of December
31, 2001, Peru had approximately 13.1 trillion cubic feet of natural gas proven
reserves, of which approximately 482 billion cubic feet had been developed. In
the period from 1997 to 2001, natural gas production increased approximately
53.3%, from 8.5 billion cubic feet in 1997 to 13.1 billion cubic feet in 2001.
This increase resulted primarily from the launch of the Aguaytia thermoelectric
plant in 1998, which extracts the natural gas it requires for power generation
directly from the Amazon basin. The increased production was partially offset in
2000 by increased rainfall, which reduced the demand for thermoelectric
generation.
Peru's natural gas reserves are concentrated in the Camisea gas field,
which is located approximately 300 miles east of Lima. In February 2000, the
Government granted a 40-year operating concession over the Camisea gas field to
the private consortium Pluspetrol-Hunt Oil-SK Corporation. Under the concession,
the Government receives in royalties 37.2% of the profits generated. In October
2000, the Government granted concessions over the distribution and
transportation of Camisea's natural gas to a private consortium led by the
Argentine company Techint.
The Government expects successful development of the Camisea field to
increase significantly production of natural gas, providing Peru with a low cost
and abundant source of energy and potentially turning the country into a net
exporter of this commodity. Operations at Camisea are estimated to begin by
April 2004, which will lead to an increase of 160% in the production of natural
gas during the two-year period from 2004 to 2005.
Secondary Production
Manufacturing
The principal components of the manufacturing sector are:
o primary manufacturing, principally:
- processing sugar;
- processing meat products;
- production of fish meal, fish oil and other fish products;
and
- refining non-ferrous metals;
- refining petroleum; and
o non-primary manufacturing, consisting principally of:
- production of food, drinks and tobacco;
- production of textiles, leather products and footwear;
- production of paper products;
- production of chemical, rubber and plastic products;
- non-metallic minerals;
- production of iron and steel; and
- manufacturing machinery, equipment and metal products.
The performance of the manufacturing sector during the period from 1997
to 2001 generally tracked the overall performance of the Peruvian economy. The
sector contracted 3.2% in 1998 and 0.5% in 1999, primarily as a result of the
adverse effects of El Nino and the Asian financial crisis, and 1.1% in 2001, due
to reduced production of fish meal and anchovy sources, but showed moderate to
strong growth in 1997 and 2000. This growth was fueled primarily by
primary-industry output, which increased 1.8% in 1997, 21.1% in 1999 and 8.6% in
2000.
Primary manufacturing. Between 1997 and 2001 primary manufacturing
production fluctuated greatly, growing 1.8% in 1997, 21.1% in 1999 as the sector
recovered from the effects of El Nino and 8.6% in 2000. The sector contracted
8.7% in 1998, when the sector suffered from the effects of El Nino, and 2.9% in
2001. During this period, primary manufacturing contributed on average
approximately 3.3% annually to GDP and 14.7% annually to export earnings.
The following table sets forth information regarding primary
manufacturing production for the years indicated.
Primary Manufacturing Production
(percentage change from previous year, at constant 1994 prices)
For the first 3
months of:
----------------------
1997 1998 1999 2000 2001 2001 2002
--------- --------- -------- ---------- -------- ---------- ----------
Sugar ....................... 14.5% (29.3)% 34.5% 18.9% 6.1% (4.6)% 19.9%
Meat products ............... 7.2 10.2 11.2 7.4 1.7 0.9 8.3
Fishmeal and fish oil........ (17.6) (49.6) 129.8 21.6 (28.6) (37.6) (46.3)
Canned and frozen fish
products..................... 21.8 (43.8) 4.7 26.2 8.7 9.8 (37.4)
Refining of non-ferrous
metals....................... 4.4 9.4 5.7 3.4 3.5 (1.0) 8.8
Petroleum refining........... 4.5 2.4 (6.8) (1.2) 3.5 0.7 (0.9)
Overall change............ 1.8 (8.7) 21.1 8.6 (2.9) (5.6) (3.6)
Source: INEI and Central Bank
Non-primary manufacturing. Despite growth of 6.3% in 1997 and 6.1% in
2000, non-primary manufacturing contracted by 1.8% in 1998 and 5.8% in 1999, as
Peru experienced a decline in domestic demand due to the effects of the Asian
financial crisis. In 2001, non-primary manufacturing contracted by 0.6%, due to
suspension of investment programs by some businesses. During this period,
non-primary manufacturing contributed on average approximately 11.6% annually to
GDP and 52.2% annually to export earnings.
The following table sets forth information regarding non-primary
manufacturing production for the years indicated.
Non-Primary Manufacturing Production
(percentage change from previous year, at constant 1994 prices)
For the first 3
months of:
---------------------
1997 1998 1999 2000 2001 2001 2002
--------- ------- -------- -------- -------- -------- ----------
Food, drinks and tobacco.................. 5.5% 6.5% 6.4% 1.3% 0.7% 0.0% 4.3%
Textiles, leather products and footwear... 7.3 (8.7) (6.4) 10.1 (3.4) (4.7) (4.4)
Paper products............................ (0.7) 2.6 4.2 20.1 0.9 0.3 4.4
Chemical, rubber and plastic products..... 11.2 (2.8) (1.0) 7.5 3.8 (0.3) 4.0
Non-metallic minerals..................... 10.2 4.0 (12.4) (1.4) (1.5) 1.2 (1.1)
Iron and steel production................. 18.2 1.6 (8.7) 7.0 4.5 15.2 (11.9)
Manufacturing of machinery, equipment and
metal products......................... 9.2 0.5 (17.3) 9.1 (5.5) (5.7) (7.8)
Other..................................... 23.7 8.0 (10.3) (6.3) 3.3 2.0 (13.1)
Overall change......................... 6.3 (1.8) (5.8) 6.1 (0.6) (2.3) 0.0
Source: INEI and Central Bank.
Construction
The construction sector expanded 14.9% in 1997 and 0.6% in 1998, but
contracted 10.5% in 1999, 4.3% in 2000 and 6.0% in 2001. In the period from 1997
to 2001, the sector contributed between 4.8% and 6.3% annually to GDP. The sharp
rise in construction activity during 1997 was due primarily to high private
investment and increased public spending on preventive projects in preparation
for El Nino. The decline in construction since 1998 is due primarily to a
reduction in public and private investment, which was caused by a limited supply
of credit, a drop in informal housing construction due to lower nominal incomes
and the completion and delay of highway construction projects by the public
sector. In 2000, the construction sector was adversely affected by a 38% decline
in road rehabilitation and expansion projects as a result of limited public
financing. In 2001, the construction sector contracted due to a decrease in road
rehabilitation and expansion projects from 2000 because of reduced levels of
public and private investment. A total of 240 kilometers of national highway
were constructed and rehabilitated in 2001. During the first three months of
2002 the construction sector began to recover after three consecutive years in
recession, growing 10.3% primarily due to public works projects, primarily road
construction, and a slight increase in private sector building activity.
Electricity and Water
In the period from 1997 to 2001, the electricity and water sector
contributed on average approximately 2.1% annually to GDP.
Electricity. The electricity sector in Peru was traditionally under the
purview of the public sector until the Republic embarked on a deregulation and
privatization of the industry in 1992-1993. Under this initiative, the sector
was divided into three segments: production, distribution and transmission. The
Government initially focused most of its deregulation and privatization efforts
in the energy production and distribution segments, but gave open access to the
country's transmission grid. The Government also began granting concessions of
its transmission lines with the concession of the transmission line
Mantaro-Socabaya in 1998 and of its Southern Power Grid in 1999. In 2001,
concessions for the construction, maintenance and operation of power lines were
granted to La Oroya-Paragcha-Antamina and Aguaytia-Pucallpa. The electricity
sector has grown due primarily to the expansion of the power grid, lower fuel
prices and the introduction of more efficient centers to the system.
As of December 31, 2001, Peru's power plants had an installed capacity
of 5,913 MW, of which 50.1% came from hydroelectric plants and 49.9% from
thermoelectric plants. Despite the significant installed capacity of
thermoelectric plants, Peru's hydroelectric plants actually produce
approximately 89.6% of the country's electricity. This dependence on
hydroelectric generation has rendered the country vulnerable to electricity
shortages in times of drought. In 2001, 19,131 GW/hr were generated, serving
16,417 GW/hr to end users.
The following table sets forth information with respect to the
development of this sector for the years shown.
Principal Economic Indicators of the Electricity Sector
-------- ------- ------- ------- --------
1997 1998 1999 2000 2001
-------- ------- ------- ------- --------
Production of electricity sector:
Thermal (in GW/hr)................. 3,049 3,437 3,297 2,546 1,997
Hydroelectric (in GW/hr)........... 12,210 13,338 14,074 15,692 17,134
-------- ------- ------- ------- --------
Total generation (in GW/hr)..... 15,259 16,774 17,371 18,238 19,131
======== ======= ======= ======= ========
Losses, transmission and
distribution (in GW/hr).......... 2,693 2,349 2,542 2,469 1,267
Energy production
(in millions of US$)............. US$ 787 US$ 676 US$ 746 US$ 833 US$ 864
Energy sale income
(in millions of US$)............. US$ 1,017 US$ 990 US$ 1,004 US$ 1,112 US$ 1,153
Consumption by economic
sector (in GW/hr):
Residential........................ 3,383 3,637 3,767 3,929 4,045
Industrial......................... 6,221 7,672 8,132 8,628 9,343
Government......................... 527 534 535 541 542
Commercial......................... 2,272 2,141 2,215 2,427 2,487
-------- ------- ------- ------- --------
Total consumption............... 12,402 13,984 14,648 15,525 16,417
======== ======= ======= ======= ========
Source: OSINERG.
Water. Peru's central government is responsible for water services in
Lima while the country's various municipalities are responsible for water
services in the urban and sub-urban areas in their respective jurisdictions. The
central and local governments designate special service companies, which may be
private, public or a mixture of both, to supply water services. In rural areas,
water services are supplied by communal administrative commissions. The water
sector is regulated by the Superintendencia Nacional de Servicios de
Saneamiento, or National Superintendence for Sanitary Services.
Services
Wholesale and Retail Trade
Wholesale and retail trade contracted 3.2% in 1998 and 1.9% in 1999 due
to a drop in domestic demand during these years. The sector grew at an average
annual rate of 7.8% in 1997 and 5.1% in 2000, but remained stable in 2001. In
the period from 1997 to 2001, this sector contributed on average 14.3% annually
to GDP, making it the second most important sector of the Peruvian economy.
Transportation and Telecommunications
The transportation and telecommunications sector has, with the
exception of a 1.0% decline in 1998, registered positive growth each year since
1997 due to increased domestic demand for telephone services. From 1997 to 2000,
a large portion of the Republic's telecom investment has gone into the mobile
telephony market. As a result, the Republic had 1.8 million mobile subscribers
by 2001, exceeding for the first time the number of fixed lines.
Transportation. Peru's transportation infrastructure has historically
been state-controlled. During the 1990s, as part of its privatization
initiative, the Government sought greater private sector involvement in this
field. The Government granted private concessions over transportation facilities
such as Lima's Jorge Chavez International Airport and the national railway
network.
Telecommunications. The following table provides information on the
evolution of the telecommunications sector.
Summary of Telecommunications Sector
1997 1998 1999 2000 2001 March 2002
--------- --------- --------- --------- --------- ---------
Lines:
Fixed wire................. 1,537,341 1,553,874 1,609,884 1,617,582 1,570,956 1,594,266
Cellular................... 435,706 736,294 1,045,710 1,339,667 1,798,928 1,950,555
Public phones.............. 40,129 49,399 63,276 83,855 94,596 101,852
--------- --------- --------- --------- --------- ---------
Total lines.............. 2,013,176 2,339,567 2,718,870 3,041,104 3,464,480 3,646,673
========= ========= ========= ========= ========= =========
Source: Organismo Supervisor de Inversion Privada.
Hotels and Restaurants
See "Balance of Payments and Foreign Trade--Services Trade" for
additional information on the tourism sector.
Public Administration
Based on a survey of households conducted by the Ministry of Labor, the
Government estimates that the public sector employed approximately 768,000
workers or 10% of the labor force in 2001.
Other Services
The private sector in Peru offers a variety of services that in the
aggregate constitute an important part of the Peruvian economy. These services
include financial services, health services and education services. In the
aggregate, these services grew at an average annual rate of 2.5% in 1997, 1998
and 2000, but contracted 0.7% in 1999. For a description of the evolution of the
financial services sector between 1997 and 2001 see "The Monetary
System--Financial Sector."
Privatization and Role of the State in the Economy
Privatization
In 1991, the Republic initiated an ambitious privatization program
beginning with the enactment of various laws for the promotion of private
investment. In 1991, in order to stimulate private investment, Congress enacted
Legislative Decree No. 662, which authorized the Government to enter into legal
stability agreements with foreign and domestic investors. These agreements
guarantee that current statutes on income taxes, remittances, export promotion,
administrative procedures and labor, as applied to a particular investment, will
remain unchanged for a period of ten years. In order to qualify for these
agreements, an investor must invest at least US$2.0 million within two years of
the agreement, or at least US$500,000 if the investment creates 20 jobs or
produces US$2.0 million in exports during the three years following the
agreement. As of December 31, 2001, investors had signed 21 legal stability
agreements with the Government worth approximately US$1.0 billion in investment.
In 2001, 14 privatization and concession-granting processes were completed, for
a value of US$255 million, that generated investment projects of US$97 million.
In 2002, to date, agreements of approximately US$5 million have been signed.
Currently, a new privatization program is being planned in light of the
suspension of the previous program due to internal political factors.
In 1991, Congress also enacted the Ley de Promocion de la Inversion
Extranjera, or Foreign Investment Promotion Act, and the Ley Marco para el
Crecimiento de la Inversion Privada, or Private Investment Growth Framework Act.
These laws provide for:
o equal treatment of both national and foreign investors;
o automatic authorization of foreign investments, which must be
subsequently registered with the Comision Nacional de Inversiones
y Tecnologias Extranjeras, or National Commission on Foreign
Investment and Technology, which we refer to in this prospectus
as "CONITE";
o the protection of the property rights of foreign investors;
o the free repatriation of property, dividends and profits; and
o the elimination of restrictions on the participation of
foreigners in banks and insurance companies.
The principle of non-discrimination against foreign investors was
incorporated into the 1993 Constitution. Additionally, the 1993 Constitution
allows foreign investors freely to hold and dispose of foreign currency. They
are, however, precluded from owning national radio and television stations,
mines, lands, forests, water, fuel or energy sources within 31 miles of an
international border, although foreign investors, under current laws, may obtain
a resolution from the executive branch authorizing such investments.
The Republic also established the Comision de Promocion de la Inversion
Privada, or Commission for the Promotion of Private Investment, which we refer
to in this prospectus as "COPRI." COPRI's main function was to design and
implement a comprehensive program to foster private investment through the
privatization and concession of large-scale infrastructure and public utility
projects. COPRI's board of directors oversaw all privatizations and concessions,
while two Special Privatization Committees established the procedures for
privatizations and execute the privatization transactions in specific
industries. The members of the Special Privatization Committees have
historically been current and former senior executives from the private sector.
In 2002 COPRI merged CONITE and one other entity to become part of
Agencia de Promocion de la Inversion, the Investment Promotion Agency, or
"PROINVERSION." The responsibilities and authority of COPRI and CONITE have been
transferred to PROINVERSION.
Since 1992, the Government has privatized the vast majority of its
assets, including those in the finance, fishing and telecommunications sectors.
Significant progress has also been made in other sectors. The Government has
privatized a majority of its assets in the mining, manufacturing, hydrocarbons,
electricity and agriculture sectors. The more than 258 privatizations that have
been completed in Peru since 1992 have generated revenues of approximately
US$9.8 billion. To date, fourteen concessions have been awarded to private
companies. Significant privatizations and concessions include:
o the Antamina copper and zinc mining project;
o the Camisea natural gas project;
o the concession to operate Lima's Jorge Chavez International
Airport;
o the concession to operate the railway systems in the South,
Southeast and central regions of the country;
o the sale of controlling equity interests in the
telecommunications companies ENTEL and CPT;
o the concession to operate the transmission line Mantaro-Socobaya
and the Southern Power Grid;
o the concession to operate the Rio Chillon water treatment plant;
and
o the privatization of the Relapasa petroleum refinery.
The telecommunications sub-sector in Peru underwent an extensive
liberalization during the 1990s, and a large number of foreign companies have
entered the market. Although private competition was originally limited to
wireless services, the telecommunications industry grew to include more than 120
companies as of the end of 1997. The total number of telephone lines in Peru
increased from 2.0 million in 1997 to 3.5 million in 2001. As of 1998, the most
recent year a survey was conducted, there were 208,200 open internet accounts.
The liberalization of the telecommunications market began in 1994 when
the Government sold to Telefonica de Espana majority interests in the
state-owned telecommunication companies Empresa Nacional de Telecomunicaciones,
which we refer to in this prospectus as "ENTEL," and Compania Peruana de
Telefonos, which we refer to in this prospectus as "CPT." The Republic followed
this initial step with the opening of the wireless market to private
competition. Telefonica de Espana maintained a monopoly over fixed-line services
until 1998 when it voluntarily decided to end its exclusivity service concession
a year ahead of schedule. Nine private companies have since been granted
concession rights to operate in the fixed-line market. To date, 259 concessions
have been granted to a total of 224 businesses to provide public
telecommunications services.
Substantially all of the stock of privatized companies is held by
foreign companies such as Telefonica de Espana (telecommunications), Repsol
(energy), Endesa (electricity), Banco Bilbao Vizcaya Argentaria (financial
services) and Telecom Italia (telecommunications).
The pace of privatizations began to slow after 1996, when privatization
proceeds reached record levels. This decline in the level of privatizations
resulted in part from a shrinking supply of state-owned enterprises, Fujimori's
retreat from unpopular privatization initiatives to gain support for his
presidential bid and the political turmoil that accompanied Fujimori's
re-election. Privatizations since 1996 have consisted primarily of the sale of
remnant government shares in privatized companies.
Upon taking office in July 2001, the Toledo administration sought to
revitalize the Republic's privatization agenda by charging two Special
Privatization Committees to develop privatization programs for projects
including highway networks, ports, airports and tourism, penal facilities,
mining and agricultural development projects.
The privatization program has generally been viewed unfavorably by
Peruvians, fearful they will lose their jobs with privatizations and opposed to
the sale of well-known state assets to non-Peruvians. Moreover, reports of
bribery and misappropriation of funds during the Fujimori administration have
tainted the process.
In June 2002, protests in Arequipa and Tacna against the sale of power
generation companies Egasa S.A. (Generaaeion Electrica de Arequipa) and Egesur,
S.A. (Generaaeion Electrica del Sur) led the Government to suspend the sale of
the two companies and the privatization process. Together, these two companies
own 7% of the power generation market. The Government's original plan was to
privatize these companies by the end of September in a single bidding process,
but protests prompted the administration to suspend the sale of the companies to
Tractebel, a Belgian leader in the sector that had won the privatization
auction.
Rather than generating the initial estimate of US$700 million,
privatization activities carried out before June 10, 2002 amounted to US$362
million (excluding Egasa and Egesur), with US$121 million transferred to the
public account during this period. The sale of the Egasa and Egesur, challenged
by regional authorities, is currently on hold until a court rules on its
validity. The Government will not attempt any more privatizations until the
regional elections to be held in November 2002.
In the letter of intent negotiated with the IMF, privatizations and
concessions were considered "[a]n essential element to generate confidence among
investors and to help finance fiscal deficits in 2002 and 2003." The
Government's aim, as agreed with the IMF as part of a two-year program, was to
generate income of at least $700 million this year and again next year through
the sale of concessions and of state assets. The Republic has, at present,
suspended its privatization program due to political and public opposition. The
IMF has accordingly agreed to adjust both the 2002 and 2003 targets for the
Republic's consolidated public sector deficit to 2.3% of GDP for 2002 and 1.9%
of GDP for 2003, subject to final board approval.
Role of the State in the Economy
As a result of the privatization program undertaken by the Government
during the 1990s, the public sector currently plays a more limited role in the
economy than it did in previous decades. The Toledo administration supports a
resumption of the privatization process and further deregulation, based on the
view that sustainable economic growth is driven primarily by private investment.
In 2001 the Government completed 14 privatization and concession-granting
processes for a value of US$255 million and generated US$97 million in
investment projects. Additionally, the Government currently has minority
interests in some of the privatized companies, including Transmantaro (power
generation), Etevensa (power generation) and Redesur (power transmission).
Employment and Labor
Employment
A significant portion of the Peruvian population lacks regular
full-time employment. Despite periods of economic growth in recent years,
unemployment and underemployment remain one of Peru's most entrenched problems.
The Toledo administration has placed job creation through the private sector as
one of the most important items on its agenda.
Unemployment grew during the period from 1997 to 1999 and in 2001 due
primarily to an increase in the participation rate--the percentage of the
population 14 years old or older that forms part of the labor force--during this
period, and decreased in 2000, as the participation rate leveled off slightly.
Underemployment remained at high levels during the period from 1997 to 2001,
increasing 4.5% in 2001 as a result of a 3.4% increase in the participation rate
combined with stagnant economic growth. The principal sectors in terms of
numbers of jobs are agriculture, services, production of consumer goods, and
wholesale and retail trade. The continuously high levels of unemployment and
underemployment have in recent months fueled social tensions and protests
against privatizations and large industrial projects. In addition, this unrest
has led to political tensions resulting in the resignations of a number of the
Counsel of Ministers and threatens the continuity of the coalition supporting
the Toledo administration in anticipation of the regional elections to be held
later in November.
The following table sets forth employment statistics for the years
indicated.
Employment and Labor
(in percentages)
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Participation rate(1)............. 64.5% 65.4% 66.9% 64.3% 67.7%
Underemployment rate(2)........... 45.0 43.9 43.2 43.1 47.6
Unemployment rate(3).............. 7.7 7.8 8.0 7.4 7.9%
(1) Refers to the percentage of the working-age population (14 years old or
older) that is in the labor force.
(2) Refers to the percentage of the working-age population (14 years old or
older) working part-time who would prefer to work more hours, plus the
percentage of the working-age population that usually works full-time but
who, in the week the employment survey was conducted, worked less than 35
hours per week as a result of economic constraints.
(3) Refers to the percentage of the working-age population (14 years old or
older) that, in the week the employment survey was conducted, was seeking
remunerated employment.
Source: Convenio MTPS - INEI Encuesta Nacional de Hogares III Trimestre,
1997-2001.
The following table sets forth information on employment by sector, as
a percentage of total employment, for the years indicated.
Employment
(percentage by sector)
1997 1998 1999 2000 2001
----- ----- ----- ----- -----
Agriculture, livestock, fishing and
forestry.......................... 7.6% 5.3% 5.8% 6.8% 8.8%
Mining.............................. 0.7 0.9 0.4 0.7 0.6
Manufacturing....................... 14.2 13.4 12.4 13.6 12.6
Construction........................ 5.4 5.6 5.2 4.2 4.5
Electricity, gas and water.......... 0.4 0.4 0.6 0.4 0.3
Transportation and telecommunications 7.7 8.4 8.6 9.0 8.4
Wholesale and retail trade.......... 29.2 29.4 28.8 28.9 27.8
Services............................ 32.7 35.1 35.3 34.1 34.6
Other............................... 1.9 2.8 2.6 2.3 2.4%
----- ----- ----- ----- -----
Total............................. 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
Source: Convenio MTPS - INEI Encuesta Nacional de Hogares III Trimestre,
1996-2000.
The Peruvian economy has a significant "informal sector" that provides
employment to the majority of the labor force, including a significant number of
women. The term "informal sector" refers to economic activities that take place
outside of the formal norms for economic transactions established by the state
or developed through formal business practices. It generally involves the
production and exchange of legal goods and services without the appropriate
business permits, without reporting of tax liability, without complying with
labor regulations and without legal guarantees for suppliers and end users. Due
to the nature of this sector, it is difficult to obtain reliable statistics
measuring the sector's contribution to the Peruvian economy. For purposes of
measuring the activity in the informal sector, the Government defines it, in the
area of wholesale and retail trade, to be all businesses that have one to four
workers, and in the manufacturing field, to be all businesses that have one to
nine workers, in both cases regardless of whether such businesses are within the
formal economy. The Government, however, excludes from its definition of the
informal sector all public and independent workers.
The percentage of the population working in the formal sector fell
during the period from 1997 to 2001, from 32.1% to 30.5%, represented mostly in
medium and large businesses and the public sector. The percentage of the
population working in the informal sector correspondingly grew from 67.9% to
69.5%.
Wages and Labor Productivity
The Ministerio de Trabajo y Promocion Social, which we refer to in this
prospectus as the "Ministry of Labor," sets a single minimum wage for all
sectors of the economy based on macroeconomic indicators such as GDP growth and
the inflation rate. The minimum wage was last adjusted in 2000 and currently
stands at S/. 410 per month, equivalent to US$115 per month. The Republic does
not currently compile statistics on labor productivity.
Poverty and Income Distribution
In the early 1990s, the poverty level in Peru declined as a result of
economic expansion and significant reduction in inflation. Poverty increased in
the late 1990s as a result of the downturn in the Peruvian economy. The
political tensions and instability in the last years of the Fujimori regime, and
the negative impact they had on private investment and bank credit, further
increased the incidence of poverty.
The Republic classifies households with earnings of less than US$60 per
capita per month as falling below the poverty line. Using this standard, the
percentage of the population living below the poverty line increased from 49% in
1997 to 54.1% in 2000. An increasing number of Peruvians earn less than US$30
per capita per month. The poorest 40% of the population earned 14.1% of the
national income in 2001 as compared to 13.9% in 1998, while the share of the
national income earned by the wealthiest 10% decreased slightly from 34.6% in
1998 to 33.9% in 2001. 1998 and 2001 are the most recent years for which income
distribution data is available.
The following table sets forth information regarding income
distribution for the years indicated.
Evolution of Income Distribution
(percentage of total national income)
Income group 1998 2001
------- ---------
Lowest 40%......................... 13.9% 14.1%
Next 20%........................... 13.9 14.2
Next 20%........................... 21.4 21.7
Highest 20%........................ 50.9 49.9
Highest 10%........................ 34.6 33.9
Source: INEI. "Encuesta Nacional de Hogares 1998, 2001"
The Toledo administration has declared raising the standard of living
of the Peruvian population and remedying poverty to be among its most important
goals. President Toledo's strategy to reduce poverty is based on:
o achieving the fiscal balance and macroeconomic stability necessary to
foster private investment, both foreign and domestic, which the
administration believes will lead to economic growth and job creation;
and
o directing a greater share of public funds towards social programs,
particularly education and health.
These policies are reflected in the 2002 budget, which reduces overall
expenditures by 1.6% but directs approximately 46% of expenditures to social
programs on education, health services and programs to alleviate poverty. The
2002 budget also increases allocations to Peru's poorest regions by 20% as
compared to the 2001 budget.
Poverty in Peru has been attributed to unemployment and underemployment
and the increasing disparity in income between skilled, educated workers and
unskilled and relatively less educated workers. The educational system has
suffered from a lack of resources and inadequate teacher training. The 2002
budget projects a 15% increase in education spending as compared to the 2001
budget. The Toledo administration's plan to improve education includes the
following elements:
o improving teacher training;
o increasing gradually salaries of teachers in rural areas by a total of
30% by the year 2006;
o building more schools;
o expanding bilingual education programs; and
o providing Internet access in public schools.
One of the most significant aspects of the Toledo administration's
anti-poverty plan is the establishment of a social program known as "A
Trabajar." A Trabajar is a two-year initiative that places unemployed workers in
public sector jobs in the development and maintenance of infrastructure for up
to six months. The program also invests in job training and technical assistance
to small businesses and in improving the capacity of local governments and
public sector agencies to formulate, coordinate and monitor effectively social
initiatives.
The Government expects the A Trabajar program to cost approximately
US$597 million and expects it to generate approximately 439,500 jobs in two
years. In October 2001, the Toledo administration secured US$1.0 billion from a
group of 18 countries and eight international organizations to help finance the
program and its other poverty initiatives. Of this amount, the Government
expects approximately US$615.3 million to be disbursed in the form of donations,
US$226.4 million in the form of debt exchanges and US$158.5 million in the form
of credit concessions.
To date, the A Trabajar program has generated an estimated 57,000 jobs
in 1,300 rural districts at a cost of S/. 221 million and an estimated 20,000
jobs in urban areas at a cost of S/. 47 million.
The Toledo administration's plan to reduce poverty also includes the
following measures:
o a 9% nominal increase in public sector wages, implemented in 2001;
o the creation of a Peruvian agency for international cooperation to
elicit and administer international financing for the Government's
poverty initiatives; and
o greater investment in improving roads, sanitation facilities and
sub-standard housing.
Environment
The most serious environmental problems currently confronting Peru are
the scarcity and quality of the water supply, soil erosion, air pollution,
deforestation and inadequate waste management in urban centers. The Republic
expects to address these environmental problems through greater supervision and
regulation, as well as through community and private-sector awareness and
involvement.
To coordinate more efficiently the Government's environmental policies,
the Consejo Nacional del Ambiente, or National Council for the Environment,
which we refer to in this prospectus as "CONAM," has launched an environmental
initiative designed to improve transparency within CONAM and improve
collaboration between the central government, municipalities and environmental
interest groups. CONAM has organized and trained Comisiones Ambientales
Regionales, or Regional Environmental Commissions, to direct environmental
initiatives at the regional level. CONAM has also developed a program known as
the Sistema Nacional de Informacion Ambiental, or National System of
Environmental Information, which seeks to create a national database of
environmental statistics. CONAM's budget in 2001 was S/. 4 million. CONAM's
initial budget for 2002 was S/. 5 million, less than 0.1% of the Republic's
budget, but to date has been adjusted to S/. 8 million to reflect all financing
sources, including a transfer to Fondo Nacional del Ambiente, or National Fund
for the Environment, for S/. 800 thousand.
The Government requests environmental impact studies before authorizing
any public or private construction project. Each regulatory agency within each
sector of the economy issues regulations to protect the environment and imposes
its own sanctions for the violation of such rules. The Ministry of Energy and
Mines has been most effective in designing an effective environmental program
and is viewed as a model for other governmental agencies. The Ministry's
Programa para Ahorro de Energia, or Energy Conservation Program, actively
promotes energy conservation and fuel-efficient energy alternatives. The
Ministry of Energy and Mines also developed and implemented an environmental
curriculum for public schools that emphasizes conservation.
BALANCE OF PAYMENTS AND FOREIGN TRADE
Balance of Payments
The balance of payments accounts are used to record the value of the
transactions carried out between a country's residents and the rest of the
world. The balance of payments is composed of two accounts:
o the current account, which comprises:
- net exports of goods and services, that is the difference in
value of exports minus imports;
- net financial and investment income; and
- net transfers; and
o the capital account, which is the difference between financial capital
inflows and financial capital outflows.
Current Account
One of the most important aspects of the current account is the trade
balance. The four primary factors that drive the trade balance are the
following:
o The relative rate of economic growth of a country as compared to that
of its trading partners. Generally, if a country's economy grows
faster than that of its trading partners, its relative level of
consumption of goods and services will tend to rise and its level of
imports will tend to increase more rapidly than its level of exports.
o The relative level of domestic prices against foreign prices, as
reflected by the real exchange rate. Generally, if a country's
domestic prices rise relative to those of its trading partners, there
is a tendency for the country's level of exports to decline and for
its level of imports to increase.
o Changes in production costs, technology and worker skills. More
efficient production will tend to lower production costs, which in
turn will tend to lower prices. As prices fall, there will be a
tendency for the country's level of exports to increase.
o Changes in consumer tastes, which may affect the demand for a
country's goods and services abroad and the demand for foreign
products in the domestic market.
Between 1997 and 2001, the Republic's current account registered annual
deficits that were completely offset by a surplus in the capital account in 1997
and only partially offset by capital account surpluses from 1998 through 2001.
During this period, the current account deficit decreased from 5.8% of GDP in
1997 to 2.0% of GDP in 2001.
In 1998, the El Nino weather phenomenon led to a substantial decrease
in the volume of fishing and agricultural exports, while sharp decreases in the
international prices of the Republic's primary exports led to a significant
decline in the value of total exports. As a result, Peru's trade deficit
increased 43.2%, which contributed to an increase in the current account deficit
to 5.9% of GDP, as compared to 1997.
In 1999, the current account deficit decreased to 2.9% of GDP, as
compared to 1998. This was partly as a result of a 74.4% drop in the trade
balance that was caused primarily by weaker domestic consumer demand and a
decrease in private investment, which led to a decline in the level of imports.
In 2000, the current account deficit remained at 2.9% of GDP, reflecting the
continued recovery of fishing and agricultural exports from the effects of El
Nino.
In 2001, the current account registered a deficit of 2.0% of GDP, as
compared to a deficit of 2.9% for 2000. This lower deficit is mainly
attributable to:
o a decline in imports, due to weaker domestic demand, and an increase
in the volume of the Republic's primary exports, which reduced the
Republic's trade deficit;
o reinsurance income from abroad in response to the earthquakes that
occurred in the south of the country in June and July 2001, which
reduced the country's trade services deficit; and
o reduced remittances and dividends by utilities out of Peru as a result
of economic instability and lower international interest rates.
During the first three months of 2002, the current account deficit
decreased to 2.6% of GDP, as compared to the 3.8% of GDP recorded for the first
three months of 2001, primarily due to weaker domestic consumer demand and a
decrease in private investment, which led to a decline in the level of imports.
Capital Account
The capital account reflects foreign direct investment and monetary
flows into and out of a nation's financial markets. Between 1997 and 2001, Peru
attracted considerable foreign investment, despite significant reductions in
investment inflows from 1996 to 1997 and from 1999 to 2000. For a description of
foreign direct investment trends, see "--Foreign Direct Investment."
In 1997, substantial foreign capital inflows contributed to increasing
surpluses in the capital account, which offset the current account deficits
registered during the year. In 1997, these inflows resulted in part from the
significant increase in the availability of short-term foreign credit for the
Peruvian banking sector on the heels of the Brady restructuring.
During the period from 1998 to 2000, however, the capital account
surplus contracted, leading to annual deficits in the Republic's balance of
payments. This negative trend in the capital account was a result of significant
withdrawals of short-term capital from the country in response to the adverse
effects of the Asian and Russian financial crises and El Nino's devastating
effect on Peru's primary export market. In 2000, the capital account surplus
showed an increase from the prior year's level, despite a 63.5% drop in foreign
direct investment as a result of the Republic's political turmoil, which
fostered uncertainty among investors. These factors, however, were countered by
a 78.8% decrease in short-term capital outflows. The sharp decrease in
short-term capital outflows followed the significant prepayments in foreign debt
that banking institutions undertook in 1999 in response to a tightening of
domestic credit.
In 2001, the capital account registered a surplus of 2.0% of GDP, as
compared to a surplus of 1.7% of GDP for 2000. Despite the political uncertainty
surrounding the April 2001 elections, the capital account surplus in 2001 was
due primarily to increased capital flow toward Antamina, the world's largest
copper and zinc project, and the telecommunications sector. However, portfolio
investment declined significantly, from US$123 million in 2000 to US$43 million
in 2001, due to an unfavorable international economic environment.
During the first three months of 2002, the capital account surplus grew
to US$406 million from US$249 million recorded for the first three months of
2001. This growth was primarily a result of a significant increase in long-term
capital inflows due to the issuance of the Global Bonds by the Republic, offset
in part by the prepayment of bond issues by a mining company and the acquisition
of foreign bonds by the non-banking financial sector.
The following table sets forth information, based on period-end
exchange rates, regarding the Republic's balance of payments for the years
indicated.
Balance of Payments
(in millions of U.S. dollars, at current prices)
For the first 3
months of:
---------------------
1997 1998 1999 2000 2001 2001 2002
---------- ---------- --------- --------- ----------- --------- ----------
Current account:
Trade balance:
Exports (FOB)(1).................. US$ 6,832 US$ 5,757 US$ 6,119 US$ 7,034 US$ 7,108 US$ 1,663 US$ 1,575
Imports (FOB)..................... (8,553) (8,222) (6,749) (7,351) (7,198) (1,848) (1,616)
---------- ---------- --------- --------- ----------- --------- ----------
Trade balance................... (1,721) (2,466) (630) (317) (90) (186) (41)
Services, net....................... (787) (657) (666) (793) (800) (245) (215)
Of which:
Net income from tourism(2)...... 383 392 446 381 224 19 27
Net income from (165)
transportation(3)............. (608) (651) (556) (617) (657) (143)
Financial and investment income,
net(4)........................... (1,825) (1,211) (1,146) (1,452) (1,203) (316) (309)
Current transfers, net.............. 920 977 964 993 999 259 223
Of which:
Workers' remittances............ 636 647 670 718 717 182 145
---------- ---------- --------- --------- ----------- --------- ----------
Current account balance....... (3,412) (3,357) (1,478) (1,568) (1,094) (488) (343)
Capital account:
Foreign direct investment........... 2,055 1,582 1,812 662 1,063 276 224
Portfolio investment................ 156 (346) (107) 123 43 (6) 18
Other medium- and long-term
capital(5)...................... 1,127 1,046 542 460 439 40 151
Of which:
Disbursements to the public 226
sector........................ 1,774 790 1,237 1,485 1,344 1,554
Other capital, including short-term
capital......................... 2,640 (429) (1,676) (355) (486) (61) 13
---------- ---------- --------- --------- ----------- --------- ----------
Capital account balance....... 5,978 1,854 571 890 1,059 249 406
Errors and omissions(6)............. (122) 253 102 547 452 177 38
---------- ---------- --------- --------- ----------- --------- ----------
Balance of payments......... US$ 2,444 US$ (1,250) US$ (805) US$ (131) US$ 417 US$ (63) US$ 101
========== ========== ========= ========= =========== ========= ==========
Financing:
Change in gross Central Bank
reserves(7).......................US$ (1,660) US$ 1,151 US$ 922 US$ 331 US$ (310) US$ 105 US$ (34)
Use of IMF resources................ (73) (145) (147) (141) (138) (68) (67)
Exceptional financing, net.......... (711) 244 30 (58) 31 26 0
---------- ---------- --------- --------- ----------- --------- ----------
Total financing................... US$ (2,444) US$ 1,250 US$ 805 US$ 131 US$ (417) US$ 63 US$ (101)
========== ========== ========= ========= =========== ========= ==========
Memorandum item:
Current account balance/deficit
(as % of GDP)................... (5.8)% (5.9)% (2.9)% (2.9)% (2.0)% (3.8)% (2.6)%
(1) Based on customs declarations, records of temporary admissions, free-trade
zone imports, grants and other adjustments.
(2) Based on a survey of tourists. Income from tourism represents the total
expenditure by a tourist multiplied by the total number of tourists.
(3) Includes freight services, passenger transportation and port expenses of
ships and airplanes.
(4) Includes interest payments.
(5) Includes debt amortization payments.
(6) Represents errors and omissions from double-entry accounting resulting from
incomplete or overlapping coverage, different prices and incomplete times
of recording and conversion practices.
(7) Refers to changes in reserves used to finance balance of payments.
N/A = Not Available.
Source: Central Bank
Foreign Trade
In 1991, the Republic began to liberalize its trade regime through a
substantial reduction in tariffs and the promotion of regional free trade
agreements. Between 1995 and 1997, the Republic imposed two principal tariffs on
imports, a 15% tariff applicable to raw materials used in a variety of
industries and a 25% tariff imposed on capital goods and a variety of selected
items. The tariff reform approved in 1997 reduced the 15% rate to 12% and the
25% rate to 20% but simultaneously increased the tariff on some agricultural
goods to 17% and 25%. In April 2001, the transition government of Valentin
Paniagua reduced the tariff on some raw materials from 12% to 4%.
The current import tariff structure is as follows:
o 4% tariff, which applied to 15.6% of Peru's imports in 2001,
principally to raw materials used in a variety of industries,
including the chemical, food, metal, mining, paper, textile and
steel industries;
o 12% tariff (which replaced the 15% tariff), some which applied to
73.6% of Peru's imports in 2001, including some capital goods,
intermediate goods and various consumer goods and raw materials;
o 17% tariff, which applied to 1.8% of Peru's imports in 2001,
including pork products, corn, beer and alcoholic
beverages;
o 20% tariff (which replaced the 25% tariff), which applied to 3.5%
of Peru's imports in 2001, principally sugar and a variety of
selected consumer items, including textiles, footwear, clothing,
heaters, refrigerators and air conditioning equipment; and
o 25% tariff, which applied to 5.5% of Peru's imports in 2001,
including milk products, meat, potatoes, onions, coffee and a
number of other agricultural products.
In 2001, the effective import tariff, which varies as a function of the
level of import goods subject to each prescribed tariff, was 11.8%. The
Government expects the effective import tariff to be approximately 13.6% in
2002.
Between 1997 and 2001, the trade deficit decreased from US$1.7 billion
to US$90 million due to a reduction in imports, particularly consumer and
capital goods, as a result of a decrease in private investment and an increase
in gold exports. Total exports increased from US$6.8 billion in 1997 to US$7.1
billion in 2001, with an average annual growth rate of 1.0%. Total imports
decreased at an average annual rate of 4.1%, from US$8.6 billion in 1997 to
US$7.2 billion in 2001. In 2001, the combined value of the Republic's imports
and exports of goods and services equaled 33.1% of GDP.
The Republic maintains close commercial ties with the United States,
its principal trading partner. In 2001, approximately 24.9% of the Republic's
total exports were bound for the United States, while 30.1% of total imports
originated from ports in the United States.
Peru classifies its non-free trade zone exports as traditional and
non-traditional exports. Traditional exports consist of goods that historically
have constituted a greater share of Peru's exports and include mostly raw
materials. Non-traditional export goods include goods that historically have not
been exported in significant quantities and traditional export goods that have
been transformed through manufacturing or other processing into non-traditional
export goods.
In 2001, Peru's most important exports consisted of:
o traditional mining exports, such as gold, silver, copper, zinc
and lead, valued at US$3.2 billion, representing 44.9% of total
exports;
o traditional fishing exports, such as fishmeal and fish oil,
valued at US$926 million, representing 13.0% of total exports;
o non-traditional textile exports, such as textile fibers and
cloth, valued at US$664 million, representing 9.3% of total
exports; and
o non-traditional agriculture and livestock exports valued at
US$437 million, representing 6.1% of total exports.
The following tables set forth further information regarding exports
for the years indicated.
Exports
(in millions of U.S. dollars, at current prices)
For the first 3 months of:
--------------------------
1997 1998 1999 2000 2001 2001 2002
----------- --------- ---------- ---------- ---------- -------- --------
Traditional:
Fishing...................... US$ 1,126 US$ 410 US$ 601 US$ 955 US$ 926 US$ 194 US$ 106
Agricultural................. 472 323 282 249 207 22 14
Mining....................... 2,731 2,747 3,008 3,216 3,188 732 837
Oil and derivatives.......... 376 233 251 402 421 101 88
----------- --------- ---------- ---------- ---------- -------- --------
Total traditional.......... 4,705 3,712 4,142 4,821 4,743 1,049 1,045
Non-traditional:
Agriculture and livestock.... 340 302 406 394 437 102 126
Textiles..................... 573 534 575 701 664 178 154
Fishing...................... 278 225 190 177 197 51 45
Fabricated metal products and
machinery.................. 57 105 76 96 158 28 22
Chemical..................... 206 196 195 212 246 61 57
Basic metal industries....... 234 222 198 215 189 55 37
Non-metallic minerals........ 51 52 51 47 58 13 14
Other(1)..................... 308 331 185 202 232 48 55
----------- --------- ---------- ---------- ---------- -------- --------
Total non-traditional...... 2,046 1,967 1,876 2,044 2,181 536 510
Other:
Fishing permits.............. 7 0 31 83 102 58 3
Other(2)..................... 73 78 69 86 82 20 17
Total other................ 81 78 100 169 184 77 20
----------- --------- ---------- ---------- ---------- -------- --------
Total exports............ US$ 6,832 US$ 5,757 US$ 6,119 US$ 7,034 US$ 7,108 US$1,663 US$1,575
=========== ========= ========== ========== ========== ======== ========
(1) Includes gold and silver jewelry, wood and paper, leather and handcrafts.
(2) Includes the sale of fuel and food to foreign vessels and the reparation of
capital goods.
Source: Central Bank.
Exports
(as a percentage of total exports, at current prices)
For the first 3 months
of:
----------------------
1997 1998 1999 2000 2001 2001 2002
------ ------- ------- -------- ------- ------- -------
Traditional:
Fishing...................... 16.5% 7.1% 9.8% 13.6% 13.0% 11.7% 6.7%
Agricultural................. 6.9 5.6 4.6 3.5 2.9 1.3 0.9
Mining....................... 40.0 47.7 49.2 45.7 44.9 44.0 53.2
Oil and derivatives.......... 5.5 4.0 4.1 5.7 5.9 6.1 5.6
------ ------- ------- -------- ------- ------- -------
Total traditional.......... 68.9 64.5 67.7 68.5 66.7 63.1 66.3
Non-traditional:
Agriculture and livestock.... 5.0 5.2 6.6 5.6 6.2 6.1 8.0
Textiles..................... 8.4 9.3 9.4 10.0 9.3 10.7 9.8
Fishing...................... 4.1 3.9 3.1 2.5 2.8 3.1 2.8
Fabricated metal products and
machinery.................. 0.8 1.8 1.2 1.4 2.2 1.7 1.4
Chemical..................... 3.0 3.4 3.2 3.0 3.5 3.7 3.6
Basic metal industries....... 3.4 3.9 3.2 3.1 2.7 3.3 2.3
Non-metallic minerals........ 0.8 0.9 0.8 0.7 0.8 0.8 0.9
Other(1)..................... 4.5 5.8 3.0 2.9 3.3 2.9 3.5
------ ------- ------- -------- ------- ------- -------
Total non-traditional...... 30.0 34.2 30.7 29.1 30.7 32.3 32.4
Other:
Fishing permits.............. 0.1 0.0 0.5 1.2 1.4 3.5 0.2
Other(2)..................... 1.1 1.4 1.1 1.2 1.2 1.2 1.1
------ ------- ------- -------- ------- ------- -------
Total other................ 1.2 1.4 1.6 2.4 2.6 4.7 1.3
Total exports............ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
====== ======= ======= ======== ======= ======= =======
(1) Includes gold and silver jewelry, wood and paper, leather and handcrafts.
(2) Includes the sale of fuel and food to foreign vessels and the reparation of
capital goods.
Source: Central Bank.
Geographic Distribution of Exports
(as a percentage of total exports, at current prices)
For the first 3
months of:
-----------------
1997 1998 1999 2000 2001 2001 2002
------ ------ ------ ------ ------ ------ ------
United States............ 23.6% 32.7% 29.2% 27.5% 24.9% 23.9% 26.7%
Canada................... 1.8 2.2 2.0 1.8 2.0 1.1 2.9
Mexico................... 1.7 2.4 2.8 2.2 1.8 1.9 1.4
------ ------ ------ ------ ------ ------ ------
Total North America.... 27.0 37.3 34.0 31.4 28.7 26.8 30.9
Brazil................... 3.8 3.1 2.9 3.2 3.2 3.8 3.3
Colombia................. 2.3 2.5 1.7 2.1 2.2 2.2 2.4
Chile.................... 2.0 2.4 2.9 3.8 4.0 3.7 3.6
Venezuela................ 2.1 1.9 1.5 1.6 2.1 2.1 1.8
Other.................... 6.1 5.7 4.8 5.8 6.5 7.9 6.2
------ ------ ------ ------ ------ ------ ------
Total Latin America and
the Caribbean........ 16.2 15.7 13.8 16.5 18.0 19.7 17.4
United Kingdom........... 4.5 4.9 9.4 8.4 13.4 13.0 12.8
Switzerland.............. 6.1 8.5 9.2 7.9 4.4 4.3 6.9
Germany.................. 5.7 4.1 4.1 3.1 3.0 1.8 2.7
Spain.................... 2.3 2.7 3.0 2.7 3.0 3.0 3.3
Other.................... 13.4 11.7 10.1 8.6 8.5 8.4 8.7
------ ------ ------ ------ ------ ------ ------
Total Europe........... 32.0 31.9 35.8 30.7 32.3 30.5 34.3
Japan.................... 7.1 3.8 4.3 5.5 6.5 8.4 4.8
China.................... 7.3 4.1 3.6 6.4 6.1 5.0 6.1
Other.................... 8.9 6.3 7.5 8.2 7.3 8.8 6.0
------ ------ ------ ------ ------ ------ ------
Total Asia............. 23.3 14.2 15.4 20.2 19.8 22.1 16.9
Africa and others........ 1.5 0.8 1.0 1.3 1.1 0.8 0.5
------ ------ ------ ------ ------ ------ ------
Total exports........ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ====== ====== ======
Source: Central Bank.
In 2001, Peru's most important imports consisted of:
o intermediate goods, such as fuels and raw materials for agricultural
and industrial production, valued at US$3.6 billion, representing
50.1% of total imports;
o capital goods, such as transportation and building equipment, valued
at US$1.9 billion, representing approximately 26.6% of total imports;
and
o consumer goods valued at US$1.6 billion, representing 21.8% of total
imports.
The following tables set forth further information regarding imports
for the years indicated.
Imports
(in millions of U.S. dollars, at current prices)
For the first 3 months
of:
--------------------
1997 1998 1999 2000 2001 2001 2002
--------- --------- --------- ---------- ---------- --------- ---------
Consumer goods:
Durable goods.................. US$ 803 US$ 738 US$ 506 US$ 587 631 US$ 146 US$ 142
Non-durable goods.............. 1,107 1,146 927 859 936 215 222
--------- --------- --------- ---------- ---------- --------- ---------
Total consumer goods......... 1,910 1,884 1,432 1,446 1,567 361 363
Intermediate goods:
Petroleum products, lubricants. 780 580 641 1,084 907 218 162
Raw materials for agriculture.. 202 204 186 214 232 59 57
Raw materials for manufacturing 2,454 2,602 2,179 2,357 2,467 610 583
--------- --------- --------- ---------- ---------- --------- ---------
Total intermediate goods..... 3,437 3,386 3,006 3,654 3,607 887 802
Capital goods:
Construction materials......... 244 215 199 211 169 47 66
For agriculture.............. 28 45 62 30 20 3 4
For manufacturing.............. 2,037 1,768 1,395 1,427 1,351 414 280
Transportation equipment....... 507 574 477 440 371 92 85
--------- --------- --------- ---------- ---------- --------- ---------
Total capital goods.......... 2,816 2,602 2,133 2,109 1,911 556 435
Other............................ 390 350 178 142 113 45 15
--------- --------- --------- ---------- ---------- --------- ---------
Total imports.............. US$ 8,553 US$ 8,222 US$ 6,749 US$ 7,351 US$ 7,198 US$ 1,848 US$ 1,616
========= ========= ========= ========== ========== ========= =========
Memorandum items:
Temporal admission imports(1) US$ 278 US$ 326 US$ 246 US$ 305 US$ 306 US$ 72 US$ 72
Imports into free trade
zones(2)................... 69 40 35 39 41 10 11
(1) Represents imports not subject to tariffs but which must be processed and
exported within a definite period of time.
(2) Imports through the Special Zone of Tacna (Zotac), which is primarily
dedicated to the assembly of motor vehicles. Peru has five free trade zones
but only the Tacna zone is actively producing.
Source: Central Bank.
Imports
(as a percentage of total imports, at current prices)
For the first 3
months of:
-------------------
1997 1998 1999 2000 2001 2001 2002
------ ------- ------- -------- ------- ------- -------
Consumer goods:
Durable goods...................... 9.4% 9.0% 7.5% 8.0% 8.8% 7.9% 8.8%
Non-durable goods.................. 12.9 13.9 13.7 11.7 13.0 11.6 13.7
------ ------- ------- -------- ------- ------- -------
Total consumer goods............. 22.3 22.9 21.2 19.7 21.8 19.5 22.5
Intermediate goods:
Petroleum products, lubricants..... 9.1 7.1 9.5 14.7 12.6 11.8 10.0
Raw materials for agriculture...... 2.4 2.5 2.8 2.9 3.2 3.2 3.5
Raw materials for manufacturing.. 28.7 31.6 32.3 32.1 34.3 33.0 36.1
------ ------- ------- -------- ------- ------- -------
Total intermediate goods......... 40.2 41.2 44.5 49.7 50.1 48.0 49.7
Capital goods:
Construction materials............. 2.9 2.6 2.9 2.9 2.3 2.5 4.1
For agriculture.................. 0.3 0.5 0.9 0.4 0.3 0.2 0.3
For manufacturing.................. 23.8 21.5 20.7 19.4 18.8 22.4 17.3
Transportation equipment........... 5.9 7.0 7.1 6.0 5.2 5.0 5.2
------ ------- ------- -------- ------- ------- -------
Total capital goods.............. 32.9 31.7 31.6 28.7 26.6 30.1 26.9
Other................................ 4.6 4.3 2.6 1.9 1.6 2.4 1.0
------ ------- ------- -------- ------- ------- -------
Total imports.................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
====== ======= ======= ======== ======= ======= =======
Memorandum items:
Temporal admission imports(1).... 3.3 4.0 3.6 4.1 4.3 3.9 4.5
Imports into free trade zones(2). 0.8 0.5 0.5 0.5 0.6 0.5 0.7
(1) Represents imports not subject to tariffs but which must be processed and
exported within a definite period of time.
(2) Imports through the Special Zone of Tacna (Zotac), which is primarily
dedicated to the assembly of motor vehicles. Peru has five free trade zones
but only the Tacna zone is actively producing.
Source: Central Bank.
Geographic Distribution of Imports
(percentage of total imports, at current prices)
For the first 3
months of:
-------------------
1997 1998 1999 2000 2001 2001 2002
------ ------- ------- -------- ------- ------- -------
United States............. 31.9% 32.4% 31.6% 29.7% 30.1% 31.2% 28.5%
Canada.................... 2.8 2.3 2.0 2.5 1.4 1.5 1.1
Mexico.................... 3.2 2.9 2.7 2.9 2.6 2.5 2.8
------ ------- ------- -------- ------- ------- -------
Total North America..... 37.9 37.7 36.4 35.1 34.1 35.2 32.4
Brazil..........................4.1...... 4.2 3.9 4.4 3.9 4.0 4.7
Colombia........................4.2...... 3.2 4.7 4.7 4.0 4.0 4.4
Chile...........................5.6...... 5.6 6.7 7.1 8.0 7.3 8.1
Venezuela.......................4.4...... 3.3 4.4 4.8 4.0 3.1 3.6
Other...........................9.1...... 9.3 8.1 8.9 10.7 10.8 12.7
------ ------- ------- -------- ------- ------- -------
Total Latin America and
the Caribbean......... 27.4 25.6 27.9 29.9 30.5 29.1 33.5
United Kingdom............ 1.2 1.6 1.2 1.4 1.1 1.1 1.2
Switzerland............... 1.1 1.4 1.6 1.4 1.4 1.8 1.5
Germany................... 3.6 4.3 3.8 3.1 3.4 2.9 3.8
Spain..................... 8.5 7.4 7.5 9.2 8.8 7.2 6.5
Other..................... 8.5 9.3 8.7 7.6 7.5 7.9 7.5
------ ------- ------- -------- ------- ------- -------
Total Europe............ 23.0 24.0 22.7 22.7 22.1 20.9 20.5
Japan..................... 3.8 4.3 4.6 4.2 3.4 4.8 2.9
China..................... 1.4 1.3 1.7 1.8 1.9 1.7 2.6
Other..................... 5.3 5.8 5.3 5.2 6.3 6.0 7.1
------ ------- ------- -------- ------- ------- -------
Total Asia.............. 10.5 11.4 11.6 11.2 11.6 12.4 12.5
Africa and others......... 1.3 1.3 1.4 1.1 1.6 2.4 1.0
------ ------- ------- -------- ------- ------- -------
Total imports......... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
====== ======= ======= ======== ======= ======= =======
Source: Central Bank.
Services Trade
The Republic's services trade consists primarily of tourism,
telecommunications, freight services and financial services. Of these, the most
important is tourism. Tourism is the most important individual item driving
Peru's foreign currency earnings. The commerce, restaurants and hotel sectors,
as well as the construction and real estate services sectors, depend
significantly on tourism. From 1997 to 2001, growth in gross income from tourism
remained flat, with US$816 million, or 1.4% of GDP, recorded in 1997 and US$817
million, or 1.5% of GDP, recorded in 2001. In 1998, gross income from tourism
increased 3.6%, as compared to the level registered for 1997, despite the
adverse effects of El Nino on the Republic's infrastructure and economy. In
2000, gross income from tourism increased by 2.4%, as compared to the level
registered in 1999, despite the Republic's political crisis. In 2001, net income
from tourism decreased by 40.9%, as compared to 2000, as a result of
recessionary conditions abroad and the effects of September 11, 2001.
In 2001, the Republic attracted visitors principally from the United
States (23.0%), Chile (15.4%), Argentina (4.5%) and France and England (9.0%).
Tourism Statistics
1997 1998 1999 2000 2001 Mar. 02
------- ------- ------- ------ ------- ------
Foreign non-resident arrivals(1)........ 746,599 819,530 943,917 1,026,867 1,009,512 258,117
Average length of stay (number of
nights)(2)........................... 8.1 9.3 10.3 10.1 N/A N/A
Hotel activity:
Number of rooms available*........... 93,606 98,375 104,474 114,581 118,823 118,823
Occupancy rate by total number of
rooms available (in %)(3).......... 32.3% 29.9% 28.7% 27.2% 25.4% 23.7%
Aggregate value of hotels and
restaurants
(as % of GDP)..................... 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Income from tourism (in millions of
US$)(4)............................ US$816 US$845 US$890 US$911 US$817 US$188
Expenses from tourism (in millions of
US$)(5)............................ (434) (452) (443) (530) (592) (160)
------- ------- ------- ------ ------- ------
Balance (income less expenses, in
millions of US$)................. US$382 US$393 US$447 US$381 US$225 US$28
======= ======= ======= ====== ======= ======
(1) Preliminary estimates.
(2) Represents an average calculated on the basis of a survey of arriving
foreign non-residents.
(3) Preliminary figures.
(4) Represents amounts spent by foreigners in Peru.
(5) Represents amounts spent by Peruvians abroad.
(*) Preliminary estimates for 2001 and March 2002.
N/A = Not Available.
Source: Direccion General de Migraciones y Naturalizacion, or Office of
Migration and Naturalization, Central Bank, MITINCI and INEI.
Foreign Direct Investment
Peru has an open investment regime and a legal framework that generally
promotes and protects foreign investment. The basis of this open investment
regime was established in 1991 through the Foreign Investment Promotion Act, the
Private Investment Growth Framework Act and Legislative Decree No. 662.
Legislative Decree No. 622 allows both foreign and domestic investors to enter
into legal stability agreements with the Government. For a description of these
measures, see "The Economy--Privatization and Role of the State in the Economy."
Peru attracted more than US$11.6 billion in foreign direct investment
between 1990 and 2001. As of March 2002, approximately US$11.9 billion in
foreign funds were directly invested in the Peruvian economy. This high level of
foreign investment is a result of various factors, including:
o the relative social and political stability achieved between 1994 and
1998 that resulted from the Fujimori administration's successful
campaign against subversive movements and the peace settlement reached
with Ecuador in 1998;
o the continued erosion of protectionist and interventionist policies
through a reduction in tariffs, simplification of the tax system and
the elimination of subsidies; and
o the influx of foreign capital in connection with the Government's
privatization program.
Foreign direct investment (excluding privatizations) increased 84% in
2001 to US$796 million, as compared to the level registered for 2000. This
increase was a result of greater investor confidence in light of the increased
political stability during 2001. Foreign investments related to privatizations
increased 16.6% in 2001 to US$267 million, as compared to the level registered
for 2000, as a result of the Government's sale of remnant shares in companies
already privatized. During 2001, the Republic consummated 14 privatizations and
concession grants for US$255 million and that generated US$97 million in
additional investment.
For the first three months of 2002, foreign direct investment
(excluding privatizations) totaled US$224 million, a US$30 million increase over
the level registered for the same period of 2001, due to an increase in the
level of investment in the hydrocarbons sector. For 2002, the Republic expects
foreign direct investment to total US$1.01 billion and concession receipts to
total approximately US$265 million. The privatization program has been suspended
until after the November regional elections. Currently a new privatization
program is being planned.
The main recipients of foreign direct investment in recent years have
been the telecommunications, mining, energy, industry and finance sectors.
The following table sets forth information on the stock of foreign
direct investment registered with PROINVERSION or its predecessor by sector for
the years indicated. The stock of foreign direct investment refers to the level
of foreign funds directly invested in the Peruvian economy as of the dates
indicated and does not reflect investment flows.
Registered Stock of Foreign Direct Investment by Sector(1)
(in millions of U.S. dollars and as a percentage of the total
accumulated stock of foreign direct investment, at current prices)
As of
As of December 31, March 31,
--------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002(2)
------------ ------------- -------------- -------------- ------------ --------------
US$ % US$ % US$ % US$ % US$ % US$ %
----- ----- ------- ----- ------- ------ ------- ----- ------ ---- ------ -----
Agriculture......... 8 0 26 0 42 0 44 0 44 0 44 0
Commerce............ 445 6 545 7 557 6 814 8 817 8 830 8
Telecommunications.. 2,025 28 2,099 26 2,354 25 2,638 26 2,638 25 2,784 26
Construction........ 32 0 43 1 52 1 56 1 67 1 70 1
Energy.............. 1,283 18 1,383 17 1,533 16 1,553 15 1,568 15 1,509 14
Finance............. 786 11 931 12 1,421 15 1,473 14 1,663 16 1,647 16
Industry............ 1,250 17 1,369 17 1,495 16 1,541 15 1,542 15 1,566 15
Mining.............. 1,231 17 1,372 17 1,653 17 1,688 17 1,691 16 1,692 16
Fishing............. 1 0 1 0 1 0 1 0 1 0 1 0
Petroleum........... 98 1 98 1 98 1 98 1 98 1 98 1
Services............ 72 1 88 1 104 1 118 1 130 1 138 1
Forestry............ 1 0 1 0 1 0 1 0 1 0 1 0
Transportation...... 17 0 82 1 82 1 93 1 106 1 119 1
Tourism............. 36 1 42 1 58 1 58 1 58 1 58 1
Housing............. 10 0 11 0 13 0 14 0 15 0 15 0
----- ----- ------- ----- ------- ------ ------- ----- ------ ---- ------ -----
Total............. 7,295 100 8,081 100 9,464 100 10,190 100 10,438 100 10,571 100
===== ===== ======= ===== ======= ====== ======= ===== ====== ==== ====== =====
(1) Principal foreign direct investment with privatization, as registered with
CONITE. Foreign direct investment figures for balance-of-payments purposes
reflect inflows and outflows of capital for a particular period and are
compiled by the Central Bank. CONITE and the Central Bank employ different
methodologies when calculating foreign direct investment; CONITE considers
only shareholder capital, while the Central Bank includes additional
elements.
(2) Preliminary data.
Source: CONITE, PROINVERSION.
Foreign direct investment in Peru has come primarily from Spain, the
United States and the United Kingdom, which, combined, accounted for
approximately 66.3%, on average, of total foreign direct investment that entered
Peru each year from 1997 to 2001.
The following tables set forth information on the stock of foreign
direct investment by country of origin, as a percentage of total foreign direct
investment, as registered with PROINVERSION or its predecessor, for the periods
indicated.
Registered Stock of Foreign Direct Investment by Country of Origin
(in millions of U.S. dollars, at current prices)
As of December 31, As of March 31,
----------------------------------------------------------------------- ------------
1997 1998 1999 2000 2001 2002
------------ ------------ ------------ ----------- ----------- -----------
Argentina..................US$ 105.2 US$ 142.0 US$ 62.6 US$ 65.1 US$ 65.1 US$ 65.1
Austria.................... 3.4 3.4 3.4 3.4 3.4 3.4
Bahrain.................... 25.0 25.0 25.0 25.0 25.0 25.0
Bolivia.................... 4.7 4.7 4.7 4.7 4.7 4.7
Brazil..................... 38.7 39.8 54.6 54.9 55.2 55.2
Canada..................... 119.9 150.6 157.9 159.3 159.3 159.3
Chile...................... 291.3 324.1 423.3 440.5 552.3 555.7
China...................... 122.2 122.2 122.2 122.2 122.2 122.2
Colombia................... 29.4 62.8 71.5 71.7 79.0 79.0
Denmark.................... 0.7 0.7 0.7 0.7 0.7 0.7
Ecuador.................... 22.1 22.3 31.9 35.5 35.5 35.5
France..................... 60.6 64.6 147.2 198.7 235.2 235.2
Germany.................... 40.1 44.6 57.3 67.1 84.1 94.1
Italy...................... 33.0 33.0 33.0 37.7 45.5 50.3
Japan...................... 42.7 45.0 71.8 99.1 99.1 99.1
Korea...................... 7.5 9.5 19.5 20.7 20.7 20.7
Liberia.................... 0.8 0.8 0.8 0.8 0.8 0.8
Liechtenstein.............. 17.6 12.8 15.8 13.9 13.9 13.9
Luxembourg................. 16.1 22.2 22.2 22.2 26.1 26.1
Mexico..................... 10.6 30.3 32.7 34.1 36.1 36.1
Netherlands................ 494.5 510.1 601.4 818.4 922.0 868.8
New Zealand................ 3.5 3.5 6.9 6.9 6.9 6.9
Panama..................... 500.0 520.9 539.5 541.3 544.1 544.2
Rumania.................... 3.5 3.5 3.5 3.5 3.5 3.5
Spain...................... 2,361.7 2,396.2 2,420.4 2,433.5 2,433.5 2,424.5
Sweden..................... 43.5 46.4 46.6 59.6 56.9 56.9
Switzerland................ 181.0 185.0 200.3 206.3 208.3 213.6
United Kingdom............. 1,003.3 1,293.9 2,043.7 2,249.6 2,309.8 2,465.3
United States.............. 1,492.6 1,668.8 1,927.3 2,066.6 1,960.2 1,962.9
Uruguay.................... 81.9 110.9 119.2 127.5 127.5 142.5
Venezuela.................. 10.2 10.7 10.5 10.2 10.2 10.2
Other...................... 127.8 179.7 187.1 189.1 190.0 190.0
------------ ------------ ------------ ----------- ----------- -----------
Total.................. US$ 7,280.3 US$ 8,080.9 US$ 9,455.2 US$10,164.5 US$10,553.4 US$10,571.2
============ ============ ============ =========== =========== ===========
Source: CONITE, PROINVERSION.
Registered Stock of Foreign Direct Investment by Country of Origin
(as a percentage of total direct investment, at current prices)
As of December 31, As of March 31,
----------------------------------------------------------------------- ------------
1997 1998 1999 2000 2001 2002
------------ ------------ ------------ ----------- ----------- -----------
Argentina................. 1.5% 1.8% 0.7% 0.6% 0.6% 0.6%
Austria................... 0.1 0.0 0.0 0.0 0.0 0.0
Bahrain................... 0.3 0.3 0.3 0.3 0.2 0.2
Bolivia................... 0.1 0.1 0.1 0.1 0.0 0.0
Brazil.................... 0.5 0.5 0.6 0.5 0.5 0.5
Canada.................... 1.7 1.9 1.7 1.6 1.5 1.5
Chile..................... 4.0 4.0 4.5 4.4 5.3 5.3
China..................... 1.7 1.5 1.3 1.2 1.2 1.2
Colombia.................. 0.4 0.8 0.8 0.7 0.8 0.8
Denmark................... 0.0 0.0 0.0 0.0 0.0 0.0
Ecuador................... 0.3 0.3 0.3 0.4 0.3 0.3
France.................... 0.8 0.8 1.6 2.0 2.2 2.2
Germany................... 0.6 0.6 0.6 0.7 0.8 0.9
Italy..................... 0.5 0.4 0.4 0.4 0.4 0.5
Japan..................... 0.6 0.6 0.8 1.0 0.9 0.9
Korea..................... 0.1 0.1 0.2 0.2 0.2 0.2
Liberia................... 0.0 0.0 0.0 0.0 0.0 0.0
Liechtenstein............. 0.2 0.2 0.2 0.1 0.1 0.1
Luxembourg................ 0.2 0.3 0.2 0.2 0.3 0.3
Mexico.................... 0.2 0.4 0.4 0.3 0.3 0.3
Netherlands............... 6.7 6.2 6.3 7.7 8.2 8.2
New Zealand............... 0.1 0.0 0.1 0.1 0.1 0.1
Panama.................... 6.9 6.5 5.7 5.3 5.2 5.2
Rumania................... 0.1 0.0 0.0 0.0 0.0 0.0
Spain..................... 32.4 29.5 25.5 23.9 23.0 22.9
Sweden.................... 0.6 0.6 0.5 0.6 0.5 0.5
Switzerland............... 2.5 2.3 2.2 2.1 2.0 2.0
United Kingdom............ 13.8 16.1 21.7 22.2 23.3 23.3
United States............. 20.5 20.6 20.4 20.4 18.6 18.6
Uruguay................... 1.1 1.4 1.3 1.3 1.4 1.4
Venezuela................. 0.1 0.1 0.1 0.1 0.1 0.1
Other..................... 1.8 2.2 2.0 1.9 1.8 1.8
------------ ------------ ------------ ----------- ----------- -----------
Total................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
- --------------------------------
Source: CONITE, PROINVERSION.
Portfolio Investment
The Republic experienced portfolio capital inflows of US$156 million in
1997. The Republic, however, experienced portfolio capital outflows of US$346
million in 1998 and US$107 million in 1999 as a result of the adverse effects
that the Asian and Russian financial crises and the devaluation of the Brazilian
real in 1999 had on investment in emerging markets. In 2000, capital inflows
increased to US$123 million despite the Republic's political instability,
principally as a result of Telefonica del Peru's repurchase of its own ADRs. To
discourage speculative capital from entering the country, the Central Bank has
established a marginal minimum reserve requirement of 20% on new foreign
currency deposits, those deposited within the current year, in Peruvian banks.
In 2001, capital inflows decreased to US$43 million, primarily due to purchases
by non-Peruvians of stock of Compania De Minas Buenaventura and Empresa Minera
Iscaycruz S.A., which were partially offset by sales of stock of Union
Cervecerias Backus y Johnston and Cementos Lima.
THE MONETARY SYSTEM
Central Bank
Established in 1922, the Central Bank serves as the monetary authority
of the Republic. The Bank exists and operates pursuant to Chapter V of the 1993
Constitution and the Ley Organica del Banco Central de Reservas del Peru enacted
that same year, which we refer to in this prospectus as the "Central Bank's
Charter." The 1993 Constitution and the Central Bank's Charter vest with the
Central Bank authority to control the monetary base, manage the Republic's
international reserves and gather and publish data on the Republic's finances.
The Central Bank is also the sole issuer of Peruvian currency.
The Central Bank is headed by a board of directors, which we refer to
in this prospectus as the "Central Bank's Board," composed of seven members who
each serve five-year terms that are coterminous with the Peruvian President's
term. Congress appoints three of the Central Bank's directors, and the President
appoints four, including the president of the Central Bank's Board. Appointment
of the president of the Central Bank's Board is subject to ratification by
Congress. The Central Bank's Charter requires the members of the Central Bank's
Board to have extensive experience and knowledge in economics and finance. The
responsibilities of the Central Bank's Board include formulating a monetary
program setting forth liquidity and monetary base growth rates consistent with
its inflation objectives and the Republic's growth assumptions.
The day-to-day operations of the Central Bank are under the supervision
of its General Manager and a Money and Foreign Exchange Committee. This
committee meets daily to decide on monetary operations, such as the amount of
dollars to be purchased in the foreign exchange market, whether to auction
Central Bank certificates of deposit, and the interest rate that the Central
Bank will charge on short term credits, generally known as the discount rate.
Reform of the Central Bank and of the Republic's monetary policy has
been a centerpiece of the Republic's economic program that began in the early
1990s. These reforms were premised on the following two key elements that were
promulgated under the 1993 Constitution and the Central Bank's Charter:
o the Central Bank's principal purpose is to maintain price
stability by preserving the value of the currency; and
o the Central Bank possesses full autonomy.
These reforms were implemented to address the high rates of inflation
that Peru, along with other countries in the region, experienced during the
1980s and early 1990s. The premise underlying these reforms was that the Central
Bank could contribute most effectively to economic prosperity by focusing its
activities on achieving stable prices. Prior to the 1991-1993 reforms, the
Central Bank operated under a much broader mandate that made it directly
responsible for fueling growth and for establishing credit and exchange rate
conditions. Pursuit of these broader and occasionally incompatible objectives
resulted in erratic policy choices that exacerbated adverse economic conditions
and contributed to the hyperinflation experienced in the late 1980s and early
1990s.
The Central Bank was granted autonomy based on the premise that, to
operate effectively, the Central Bank has to be immune from political pressures.
In the past, the Central Bank had often been required to pursue ill-advised
policies, such as printing currency in order to finance public spending, as a
result of government intervention. Since the reforms were implemented, technical
rather than political management of the Republic's monetary policy has built
confidence in the Government's ability to formulate and implement a sound and
stable monetary policy.
The 1993 Constitution and the Central Bank's Charter guaranteed the
autonomy of the Central Bank by prohibiting it from:
o providing financing to the public sector, except indirectly
through limited purchases of treasury bonds;
o issuing guarantee certificates, surety bonds or any other kind of
guarantees, using any other form of indirect financing, or
providing insurance of any kind;
o imposing sectoral or regional ratios on the composition of the
loan portfolios of financial institutions; and
o establishing multiple currency exchange regimes.
The reform of the Central Bank's role has been instrumental in the
drastic drop in inflation experienced during the 1990s. Between 1994 and 2000,
the Central Bank met or slightly exceeded its annual inflation targets. During
2001, the Central Bank maintained a restrictive monetary policy that produced a
marked deceleration in the CPI, which averaged 2.0%. This record has served to
foster confidence in the stability of the Peruvian currency.
Monetary Policy
The Central Bank's overarching goal is to maintain a stable monetary
environment, with low levels of inflation. Accordingly, the Central Bank
establishes a target inflation rate for each fiscal year and has, since 1994,
announced this target rate in order to shape market expectations.
The Central Bank has chosen as its main variable for maintaining price
stability the growth rate of the monetary base. Accordingly, subject to
occasional intervention by the Central Bank in the foreign exchange market to
prevent drastic exchange rate fluctuations, both exchange rates and interest
rates are allowed to float freely according to market conditions. The Central
Bank establishes an annual target growth rate for the monetary base based on
Peru's projected GDP and inflation rate. In order to control the growth rate of
the monetary base, the Central Bank monitors and regulates the daily level of
liquidity of the banking system, which it tracks by monitoring the average level
of bank deposits held at the Central Bank. These deposits are used for the
Republic's clearing system, and are also used by banks for the payment of taxes,
and by Banco de la Nacion to make payments on behalf of the Republic.
Accordingly, they provide a fairly accurate picture of the daily level of
liquidity of the banking system.
The Central Bank establishes a target range for bank deposits held at
the Central Bank, which it adjusts and publishes on a monthly basis. The Central
Bank employs several tools to ensure that the actual level of bank deposits
falls within its specified target. These tools fall into three major categories:
o open market operations, which include:
- auctions to financial institutions of Central Bank
certificates of deposit;
- temporary purchases of Central Bank certificates of deposits
and of treasury bonds;
- auctions to financial institutions of monies owned by Banco
de la Nacion; and
- purchases and sales of foreign currencies in the interbank
market;
o discount-window transactions, which include:
- monetary regulation loans, generally known as rediscounts,
which consist of short-term loans made directly by the
Central Bank to financial institutions to cover their
short-term liquidity needs;
- overnight foreign currency swaps that allow the Central Bank
to provide financial institutions with short-term liquidity;
and
- remunerated overnight deposits in the Central Bank, in both
domestic and foreign currency, which allow the Central Bank
to remove excess liquidity from the banking system; and
o minimum reserve requirements.
Currently, the minimum reserve requirement for local currency deposits
is 6%. New foreign currency deposits, those deposited within the current
calendar year, are subject to a 20% marginal rate, while foreign currency
deposits placed in prior years are subject to the reserve rate applicable in the
year they were deposited. Currently, 33%, on average, of total foreign currency
deposits must be kept as reserves. The Central bank generally adjusts the
marginal rate applicable to foreign currency deposits, but may from time to time
adjust the average rate as a tool of monetary policy. Financial institutions may
satisfy the minimum reserve requirements with funds they hold in cash or cash
equivalents or that they have deposited in their accounts at the Central Bank,
so long as they maintain at least 1% of local and foreign currency deposited in
the Central Bank.
The Central Bank increasingly relies on open market operations to
regulate the liquidity of the banking system and promotes the perception of the
Central Bank as a lender of last resort by imposing above-market rates and
commissions on discount-window transactions.
The significant volatility of short-term capital flows has been a
destabilizing factor in Peru's monetary system. Between 1997 and 2001,
short-term capital fluctuated between a high of US$2.6 billion, or 4.5% of GDP,
of inflows in 1997 to US$1.7 billion, or 3.2% of GDP, of outflows in 1999. In
contrast, medium- and long-term capital remained relatively stable between 1997
and 1998, with levels at US$1.1 billion and US$1.0 billion respectively, and
from 1999 to 2001, fluctuating between a high of US$542 million, or 1.1% of GDP,
of inflows in 1999 to a low of US$439 million, or 0.8% of GDP, of inflows in
2001. To confront the volatility of short-term capital flows, the Central Bank
generally prescribes high foreign currency reserve requirements that discourage
significant capital outflows and promote holdings of local currency.
Despite the positive impact it may have on reducing cross-border
transaction costs and in preserving purchasing power, the high level of
dollarization of the Peruvian economy has also hampered monetary policy by
undermining the Central Bank's ability to control the money supply.
Dollarization generally refers to the degree to which the U.S. dollar has
displaced Peru's domestic currency in the economy. Dollarization began during
the 1980s as inflation rates started to rise. As inflation reached triple-digit
rates between 1983 and 1985, foreign currency-denominated assets were
increasingly used to store value. By 1990, when the annual inflation rate had
reached 7,650%, 47% of total deposits in the domestic financial system, and 76%
of total deposits held by Peruvians domestically and abroad, were denominated in
dollars. During the 1990s, the Peruvian economy remained highly dollarized. As
of March 31, 2002, dollar-denominated deposits equaled 66% of total domestic
deposits and dollar-denominated assets rose to 54% of total assets held by
Peruvians.
Mitigating the impact that dollarization has had on monetary policy is
the fact that domestic currency has retained its role as the principal means of
payment, while foreign currency has been used primarily as a savings mechanism.
The continued demand for local currency in the vast majority of transactions
that take place in the Peruvian economy has preserved local currency as the main
channel through which the Central Bank can affect aggregate demand and thus
control inflation. The Central Bank expects that as it continues to meet its
inflation targets, confidence in the value of the local currency will grow,
gradually restoring the nuevo sol as the principal means of savings.
Supervision of the Financial System
Established in 1931, the Superintendencia de Banca y Seguros, or
Banking and Insurance Superintendency, which we refer to in this prospectus as
the "SBS," is responsible for regulating and supervising the financial,
insurance and private social security systems in Peru. Since 1979, the SBS has
had institutional autonomy from the Ministerio de Economia y Finanzas, which we
refer to in this prospectus as the "Ministry of Economy." In 1981, the first Ley
Organica de la Superintendencia de Banca y Seguros, or Banking and Insurance
Superintendency Charter, was adopted, which outlined in greater detail the
powers and functions of the SBS. The role of the SBS was expanded in 2000 when
it was given jurisdiction over the private social security system.
The overarching goal of the SBS is to protect the interests of
customers, depositors and beneficiaries of the financial, insurance and private
social security systems, by ensuring the solvency and integrity of the companies
that operate in this sector. In recent years, the SBS has pursued this goal from
a free-market perspective, stepping away from the interventionist model that
characterized the financial industry until the early 1990s. Accordingly, it has
sought to create incentives for financial institutions to manage adequately
their levels of risk, while imposing minimum standards to ensure that the
integrity and solvency of the industry are not jeopardized.
Under current banking law, and the regulatory norms and guidelines
adopted by the SBS, financial institutions are subject to the following three
basic types of regulations:
o Market-entry requirements designed to ensure that the regulated
entities have minimal capital levels to conduct their business
and are otherwise reliable financial agents. In particular, the
SBS requires that financial institutions have a capital base of
no less than US$7.0 million and be managed by competent teams
composed of persons of high integrity, aptitude and expertise in
their particular fields.
o Prudential standards designed to ensure that the quality of the
financial system's loan portfolio meets minimum levels. These
prudential standards include the following requirements:
- Strict limits on credit concentration. Financial
institutions may not lend an amount equal to or greater than
10% of their capital to any single person or entity. This
limit may be raised to 30% depending on the kind of
guarantee or security offered. Additionally, financial
institutions may not lend more than 5% to any single person
or entity residing abroad. This limit may be raised to 10%
depending on the kind of guarantee or security offered. The
1996 Banking Law also prescribes special limits for
particular kinds of credits, such as loans to affiliates and
other financial institutions, foreign and domestic.
- Capital adequacy ratios. The risk-weighted assets of
financial institutions may not exceed eleven times their net
worth--a stricter standard than the Basel Accord guidelines.
- Loan-loss reserve requirements that are strictly enforced.
These requirements range from a minimum 1% reserve for loans
with normal risk levels, to a maximum 100% reserve for loans
that are being recovered in court, which must be treated as
a loss.
o Disclosure requirements designed to provide regulators, economic
agents in other sectors of the economy and the public, with
sufficient information to evaluate the activities of financial
institutions. The principal requirements are as follows:
- Banks must register their shares on the Bolsa de Valores de
Lima, which we refer to in this prospectus as the "Lima
Stock Exchange," and thereby become subject to the
disclosure guidelines established by the Comision Nacional
Supervisora de Empresas y Valores, or National Supervisory
Commission of Companies and Securities, which we refer to in
this prospectus as "CONASEV."
- Banks are required to publish their quarterly financial
statements in major newspapers.
- CONASEV must publish each month an assessment of the loan
portfolio quality of banks.
- The credit risk of banks must be assessed every semester by
two credit rating agencies, and these ratings must be
published in major newspapers.
With respect to loan-loss reserve requirements, current regulations
base the risk classification of outstanding credits primarily on the number of
days a particular credit is past due. However, for commercial loans, a bank may
also take into consideration the debtor's level of solvency, economic trends in
the debtor's line of business and the quality of the debtor's management and
control systems. Additionally, guarantees or collateral may affect the specific
level of reserves that must be maintained with respect to a particular credit.
Set forth below is the risk-classification scheme mandated by the SBS:
Risk Category Criteria
- ---------------------- ------------------------------------------------------
Normal:
Commercial loans......... 0 days past due, high solvency,
growing economic sector, adequate management and
control systems.
Consumer loans.......... Up to 8 days past due.
Mortgage loans.......... Up to 30 days past due.
Potential problems:
Commercial loans........ Based on cash flow analysis the
company is able to fulfill all of its financial
obligations, exhibits moderate solvency and adequate
management and control systems, but is part of a
temporarily destabilized economic sector.
Consumer loans.......... 9 to 30 days past due.
Mortgage loans.......... 31 to 90 days past due.
Deficient:
Commercial loans........ 60 to 120 days past due, moderate to
low solvency, unclear tendency in economic sector,
inadequate management and control systems.
Consumer loans.......... 31 to 60 days past due.
Mortgage loans.......... 91 to 120 days past due.
Doubtful:
Commercial loans........ 121 to 365 days past due, low
solvency, falling revenues in economic sector,
inadequate management and control systems.
Consumer loans.......... 61 to 120 days past due.
Mortgage loans.......... 121 to 365 days past due.
Loss:
Commercial loans........ More than 365 days past due, debtor
insolvent, structural problems in economic sector,
inadequate management and control systems.
Consumer loans.......... More than 120 days past due.
Mortgage loans.......... More than 365 days past due.
- --------------------------
Source: SBS.
The following table sets forth the required loan-loss reserves
currently in effect:
Required Loan-Loss Reserves by Risk Category
(as a percentage of total portfolio)
Loan-loss reserve
-------------------------------------------------------------------------------
With liquid guarantees With guarantees Without guarantees
---------------------- ---------------------- ----------------------
Normal:
Fixed.................... 0.75% 0.75% 0.75%
Variable(1) ............. 0.25 0.25 0.25
Potential problems:
Fixed.................... 0.75 1.25 3.75
Variable(1).............. 1.75 1.25 1.25
Deficient................... 12.5 12.5 25.0
Doubtful.................... 30.0 30.0 60.0
Loss........................ 60.0 60.0 100.0
- ------------------
(1) If profits are above a maximum level, the variable rate is added to the
fixed rate.
Source: SBS.
The following tables set forth information regarding loans of the
financial system by risk category and type of institution and loans issued by
commercial banks by risk category and type of loan.
Risk Classification of Aggregate Assets of the Financial System
by Type of Institution
(as a percentage of total loans, as of March 31, 2002)
Savings and loans
associations Small-business Financial
Commercial Financial ----------------------- development leasing
Risk category banks institutions Municipal Rural banks companies Total
- -------------------- ---------- ----------- --------- ----------- ------------- ------------ -----------
Normal.............. 69.0% 80.8% 82.7% 59.4% 76.9% 57.9% 68.9%
Potential problems.. 11.7 7.9 6.6 6.5 11.1 24.0 12.1
Deficient........... 8.0 4.0 4.3 17.6 3.6 8.3 7.9
Doubtful............ 5.9 1.4 1.8 5.3 2.7 8.4 5.8
Loss................ 5.4 5.9 4.6 11.2 5.8 1.5 5.3
---------- ----------- --------- ----------- ------------- ------------ -----------
Total............ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
========== =========== ========= =========== ============= ============ ===========
- -------------
Source: SBS.
Risk Classification of Aggregate Assets of Commercial Banks
by Type of Loan
(as a percentage of total loans, as of March 31, 2002)
Risk category Commercial loans Consumer loans Mortgage loans Small-business loans
- -------------------- ---------------- -------------- -------------- --------------------
Normal............... 66.4% 82.2% 82.9% 76.9%
Potential problems... 12.9 5.4 6.0 5.4
Deficient............ 8.9 3.7 2.3 5.3
Doubtful............. 6.5 2.3 2.9 3.7
Loss................. 5.3 6.3 5.9 8.8
-------------------- ---------------- -------------- -------------- --------------------
Total.............. 100.0% 100.0% 100.0% 100.0%
================ ============== ============== ====================
- --------------------------
Source: SBS.
The following table sets forth the status of loans in the financial
system.
Status of Loans in the Financial System
(as a percentage of total loans, as of March 31, 2002)
Current loans Refinanced and Loans 1 - 4 Loans > 4 Loans
----------------------- restructured months past months past subject to
Type of institution Short-term Long-term loans due due due judicial process
- -------------------------------- ------------ ---------- -------------- -------------- ----------- ----------------
Commercial banks................. 52.7% 30.4% 7.8% 1.6% 2.0% 5.4%
Financial institutions........... 44.8 38.0 10.9 1.7 1.8 2.8
Savings and loans associations:
Municipal...................... 57.3 34.6 2.0 2.0 0.6 3.4
Rural.......................... 48.7 20.8 17.1 4.7 2.0 6.6
Small-business development banks. 51.5 36.9 2.3 3.8 3.1 2.4
Financial leasing companies...... 1.5 80.2 9.4 2.3 3.3 3.4
------------ ---------- -------------- -------------- ----------- ----------------
Total.......................... 49.1% 34.1% 7.9% 1.7% 2.1% 5.1%
============ ========== ============== ============== =========== ================
- --------------------------
Source: SBS.
The SBS performs its supervisory role in the following two principal
manners:
o Direct supervision of regulated entities through on-site and
off-site inspections. The SBS systematically reviews and analyzes
the information that financial companies are required to
disseminate through the media and CONASEV. Based on these
inspections, the SBS conducts on-site inspections that focus on
areas that merit further scrutiny.
o Assessments made by third parties. The SBS regularly reviews the
analyses of regulated entities conducted by auditors, foreign and
domestic credit-rating agencies, and other supervisory agencies,
both foreign and domestic. These reviews allow the SBS to gain a
broader perspective of the activities and performance of the
Peruvian financial sector and to identify areas of concern.
In 1991, the Republic introduced the Fondo de Seguros de Depositos,
which we refer to in this prospectus as the "Deposit Insurance Fund," which
insures deposits in the banking system up to S/. 66,572, or US$18,000, per
person per bank. The introduction of the Deposit Insurance Fund ameliorated some
of the burdens created by the several closures of deficient banks that resulted
from the banking reforms undertaken by the Republic in the early 1990s. There
have been no significant bank failures or bailouts since December 2000.
Financial Sector
Prior to 1990, the Republic's regulation of the financial system was
characterized by interventionist measures that limited and directed the
activities of banks, restricted foreign competition and prevented profit
remittances and credit payments abroad. This regulatory environment undermined
competition in the financial industry and limited the supply of medium- and
long-term credit.
As part of its economic program, the Fujimori administration undertook
an overhaul of the Republic's financial system. Its first measures included the
liberalization of interest rates and the elimination of exchange rate controls.
In 1996, Congress passed the Ley de Bancos, which we refer to in this prospectus
as the "1996 Banking Law," which introduced the Deposit Insurance Fund, adopted
a policy of nondiscrimination among foreign and national banks, and state and
private banks, and opened the financial market to foreign banks and insurance
companies. The 1996 Banking Law also liberalized market-entry barriers for
domestic banks and tightened prudential standards and disclosure requirements.
These and other reforms adopted by the Fujimori administration fueled
significant growth of the financial sector. In 1990, there were 38 financial
institutions operating in Peru, with only one foreign bank. As of March 31,
2002, the Peruvian financial system was composed of 68 financial institutions,
including:
o 15 commercial banks;
o 14 municipal and 12 rural savings and loan associations;
o 13 small-business development banks;
o five consumer credit organizations;
o seven leasing companies; and
o two state-owned banks (not counting the Central Bank), Banco de
la Nacion and the Corporacion Financiera de Desarrollo, which we
refer to in this prospectus as "COFIDE."
Of the 15 commercial banks in operation, 13 were partly foreign-owned
and in 10 of these, foreigners had a majority equity stake. Other participants
in the financial sector included, as of March 31, 2002, 16 insurance companies
and four private pension funds.
Established in 1966, Banco de la Nacion is a state-owned bank that
offers a variety of services to the public sector, including regional and local
governments. These services include:
o collecting taxes on behalf of various governmental agencies;
o making payments and transfers on behalf of the Government;
o serving as paying and centralized collection agent for the
Republic's internal indebtedness and its medium- and long-term
external indebtedness; and
o providing banking and foreign exchange services in connection
with the Government's foreign trade transactions.
Established in 1971, COFIDE is a state-owned development bank that
since 1991 has specialized in providing credit to the financial sector. Through
such credits, COFIDE is expected to promote private sector credit for the
various sectors of the economy. Additionally, COFIDE administers various special
development funds created by the Government, such as the mortgage fund
Mivivienda.
The following table identifies the number of financial institutions and
percentage of loans and deposits corresponding to each category as of the dates
indicated.
Number of Financial Institutions and Percentage of Loans and Deposits
As of December 31, As of March 31, 2002
----------------------------------- ---------------------------
Type of institution 1997 1998 1999 2000 2001 Loans Deposits
- ----------------------------------- ------ ------ ------ ------ ------ ------------ ------------
S/. US$ S/. US
------ ----- ------ -----
Rural savings and loans............. 16 15 13 12 12 0.9% 0.4% 0.5% 0.3%
Municipal savings and loans......... 13 13 13 13 14 6.0 0.6 2.4 1.5
Leasing companies................... 9 9 9 7 7 1.2 7.1 0.0 0.0
Consumer credit organizations....... 7 7 5 5 5 6.5 0.5 4.5 0.0
Commercial banks.................... 25 26 20 18 15 69.5 76.7 80.5 94.6
Small business development banks.... 1 7 7 10 13 1.0 0.2 0.0 0.0
State-owned banks................... 3 3 3 3 2 15.0 14.4 12.1 3.6
------ ------ ------ ------ ------ ------------ ------------
Total............................. 74 80 70 68 68 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ====== ============ ============
- --------------------------------
Source: SBS.
The following table shows the percentage interest in total assets of
the financial system held by various categories of financial institutions as of
the dates indicated.
Number of Financial Institutions in Operation
and Share of Total Assets of the Financial System
Number of Institutions Share of Total Assets
--------------------------------------------- ------------------------
Type of institution As of December 31, 2001 As of March 31, 2002 As of March 31, 2002
- -------------------------------------------- ----------------------- -------------------- ------------------------
Rural savings and loans...................... 12 12 0.5%
Municipal savings and loans.................. 14 14 1.7
Leasing companies............................ 7 7 3.2
Consumer credit organizations................ 5 5 1.4
Commercial banks............................. 15 15 79.4
Small business development banks............. 13 13 0.3
State-owned banks............................ 2 2 13.6
---------- ---------- ----------
Total...................................... 68 68 100.0%
========== ========== ==========
- --------------------------------
Source: SBS.
The Peruvian financial system grew only 0.8%, measured in current U.S.
dollars, between 1997 and 1998, and contracted 13.4%, measured in current U.S.
dollars, between 1998 and 2000, as reflected by the total level of assets.
Contraction continued in 2001 with a 7.7% decrease, measured in current U.S.
dollars, compared to 2000. The growth experienced between 1997 and 1998 was
possible because of the growth of the economy as a whole and the liberalization
of the financial system. The contraction since 1998 was caused primarily by
external financial shocks, such as the Asian and Russian financial crises, and
the resulting economic crisis that led to a reduction in the extension of
credit. The contraction in 2001 was caused primarily by the Argentina financial
crisis and the events of September 11, 2002, which led to a reduction in the
extension of credit. Overall, from 1997 to 2001, total assets of the financial
system contracted 19.4%, measured in current U.S. dollars. For the first three
months of 2002, total assets of the financial system have increased slightly by
1.9%, measured in current U.S. dollars, since the end of 2001.
The following table sets forth the total gross assets of the Peruvian
financial system for the periods indicated:
Total Gross Assets of the Peruvian Financial System
(in millions of U.S. dollars and as a percentage change from previous year)
Financial system Commercial banks
----------------------------- -----------------------------
US$ Growth rate (%) US$ Growth rate (%)
------------ ----------------- ------------ -----------------
As of December 31,
1997................................. 23,405 29.8 21,976 28.6
1998................................. 23,582 0.8 21,761 (1.0)
1999................................. 22,427 (4.9) 20,834 (4.3)
2000................................. 20,424 (8.9) 19,110 (8.3)
2001................................. 18,858 (7.7) 17,814 (6.8)
2002:
January........................... 18,934 2.0 17,866 2.1
February.......................... 19,080 2.5 18,028 2.7
March............................. 19,214 0.1 18,166 0.2
- --------------------------------
Source: SBS.
Private commercial banks are the primary source of private sector
financing and in 2001 accounted for 78.7% of all U.S. dollar-denominated loans
and 19.2% of loans denominated in nuevos soles. In the period from 1997 to 2001,
the private sector received on average 88.8% of the total credits issued by the
financial system, while the public sector received only 11.2%. As of March 31,
2002, major private sector borrowers included companies engaged in manufacturing
(24.3% of total loans) and wholesale and retail trade (17.0% of total loans).
The following tables set forth information regarding the allocation of
loans to each sector of the economy.
Loans of the Financial System by Sector(1)
(in millions of U.S. dollars, at current prices)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- ---------
Private sector:
Agriculture and
livestock............... US$ 450 US$ 457 US$ 392 US$ 392 US$ 381 US$ 389
Fishing................... 313 425 382 439 316 326
Mining.................... 442 494 574 591 764 616
Manufacturing............. 3,287 3,888 3,404 3,251 2,682 2,854
Electricity, gas and 113 313
water................... 356 402 370 407
Construction.............. 486 682 611 560 339 340
Wholesale and retail
trade................... 2,481 2,207 2,088 1,593 1,988 1,997
Hotels and restaurants.... 209 331 232 205 192 188
Transportation,
warehousing and
telecommunications...... 848 818 589 613 583 619
Financial intermediation.. 574 828 430 380 379 391
Real estate............... 809 1,046 742 861 773 766
Public administration
and defense............. 91 111 80 93 94 95
Education................. 65 84 63 57 49 59
Health and social
services................ 527 735 587 753 54 52
Other..................... 3,758 3,069 2,536 2,569 2,617 2,638
--------- --------- --------- --------- --------- ---------
Total loans........... US$14,453 US$15,488 US$13,066 US$12,759 US$11,582 US$11,736
========= ========= ========= ========= ========= =========
- ---------------------
(1) Excludes rural savings and loans, municipal savings and loans and small
business loans institutions. Source: SBS.
Loans of the Financial System by Sector(1)
(as a percentage of total loans)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- ---------
Private sector:
Agriculture and
livestock................ 3.1% 3.0% 3.0% 3.1% 3.3% 3.3%
Fishing.................... 2.2 2.7 2.9 3.4 2.7 2.8
Mining..................... 3.1 3.2 4.4 4.6 6.6 5.3
Manufacturing.............. 22.7 25.1 26.1 25.5 23.2 24.3
Electricity, gas and
water.................... 0.8 2.0 2.7 3.2 3.2 3.5
Construction............... 3.4 4.4 4.7 4.4 2.9 2.9
Wholesale and retail
trade.................... 17.2 14.2 16.0 12.5 17.2 17.0
Hotels and restaurants..... 1.4 2.1 1.8 1.6 1.7 1.6
Transportation,
warehousing and
telecommunications....... 5.9 5.3 4.5 4.8 5.0 5.3
Financial intermediation... 4.0 5.3 3.3 3.0 3.3 3.3
Real estate................ 5.6 6.8 5.7 6.7 6.7 6.5
Public administration
and defense.............. 0.6 0.7 0.6 0.7 0.8 0.8
Education.................. 0.4 0.5 0.5 0.4 0.4 0.5
Health and social
services................. 3.6 4.7 4.5 5.9 0.5 0.4
Other..................... 26.0 19.8 19.4 20.1 22.6 22.5
--------- --------- --------- --------- --------- ---------
Total loans.......... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
========= ======== ========= ========= ========= =========
- --------------------------------
(1) Excludes rural savings and loans, municipal savings and loans and small
business loans institutions. Source: SBS.
The following table sets forth the bank credit to the private sector
for the years shown.
Bank Credit to the Private Sector
(as a percentage of total credit)
Private Commercial Banks Public Sector Banks
---------------------------- ------------------------------
S/. Foreign Currency S/. Foreign Currency
-------- ----------------- --------- ----------------
1997........ 21.9 75.6 0.8 1.7
1998........ 19.3 78.4 0.7 1.6
1999........ 17.4 80.6 0.3 1.7
2000........ 18.2 79.9 0.3 1.6
2001........ 19.2 78.7 0.7 1.4
2002(1)..... 19.5 78.1 0.9 1.5
- --------------------------------
(1) As of March 31.
Source: Central Bank.
Pursuant to the Central Bank Charter, interest rates float freely in
the Peruvian economy and are determined by market conditions. Only in
exceptional circumstances is the Central Bank allowed to establish minimum and
maximum interest rates. The Central Bank does not engage in open market
operations in order to affect interest rates but rather to control the growth
rate of the monetary base.
The Ley General del Sistema Financiero y del Sistema de Seguros y
Organica de la Superintendencia de Banca y Seguros, or Financial and Insurance
System Law, the 1996 Banking Law and the SBS Charter establish that financial
companies may freely establish interest rates and the commissions they charge on
loans, deposits and other services they provide.
The following table sets forth information regarding interest rates for
the years shown.
Interest Rates on Commercial Bank Loans
(in annual percentages)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- ---------
Domestic currency:
Interbank............. 12.8% 12.9% 16.9% 11.4% 3.1% 2.5%
Prime(1).............. 18.5. 21.5 22.5 15.4 5.0 3.9
Average loan rate..... 30.4. 37.1 32.0 26.5 23.0 20.7
Foreign currency:
Interbank.............. 7.6. 11.2 6.6 8.4 2.1 2.1
Prime(1).............. 12.8. 12.5 12.9 8.2 3.1 2.9
Average loan rate..... 15.6. 16.8 14.8 12.6 10.2 10.1
- --------------------------------
(1) Since year 2000 it considers only loans to corporate sector.
Source: SBS.
The decrease in interest rates on domestic currency loans since
December 31, 2000 is a result of greater liquidity in the financial system and
lower international interest rates, as well as a reduced credit risk since the
second half of 2001.
The following table sets forth information on interest rates applicable
to deposits for the years indicated.
Interest Rates on Deposits Paid by Commercial Banks
(in annual percentages)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- ---------
Domestic currency:
Savings deposits........... 10.7% 10.1% 9.5% 7.7% 5.9% 1.8%
Time deposits.............. 15.0 15.1 16.2 13.3 9.9 3.9
Average deposit rate....... 10.3 10.9 11.8 9.8 7.5 3.7
Foreign currency:
Savings deposits........... 4.6 4.4 4.1 3.5 2.5 0.8
Time deposits.............. 7.2 6.6 6.4 5.7 4.0 2.1
Average deposit rate....... 5.5 5.1 5.1 4.7 3.5 1.7
- -------------------------------
Source: SBS.
Liquidity and Credit Aggregates
The most significant money supply measures in Peru are M1, M2, M3 and
M4, which are generally composed as follows:
o M1 consists of currency in circulation plus demand deposits in
domestic currency held in private sector banks;
o M2 consists of M1 plus savings deposits in domestic currency held
in private banks;
o M3 consists of M2 plus time deposits in domestic currency held in
private banks and mortgage certificates and other certificates,
in domestic currency, issued by private banks; and
o M4 or "broad money" consists of M3 plus foreign currency in
circulation.
During the period from 1997 to 2001, the Republic's monetary base grew
only 1.1%, from US$1.75 billion in 1997 to US$1.77 billion in 2001. M1 grew
during this period at an average annual rate of 8.6%, M2 at an average annual
rate of 9.8% and M3 at an average annual rate of 12.5%. The following table sets
forth the composition of the monetary base and international reserves as of the
dates indicated.
Monetary Base and Central Bank's International Reserves
(in millions of U.S. dollars, at current prices)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- ---------
Currency in circulation
and cash in vaults
at banks................. US$ 1,711 US$ 1,561 US$ 1,659 US$ 1,583 US$ 1,748 US$ 1,654
Commercial bank deposits
at the Central Bank....... 39 34 15 15 22 16
--------- --------- --------- --------- --------- ---------
Monetary base............... US$ 1,750 US$ 1,595 US$ 1,674 US$ 1,598 US$ 1,770 US$ 1,670
========= ========= ========= ========= ========= =========
Gross international
reserves.................. US$11,119 US$ 9,982 US$ 9,003 US$ 8,563 US$ 8,838 US$ 8,940
Net international
reserves.................. 10,169 9,183 8,404 8,180 8,613 8,786
- --------------------------------
Source: Central Bank.
As of December 31, 2001, the ratio of gross international reserves at
the Central Bank to the monetary base was approximately 5 to 1.
Between 1997 and 2001, the average amount held by financial
institutions in current accounts at the Central Bank was US$42.8 million. During
this period, the Central Bank successfully employed its monetary tools to ensure
that current account deposits remained within the targets it prescribed on a
monthly basis. The Central Bank was thus able to regulate the liquidity of the
banking system in order to ensure a growth of the monetary base commensurate
with the Republic's inflation and GDP growth targets.
As of December 31, 2001, outstanding credits of the financial system
totaled US$15.6 billion and deposits in the financial system totaled US$11.9
billion. The private sector is the principal recipient of commercial loans.
Private-sector credits from commercial banks showed only a moderate increase
between 1997 and 1998, as a result of a worldwide economic slowdown. After
reaching a peak of US$14.8 billion in 1998, private-sector credits declined at
an average annual rate of 3.3% to US$13.4 billion in 2001. Aggregate deposits in
commercial banks grew at an average annual rate of 3.2%, from US$12.0 billion in
1997 to US$12.4 billion in 2001. Foreign-currency denominated deposits in the
banking system grew at an average annual rate of 1.6% between 1997 and 2001,
reaching US$9.5 billion in 2001.
From December 31, 2001 to March 31, 2002, the Republic's monetary base
decreased 5.4%, to US$1.67 billion as of March 31, 2002. The decrease was
largely attributable to a seasonal increase in over the counter purchases of
U.S. dollars during the forth quarter of 2001. At the same time, gross
international reserves increased 1.2%, to US$8.94 billion, and net international
reserves increased 2.0%, to US$8.79 billion largely due to increased public
sector deposits due to the February 2002 issuance of the Global Bonds and a
reduction of deposits by financial intermediaries, primarily banks, in the
Central Bank.
The following table sets forth liquidity and credit aggregates as of
the dates indicated.
Liquidity and Credit
(in millions of U.S. dollars, at current prices)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- ---------
Monetary aggregates
Currency in circulation... US$ 1,407 US$ 1,254 US$ 1,319 US$ 1,285 US$ 1,438 US$ 1,368
M1........................ 2,423 2,103 2,128 2,080 2,275 2,193
M2........................ 4,763 4,014 4,020 4,096 4,769 4,792
M3........................ 13,630 12,999 13,225 13,438 14,220 14,003
Credit by sector(1)
Public sector............. US$ 1,384 US$ 1,727 US$ 1,787 US$ 1,728 US$ 2,226 US$ 2,099
Private sector............ 14,206 14,840 14,207 13,691 13,403 13,377
Total credit aggregates. US$15,589 US$16,567 US$15,994 US$15,419 US$15,630 US$15,476
Deposits
Local currency(2)......... US$ 2,340 US$ 1,911 US$ 1,892 US$ 2,016 US$ 2,494 US$ 2,599
Foreign currency(3)....... 8,867 8,985 9,205 9,342 9,451 9,211
Total deposits.......... US$11,207 US$10,897 US$11,097 US$11,358 US$11,945 US$11,810
- --------------------------------
(1) Includes securities offerings and cash advances from checking accounts.
(2) Includes savings deposits, time deposits and other certificates in domestic
currency.
(3) Includes demand deposits, savings deposits, time deposits and other
certificates in foreign currency.
Source: Central Bank.
The following table sets forth growth in selected monetary indicators
as of the dates indicated.
Selected Monetary Indicators
(percentage change from previous
year, based on variable rates in nuevos soles)(1)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002(2)
--------- --------- --------- --------- --------- ---------
M1................. 19.8% 13.3% 2.6% 5.6% 1.5% 9.8%
M2................. 19.1 15.3 1.7 5.9 6.8 17.2
M3................. 25.2 14.7 14.0 5.3 3.2 4.1
- --------------------------------
(1) Average indicators of the period.
(2) As compared to March 31, 2001.
Source: Central Bank.
Inflation
The economic and monetary program that the Government implemented
during the early 1990s achieved a drastic reduction in inflation. The Republic
experienced hyperinflation during the late eighties and in 1990. By 1997,
inflation, as measured by the CPI, had declined to an average rate of 8.5% and
continued to decrease from 1997 to 2001. Prices during 2002 have shown
significant stability, with an average inflation rate of -0.7% for the three
months ending March 31, 2002, as compared to 0.3% for the three months ending
March 31, 2001.
During 1999 and 2000, fuel prices were by far the main contributors to
the overall increase in prices, rising 25.9% in 1999 and 30.3% in 2000. In 1999,
other significant contributors to inflation included transport services rising
13.3% and public services rising 12.7%. In 2000, significant contributors to
inflation included education services rising 5.6% and transport services rising
5.0%.
In 2001, fuel prices showed a sharp reversal, falling 13.1%. The main
reasons for inflation during this period included education services rising
4.0%, health services rising 3.0%, public services rising 2.7% and food prices
rising 1.2%.
The following table sets forth changes in the CPI for the periods
indicated.
Consumer Price Index(1)
(% change)
----------------------------------
End of period Average
---------------- -------------
1997............................ 6.5 8.5
1998............................ 6.0 7.3
1999............................ 3.7 3.5
2000............................ 3.7 3.8
2001............................ -0.13 2.0
2002:
January....................... -0.52 1.6
February...................... -0.04 1.2
March......................... 0.54 0.8
- --------------------------------
(1) For a description of how the CPI is and its rates of change are calculated,
see "Certain Defined Terms and Conventions--Certain Defined Terms."
Source: Central Bank.
Foreign Exchange and International Reserves
Foreign Exchange
Prior to 1991, the Republic exercised control over the foreign exchange
markets by imposing multiple exchange rates and placing restrictions on the
holding and use of foreign currencies. In 1991, the Fujimori administration
eliminated all foreign exchange controls and the exchange rates were unified.
Currently, foreign exchange rates are determined by market conditions, with
occasional intervention by the Central Bank to prevent drastic fluctuations.
The following table sets forth the nuevo sol/U.S. dollar exchange rates
for the dates and periods indicated.
Exchange Rates(1)
(S/. per US$)
-------------------------------------
End of period Average
---------------- ------------
1997............................ 2.725 2.660
1998............................ 3.150 2.925
1999............................ 3.510 3.380
2000............................ 3.525 3.490
2001............................ 3.444 3.507
2002............................ 3.446(2) 3.456(3)
- --------------------------------
(1) Formal rates offered by banks.
(2) As of March 31.
(3) Average from January 1 to March 31, 2002.
Source: Central Bank.
International Reserves
Pursuant to Article 72 of the Central Bank's Charter, the international
reserves administered by the Central Bank consist primarily of:
o holdings of gold and silver;
o foreign currencies generally accepted as a means of payment in
the international markets; and
o in the Central Bank's Board's discretion:
- foreign currency deposits of less than 90 days;
- certificates of deposits of less than 90 days issued by
banks; and
- investment-grade securities having a high level of liquidity
issued by international organizations or public foreign
entities.
The Central Bank maintained a policy during the 1990s of accumulating
international reserves. International reserves help the Republic to maintain
economic and financial stability by ensuring the availability of foreign
currency in extraordinary situations. These situations can include sudden,
significant withdrawals of foreign currency deposits from the banking system, or
sharp downturns in exports and economic activity.
In order to determine and guide the optimal investment distribution of
its reserves, the Central Bank prepares a model benchmark portfolio that takes
into consideration variables such as return, risk, liquidity, maturity and
diversification. This model portfolio is designed in light of actual market
conditions to ensure that it sets forth feasible goals and eschews speculative
assumptions. The Central Bank adjusts the value of its investment portfolio
daily on the basis of market prices, although the Central Bank generally
maintains its investment assets until their maturity.
The Central Bank considers and actively manages the following four
types of risks in investing its international reserves:
o Liquidity risk. The Central Bank manages liquidity risk by
distributing its investments among three types of assets,
following the guidelines of its benchmark portfolio:
- highly liquid, short-term assets to cover unexpected
contingencies;
- liquid assets not exceeding one year in maturity, which
include bank time-deposits not exceeding three months and
having staggered maturity dates, and fixed income-securities
that are highly liquid in the international markets; and
- assets with maturities exceeding one year, generally
consisting of bonds that offer a relatively higher return
because of the longer term. To ensure an adequate level of
liquidity, these bonds must have been issued in certain
minimum quantities as prescribed by the Central Bank.
o Credit risk. To minimize risks that may arise due to insolvency
on the part of the creditor, the Central Bank diversifies its
investments as follows:
- deposits in foreign banks that are rated investment grade by
Standard & Poor's, a division of the McGraw-Hill Companies,
Moody's Investor Service, Fitch IBCA, Duff & Phelps or
similar credit-rating agencies;
- investment-grade fixed-income securities or securities
guaranteed by international organizations, foreign
governments or their agencies; and
- investments in debt or equity issued by private entities are
prohibited.
o Foreign exchange risk. Fluctuations in the foreign exchange
markets can pose a significant risk to the level of reserves at
the Central Bank, due to the significant U.S. dollar-denominated
liabilities of the Peruvian banking system. Moreover, the great
majority of the Republic's foreign trade and capital flows are
also denominated in U.S. dollars, which can also exert
significant pressure on the Central Bank's international
reserves. To safeguard its international reserves from
fluctuations in the foreign exchange markets, the Central Bank
invests primarily in U.S. dollar-denominated assets. Some
investments are also made in German deutsche marks that match
amounts owed in such currency to the IMF.
o Market risk. To mitigate market risk, the Central Bank tries to
match the average maturity of its assets to that of its
liabilities. The average maturity of the Central Bank's portfolio
does not exceed one year, which significantly protects it from
market fluctuations. Additionally, the Central Bank imposes
limits on the maximum term of its portfolio securities.
Between 1997 and 2000, the Central Bank's net international reserves
decreased at an average annual rate of 7.0%, with the steepest declines
occurring during 1998 and 1999. This decrease was the result of reductions in
public sector deposits and deposits of financial institutions in the Central
Bank, and a decrease in foreign exchange reserves at the Central Bank, as a
result of repurchases of treasury bonds. In 2001, however, net international
reserves increased 5.3% from 2000, due to increased deposits of financial
institutions at the Central Bank, reflecting excess liquidity at the Central
Bank and for bank operations.
As of March 31, 2002, the Central Bank's cash reserves totaled US$4.1
billion, representing a 20.2% decrease over the level as of December 31, 2001
and a 19.2% decrease over the level as of December 31, 2000. As of March 31,
2002, the Central Bank's gold reserves totaled US$337 million, representing a
30.6% increase over the level as of December 31, 2001 and a 22.5% increase over
the level as of December 31, 2000.
Between 1997 and 1998, the net international reserves of the Peruvian
banking system as a whole decreased by 10.6%, but increased by 7.6% in 1999,
showed only a moderate decrease of 1.8% in 2000, and increased again by 9.5% in
2001. During the period from 1997 to 2001, the ratio of total gross reserves of
the Peruvian banking system to total monthly imports fluctuated between 15.4%
and 18.0%.
The following table shows the composition of the international reserves
of the Republic's banking system as of the dates indicated.
Net International Reserves of the Banking System
(in millions of U.S. dollars at period end, at current prices)
As of
As of December 31, March 31,
---------------------------------------------------------------- ---------
1997 1998 1999 2000 2001 2002
--------- --------- --------- --------- --------- ---------
Central Bank
Assets................... US$11,119 US$ 9,982 US$ 9,003 US$ 8,563 US$ 8,838 US$ 8,940
Liabilities.............. 950 799 599 383 225 154
--------- --------- --------- --------- --------- ---------
Total (assets
less liabilities).... 10,169 9,183 8,404 8,180 8,613 8,786
Banco de la Nacion and
Banca de Fomento
Assets................... 287 246 152 77 103 33
Liabilities.............. 68 29 28 28 27 27
--------- --------- --------- --------- --------- ---------
Total (assets
less liabilities).... 219 217 124 49 76 6
Private banks
Assets................... 578 613 981 824 750 763
Liabilities.............. 2,984 2,879 1,835 1,519 1,188 1,154
--------- --------- --------- --------- --------- ---------
Total (assets
less liabilities).... (2,406) (2,266) (854) (695) (437) (392)
Net international
reserves........... US$ 7,982 US$ 7,134 US$ 7,674 US$ 7,534 US$ 8,252 US$ 8,400
========= ========= ========= ========= ========= =========
Memorandum items:
Gross reserves of
the Central Bank....... US$11,119 US$ 9,982 US$ 9,003 US$ 8,563 US$ 8,838 US$ 8,940
Gross reserves of
the banking system..... US$11,984 US$10,841 US$10,136 US$ 9,464 US$ 9,691 US$ 9,735
Gross reserves of the
Central Bank (in months
of total imports)...... 15.6 14.6 16.0 14.0 14.7 16.6
Gross reserves of the banking
system (in months of total
imports)............... 16.8 15.9 18.0 15.4 16.2 18.1
- --------------------------------
Source: Central Bank.
Securities Markets
The securities markets in Peru are regulated by CONASEV. CONASEV's
purpose is to protect investors and promote the efficient operations of the
market. In particular, CONASEV functions include:
o supervision of the activities and management of the various
market participants, including the Lima Stock Exchange, brokerage
firms, issuing companies, mutual funds and other investment
funds, and credit-rating agencies; and
o promotion of market transparency, through disclosure and
dissemination requirements.
Peru's capital markets underwent significant changes during the 1990s
as a result of various reform initiatives undertaken by the Government. These
reforms began in 1991 with passage of the Ley de Mercado de Valores, which we
refer to in this prospectus as the "Securities Market Law of 1991." This law
implemented a comprehensive set of measures that liberalized and modernized the
operations of Peru's capital markets. These measures included:
o requirements for securities exchanges and broker dealers, such as
the introduction of special funds that these entities must
provide in order to guarantee the proper execution of trades;
o market transparency and disclosure requirements, particularly
through the creation of the Registro Publico de Valores e
Intermediarios, or Public Registry of Securities and Broker
Dealers, a public record of all the participants in the Peruvian
capital markets, including issuers, broker-dealers and
credit-rating agencies;
o the establishment of a regulatory framework for new institutions
that were authorized to operate in the Peruvian capital markets
and which would play an increasingly important role (these new
institutions included mutual funds and credit-rating agencies);
and
o requirements for the operation of primary and secondary markets,
including guidelines for the settlement of securities
transactions, dealer commissions, dispute resolution and asset
securitization.
In 1996, a new Ley de Mercado de Valores, or Securities Market Law of
1996, was introduced. This law preserved the basic market structure adopted
under the Securities Market Law of 1991, but introduced certain changes in order
to streamline further the operations of the Peruvian capital markets, making
them more compatible with international standards. These changes included:
o vesting with the Lima Stock Exchange self-regulatory authority;
o creating CAVALI ICLV S.A., a private securities clearing and
depository agency independent of the Lima Stock Exchange;
o liberalizing the brokerage business through the introduction of
less stringent minimum capital requirements and broadening of the
range of transactions in which brokerage firms may participate;
and
o restricting insider trading.
In order to stimulate the growth of Peru's capital markets, the
Government also encouraged greater participation in the markets through economic
incentives. In 1993, the Republic adopted tax exemptions for both capital
earnings generated through stock exchange trading and interest income obtained
from any kind of bond. These tax exemptions, which are scheduled to expire in
December 2006, have played a pivotal role in funneling funds towards the capital
markets.
Another significant factor in the development of Peru's capital markets
was the introduction in 1993 of private pension funds and mutual funds, both of
which have become important institutional investors. Administradoras Privadas de
Fondos de Pensiones, or Private Pension Fund Agencies, which we refer to in this
prospectus as "AFPs," were created pursuant to Decree Law No. 25897, or Private
Pension System Law of 1992. These private pension funds were introduced not only
to improve Peru's social security system, but also to channel funds towards the
capital markets. For a description of the Republic's private pension system see
"Public Sector Finances--Social Security." During the period from 1997 to 2001,
membership in these funds increased at an average annual rate of 12.4%.
Currently, there are four funds in operation with approximately 2.8 million
members and approximately US$3.9 billion in assets under management. These funds
invest in fixed-income securities, representing approximately 52.8% of their
portfolios, floating-rate securities, representing approximately 25% of their
portfolios, and bank time deposits, representing approximately 22.2% of their
portfolios.
Mutual funds entered the market as a result of the Securities Market
Law of 1991, which established a regulatory framework for their operations.
Currently, there are eight mutual fund companies in operation that administer 25
mutual funds. As of December 31, 2001, these mutual fund companies managed
approximately US$1.1 billion in assets for approximately 41,000 investors. These
mutual funds invest primarily in fixed-income securities, representing
approximately 49.1% of their portfolios, and bank time deposits, representing
approximately 33.8% of their portfolios.
Peru's capital markets experienced significant growth during the 1990s
as a result of the reforms implemented by the Government during this period.
Despite this growth, the Peruvian capital markets remain relatively small and
illiquid. Accordingly, most businesses, particularly small and medium-size
businesses, raise capital through the local banking system; large businesses
also benefit from limited access to foreign credit.
Founded in 1971, the Lima Stock Exchange is the only securities
exchange operating in Peru. The Lima Stock Exchange was privatized as part of
the capital-market reforms implemented by the Government in 1991 and currently
operates as a self-regulatory entity under the supervision of CONASEV. The
public trading of company shares (cash operations) accounted for approximately
31% of the total volume transacted on the exchange in 2001, while cash
transactions with debt instruments accounted for 58%. As of March 30, 2002,
there were 210 companies listed on the Lima Stock Exchange, four of which were
foreign companies (not including companies listing only bonds or trading
securities under the modality of market maker). During the period from 1996 to
2001, market capitalization of domestic companies decreased at an average annual
rate of 4.7% to US$10.9 billion as of December 31, 2001. During the same period,
annual trading volume decreased at an average annual rate of 18.7% to US$3.0
billion in 2001. Daily trading volume in 2001 averaged US$12.0 million.
Peru's Capital Markets
Transaction Volume and Market Capitalization(1)
(in millions of U.S. dollars, at current prices)
For the first 3 months of:
--------------------------
1997 1998 1999 2000 2001 2001 2002
Equities:
Stocks.............. US$ 4,289.3 US$ 3,077.2 US$ 2,742.5 US$ 2,436.6 US$ 848.6 US$ 247.6 US$ 226.9
Others................ 8.9 13.7 5.2 83.7 87.7 38.3 15.5
----------- ----------- ----------- ----------- ----------- --------- ----------
Total.............. 4,298.2 3,090.9 2,747.7 2,520.3 936.3 285.9 242.4
Fixed Income Securities:
Auctions.............. 0.0 0.0 141.6 144.1 0.2 0.0 0.0
Continued trading..... 0.0 0.0 0.0 339.3 1,282.8 159.7 437.0
Bonds-money market.... 2,634.9 2,089.9 853.8 247.8 450.4 51.0 253.0
Mortgage bills........ 124.1 90.1 43.2 0.0 0.0 0.0 0.0
Certificates of
deposit............... 2,162.8 885.2 330.7 0.0 0.2 0.0 0.7
Others................ 948.9 491.8 26.5 0.9 0.9 0.0 1.5
----------- ----------- ----------- ----------- ----------- ---------- ----------
Total.............. 5,870.7 3,557.0 1,395.7 732.1 1,734.5 210.7 692.2
Report Transactions:
Equities.............. 1,770.8 981.4 430.7 271.0 219.9 56.4 54.7
Debt instruments...... 191.6 104.6 124.3 70.3 108.8 13.0 2.0
----------- ----------- ----------- ----------- ----------- ---------- ----------
Total.............. 1,962.4 1,086.0 555.0 341.3 328.7 69.4 56.7
Non-massive issued
instruments.............. 0.0 0.0 0.0 0.0 11.3 0.0 0.7
----------- ----------- ----------- ----------- ----------- ----------- ----------
Total Transaction
Volume................... US$12,131.3 US$ 7,734.0 US$ 4,698.4 US$ 3,593.7 US$ 3,010.8 US$ 566.0 US$ 992.0
============ ============ =========== =========== =========== =========== ==========
Market capitalization.... US$17,383.0 US$ 11,035.3 US$13,407.4 US$10,511.1 US$10,861.0 US$10,687.8 US$11,909.7
- --------------------------------
(1) Lima Stock Exchange
Source: CONASEV, Lima Stock Exchange
PUBLIC SECTOR FINANCES
Consolidated Public Sector
The consolidated Peruvian public sector is divided into the financial
public sector and the non-financial public sector. The non-financial public
sector consists of the central government, its various decentralized
administrative and regulatory agencies, such as the SBS, Seguridad Social de
Salud, or Social Security for Health, which we refer to in this prospectus as
"ESSALUD," and the Superintendencia Nacional de Administracion Tributaria, or
National Superintendency for Tax Administration, which we refer to in this
prospectus as "SUNAT," the local municipal and district governments and
non-financial state-owned enterprises such as Petroleos del Peru S.A., which we
refer to in this prospectus as "Petroperu," and Empresa de Electricidad del Peru
S.A., which we refer to in this prospectus as "Electroperu." The financial
public sector consists of the Central Bank, Banco de la Nacion and COFIDE.
The non-financial public sector registered a surplus of US$93 million,
or 0.2% of GDP, in 1997 and an overall deficit every year from 1998 to 2001,
ranging from a low of US$475 million, or 0.9% of GDP, in 1998 to a high of
US$1.7 billion, or 3.2% of GDP, in 2000. The overall surplus achieved in 1997 by
the non-financial public sector resulted primarily from a US$259 million rise in
the consolidated surplus of state-owned enterprises as a result of an increase
in the net profits of Petroperu, Empresa Minera del Centro and Electroperu,
which was caused by diverse factors, including an 18% increase in the price of
fuel and a 28% rise in the price of zinc. In 1999, the consolidated deficit for
the non-financial public sector increased 243%, primarily as a result of a shift
in the central government's fiscal accounts, from a US$422 million surplus in
1998 to a US$552 million deficit in 1999. This drastic shift was caused by a
decline in tax revenues that was not accompanied by a proportionate reduction in
Government expenditures. For a description of the central government fiscal
accounts see "--Central Government."
The 2000 deficit for the non-financial public sector exceeded the 2.0%
target established in the Ley de Prudencia y Transparencia Fiscal, which we
refer to in this prospectus as the "Fiscal Prudence Act." This law was approved
in December 1999 and seeks to foster fiscal stability by establishing specific
guidelines on public sector deficits, growth in government spending and growth
in public sector debt. The law targets a 1.5% of GDP deficit for 2001 and a 1.0%
of GDP deficit for 2002. It also limits the increase of non-financial expenses
of the central government for 2002 to 2.0% in real terms.
The Government has proposed new legislation which would substitute a
new Ley de Responsibilidad y Transparencia Fiscal, the Fiscal Responsibility
Act, for the current Fiscal Prudence Act. The proposed legislation, which has
been submitted to Congress for review and approval, is meant to address aspects
of the current law which have led to compliance failures, as well as to adapt
the law for the new Regional Governments.
In 2001, the deficit in the non-financial public sector fell from the
3.2% of GDP registered during the previous year to 2.5% of GDP, due to a
reduction in the central government's fiscal accounts and a reduction in the
non-financial expenses of the central government resulting from the improved
performance of state-owned enterprises and ESSALUD. On December 5, 2001,
Congress temporarily suspended enforcement of the deficit limit targeted by the
Fiscal Prudence Act.
For the first three months of 2002, the non-financial public sector
registered a deficit of US$198 million, or 1.5% of GDP, a 318% decrease from the
US$91 million surplus for the same period in 2001. This shift resulted primarily
from a steep fall in central government income and, to a lesser extent,
increases in non-financial spending. The Government's decision to abandon
planned privatizations following protests in the cities of Arequipa and Tacna
against the sale of power generators Egasa S.A. and Egesur, S.A. is expected to
impact negatively private investment, holding back the expected economic
recovery and dry up financing of the fiscal deficit. The Government projects a
consolidated public sector deficit of 2.3% of GDP in 2002. Thus far, the
Republic has not met the Fiscal Prudence Act's budget guidelines for 2002.
The draft budget in 2003 projects a consolidated public sector deficit
of U.S.$1.1 billion or 1.9% of projected GDP.
The following tables set forth the consolidated public sector accounts
for the periods indicated.
Consolidated Accounts of the Non-Financial Public Sector
(in millions of U.S. dollars, at current prices)
For the first 3 months of:
-------------------------------
1997 1998 1999 2000(1) 2001(1) 2001(1) 2002(1)
--------- --------- --------- --------- --------- --------- ---------
Primary balance:
Central government.......... US$ 545 US$ 422 US$ (552) US$ (300) US$ (365) US$ 204 US$ 12
Decentralized agencies...... 255 225 69 31 41 81 27
Local governments........... (1) 40 (40) 12 44 32 28
State-owned enterprises..... 401 (54) 15 (262) 107 69 0
--------- --------- --------- --------- --------- --------- ---------
Primary consolidated
fiscal balance......... 1,200 633 (507) (518) (173) 387 67
Interest payments:
External debt............... 1,010 1,005 1,023 1,026 1,046 257 230
--------- --------- --------- --------- --------- --------- ---------
Domestic debt............... 97 103 99 188 160 39 35
--------- --------- --------- --------- --------- --------- ---------
Total interest payments... 1,108 1,108 1,122 1,214 1,207 296 265
Overall consolidated
fiscal balance........ US$ 93 US$ (475) US$(1,629) US$(1,732) US$(1,380) US$ 91 US$ (198)
========= ========= ========= ========= ========= ========= =========
Financing:
External.................... US$ (229) US$ 224 US$ (20) US$ 655 US$ 498 US$ 49 US$ 494
Domestic.................... (423) (12) 1,261 668 554 (187) (335)
Privatization............... 559 263 388 409 328 47 39
--------- --------- --------- --------- --------- --------- ---------
Total financing........... US$ (93) US$ 475 US$ 1,629 US$ 1,732 US$ 1,380 US$ (91) US$ 198
========= ========= ========= ========= ========= ========= =========
- --------------------------
(1) Preliminary data.
Source: Central Bank.
Consolidated Accounts of the Non-Financial Public Sector
(as a percentage of GDP, at current prices)
For the first 3 months of:
-------------------------------
1997 1998 1999 2000(1) 2001(1) 2001(1) 2002(1)
--------- --------- --------- --------- --------- --------- ---------
Primary balance:
Central government....... 0.9% 0.7% (1.1)% (0.6)% (0.7)% 1.6% 0.1%
Decentralized agencies... 0.4 0.4 0.1 0.1 0.1 0.6 0.2
Local governments........ 0.0 0.1 (0.1) 0.0 0.1 0.2 0.2
State-owned enterprises.. 0.7 (0.1) 0.0 (0.5) 0.2 0.5 0.0
--------- --------- --------- --------- --------- --------- ---------
Primary consolidated
fiscal balance...... 2.0 1.1 (1.0) (1.0) (0.3) 3.0 0.5
Interest payments:
External debt............ 1.7 1.8 2.0 1.9 1.9 2.0 1.7
Domestic debt............ 0.2 0.2 0.2 0.4 0.3 0.3 0.3
--------- --------- --------- --------- --------- --------- ---------
Total interest payments 1.9 2.0 2.2 2.3 2.2 2.3 2.0
--------- --------- --------- --------- --------- --------- ---------
Overall consolidated
fiscal balance..... 0.2% (0.9)% (3.2)% (3.2)% (2.5)% 0.7% (1.5%)
========= ========= ========= ========= ========= ========= =========
Financing:
External................. (0.4)% 0.4% (0.1)% 1.2% 0.9% 0.4% 3.7%
Domestic................. (0.7) 0.0 2.5 1.2 1.0 (1.5) (2.5)
Privatization............ 0.9 0.5 0.8 0.8 0.6 0.4 0.3
--------- --------- --------- --------- --------- --------- ---------
Total financing........ (0.2)% 0.9% 3.2% 3.2% 2.5% (0.7)% 1.5%
========= ========= ========= ========= ========= ========= =========
- ---------------------------
(1) Preliminary data.
Source: Central Bank.
The Toledo administration is currently considering a restructuring of
the consolidated public sector to increase efficiency in the provision of public
services. This restructuring could include a decentralization of the
consolidated public sector through the creation of autonomous regional
governments that will assume a number of central government functions. As part
of this decentralization, the Toledo administration is considering conducting a
review and restructuring of the consolidated public sector to avoid duplicative
tasks and reduce administrative costs. These changes are pending developments
within the newly staffed Ministry of Economy.
Central Government
Peru's central government encompasses the Republic's executive branch,
including various of its ministries and other centralized agencies such as the
Instituto Nacional de Bienestar Familia, or National Institute of Family
Welfare, and the Instituto Nacional de Becas y Credito Educativo, or National
Institute of Scholarships and Student Loans. The central government also
includes regional governments, whose representatives are appointed by the
President, and public universities.
The Government derives its revenues primarily from:
o tax collections;
o import tariffs;
o external loans; and
o dividends from state-owned companies.
Between 1997 and 2001, total Government revenues fluctuated between a
low of US$7.6 billion, or 14.8% of GDP, in 1999 and a high of US$9.5 billion, or
16.0% of GDP, in 1997. During this same period, tax revenues ranged from a low
of US$6.5 billion, or 12.5% of GDP, in 1999 to a high of US$8.3 billion, or
14.1% of GDP, in 1997. Total Government revenues in 2001 decreased 3.8% to
US$7.7 billion, while tax revenues increased 3.0% to US$6.7 billion, in both
cases as compared to the level registered in 2000. During the first three months
of 2002, the Government registered total revenues of US$1.8 billion, a 6.3%
decrease over the first three months of 2001, and tax revenues of US$1.5
billion, a 5.8% decrease over the first three months of 2001.
In recent years, Government expenditures have consisted primarily of:
o wages of public sector employees;
o transfers to public sector entities;
o interest payments on debt;
o public investments in infrastructure; and
o pension expenditures.
Between 1997 and 2001, total Government expenditures, excluding
interest payments on the Government's debt fluctuated between a low of US$8.1
billion, or 14.9% of GDP, in 2001 and a high of US$8.9 billion, or 15.1% of GDP,
in 1997. Total Government expenditures, excluding interest payments on the
Government's debt, in 2001 decreased 2.9% to US$8.1 billion, as compared to the
level registered in 2000. During the first three months of 2002, the Government
registered total Government expenditures, excluding interest payments on the
Government's debt, of US$1.8 billion, a 4.2% increase over the first three
months of 2001.
In the first three months of 2002, the government registered an overall
fiscal deficit of US$217 million, a 211% increase over the US$87 million fiscal
deficit registered for the first three months of 2002. The increase in the
fiscal deficit over 2001 is largely attributable to a tax amnesty declared by
Congress which decreased tax revenue by approximately 1% of GPD during the first
quarter of 2002. The Government financed its deficit during the first three
months of 2002 through multilateral disbursements, privatization proceeds and
issuances of bonds in the national currency.
Between 1997 and 2001, the central government registered overall fiscal
deficits that ranged from a low of US$456 million, or 0.9% of GDP, in 1997 to a
high of US$1.6 billion, or 3.2% of GDP, in 1999. In 1997 and 1998, the central
government registered primary surpluses of 0.9% to 0.7% of GDP, respectively.
This trend changed drastically in 1999, when the central government registered a
primary deficit of US$552 million, or 1.1% of GDP, primarily as a result of a
17.4% drop in tax revenues that was not accompanied by a proportionate reduction
in government expenditures. In 2000, an increase in non-tax revenues due to an
increase in current transfers from state-owned enterprises led to a reduction in
the central government's primary deficit to US$300 million, or 0.6% of GDP. The
stabilizing effect of this increase in non-tax revenues was undermined by
Fujimori's expansionary fiscal policies leading to the June 2000 elections and
by low tax collections. The Government financed its 2000 deficit through a
combination of foreign credits, domestic credits and privatization proceeds. In
2001, the deficit was financed through amortizations, privatization proceeds and
issuances of bonds in the national currency.
The following tables set forth information regarding government
accounts for the periods indicated.
Central Government Accounts
(in millions of U.S. dollars, at current prices)
For the first 3 months of:
-------------------------------
1997 1998 1999 2000(1) 2001(1) 2001(1) 2002(1)
--------- --------- --------- --------- --------- --------- ---------
Fiscal revenue:
Current revenue:
Tax revenue:
Income tax............. US$ 2,143 US$ 2,000 US$ 1,499 US$ 1,471 US$ 1,604 US$ 390 US$ 380
Capital gains tax...... 0 0 0 0 0 0 0
Taxes on goods and
services:
General Sales Tax.... 3,883 3,768 3,260 3,439 3,364 837 824
Selective consumption
tax.................. 1,263 1,170 1,019 981 1,007 242 266
Import tariffs......... 927 987 842 835 780 202 168
Other taxes............ 82 (108) (166) (257) (93) (34) (96)
--------- --------- --------- --------- --------- --------- ---------
Total tax revenue. 8,299 7,817 6,453 6,468 6,662 1,637 1,542
Non-tax revenue(2)....... 1,081 1,085 1,023 1,391 958 256 233
--------- --------- --------- --------- --------- --------- ---------
Total current
revenue......... 9,380 8,902 7,476 7,859 7,620 1,892 1,774
Capital revenue........... 72 182 159 152 83 15 13
--------- --------- --------- --------- --------- --------- ---------
Total fiscal
revenue....... US$ 9,452 US$ 9,083 US$ 7,635 US$ 8,011 US$ 7,703 US$ 1,907 US$ 1,787
========= ========= ========= ========= ========= ========= =========
Expenditures:
Current expenditures:
Wages and salaries....... US$ 2,401 US$ 2,382 US$ 2,298 US$ 2,345 US$ 2,389 US$ 525 US$ 577
Goods and services....... 1,997 2,055 1,836 2,026 2,013 443 409
Current transfers........ 2,334 2,306 2,309 2,439 2,393 525 596
--------- --------- --------- --------- --------- --------- ---------
Total current expenditures 6,731 6,743 6,443 6,811 6,796 1,492 1,582
Capital expenditures:
Fixed investment......... 1,669 1,694 1,671 1,361 1,110 167 182
Other.................... 506 225 73 139 162 43 11
Of which:
Capital transfers.... 0 0 0 73 81 42 4
--------- --------- --------- --------- --------- --------- ---------
Total capital
expenditures......... 2,175 1,919 1,744 1,500 1,273 211 193
--------- --------- --------- --------- --------- --------- ---------
Total expenditures... US$ 8,907 US$ 8,662 US$ 8,186 US$ 8,311 US$ 8,068 US$ 1,703 US$ 1,775
========= ========= ========= ========= ========= ========= =========
Fiscal balance:
Primary fiscal balance..... US$ 545 US$ 422 US$ (552) US$ (300) US$ (365) US$ 204 US$ 12
Interest................... (1,001) (995) (1,012) (1,012) (1,026) (285) (229)
--------- --------- --------- --------- --------- --------- ---------
Overall fiscal
balance........... US$ (456) US$ (573) US$(1,564) US$(1,312) US$(1,391) US$ (81) US$ (217)
========= ========= ========= ========= ========= ========= =========
Financing:
Foreign financing.......... US$ 4 US$ 191 US$ (94) US$ 603 US$ 588 US$ 66 US$ 489
Domestic financing......... (108) 118 1,270 300 476 (33) (311)
Privatization.............. 559 263 388 409 328 47 39
--------- --------- --------- --------- --------- --------- ---------
Total financing.......... US$ 456 US$ 573 US$ 1,564 US$ 1,312 US$ 1,391 US$ 81 US$ 217
========= ========= ========= ========= ========= ========= =========
- --------------------------
(1) Preliminary data.
(2) Includes transfers from state-owned enterprises and royalties from
petroleum companies.
Source: Central Bank.
Central Government Accounts
(as a percentage of GDP, at current prices)
For the first 3 months of:
-------------------------------
1997 1998 1999 2000(1) 2001(1) 2001(1) 2002(1)
--------- --------- --------- --------- --------- --------- ---------
Fiscal revenue:
Current revenue:
Tax revenue:
Income tax............. 3.6% 3.5% 2.9% 2.7% 3.0% 3.1% 2.8%
Capital gains tax...... 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Taxes on goods and
services:
General Sales Tax.... 6.6 6.6 6.3 6.4 6.2 6.6 6.2
Selective consumption 1.9 1.9
tax.................. 2.1 2.1 2.0 1.8 2.0
Import tariffs......... 1.6 1.7 1.6 1.6 1.4 1.6 1.3
Other taxes............ 0.1 (0.2) (0.3) (0.5) (0.2) (0.3) (0.7)
--------- --------- --------- --------- --------- --------- ---------
Total tax revenue. 14.1 13.8 12.5 12.1 12.3 12.9 11.5
Non-tax revenue(2)....... 1.8 1.9 2.0 2.6 1.8 2.0 1.7
--------- --------- --------- --------- --------- --------- ---------
Total current 14.1 14.9
revenue........... 15.9 15.7 14.5 14.7 13.3
Capital revenue........... 0.1 0.3 0.3 0.3 0.2 0.1 0.1
--------- --------- --------- --------- --------- --------- ---------
Total fiscal revenue.. 16.0% 16.0% 14.8% 15.0% 14.3% 15.0% 13.4%
========= ========= ========= ========= ========= ========= =========
Expenditures:
Current expenditures:
Wages and salaries....... 4.1% 4.2% 4.4% 4.4% 4.4% 4.1% 4.3%
Goods and services....... 3.4 3.6 3.6 3.8 3.7 3.5 3.1
Current transfers........ 4.0 4.1 4.5 4.6 4.4 4.1 4.5
--------- --------- --------- --------- --------- --------- ---------
Total current
expenditures........... 11.4 11.9 12.5 12.7 12.6 11.8 11.8
Capital expenditures:
Fixed investment......... 2.8 3.0 3.2 2.5 2.1 1.3 1.4
Other.................... 0.9 0.4 0.1 0.3 0.3 0.3 0.1
Of which:
Capital transfers.... 0.0 0.0 0.0 0.1 0.1 0.3 0.0
--------- --------- --------- --------- --------- --------- ---------
Total capital
expenditures........... 3.7 3.4 3.4 2.8 2.4 1.7 1.4
--------- --------- --------- --------- --------- --------- ---------
Total expenditures... 15.1% 15.2% 15.9% 15.5% 14.9% 13.4% 13.3%
========= ========= ========= ========= ========= ========= =========
Fiscal balance:
Primary fiscal balance..... 0.9% 0.7% (1.1)% (0.6)% (0.7)% 1.6% 0.1%
Interest................... (1.8) (1.9) (2.1) (2.2) (2.1) (2.2) (1.9)
--------- --------- --------- --------- --------- --------- ---------
Overall fiscal (2.8)% (0.6)%
balance........... (0.9)% (1.1)% (3.2)% (2.7)% (1.8)%
========= ========= ========= ========= ========= ========= =========
Financing:
Foreign financing.......... 0.0% 0.3% (0.2)% 1.1% 1.1% 0.5% 3.7%
Domestic financing......... (0.1) 0.3 2.6 0.9 1.1 (0.3) (2.1)
Privatization.............. 0.9 0.5 0.8 0.8 0.6 0.4 0.3
--------- --------- --------- --------- --------- --------- ---------
Total financing.......... 0.9% 1.1% 3.2% 2.7% 2.8% 0.6% 1.8%
========= ========= ========= ========= ========= ========= =========
- ---------------------------
(1) Preliminary data.
(2) Includes transfers from state-owned enterprises and royalties from
petroleum companies.
Source: Central Bank
One of the Toledo administration's highest priorities is maintaining
fiscal discipline while reorienting public spending towards important social
programs, particularly education. To achieve fiscal balance, the Toledo
administration is considering the following measures:
o a reform of the tax system that will focus on eliminating costly
and unnecessary exemptions and improving tax collection
mechanisms;
o a review and reform of regulatory and public sector functions to
eliminate duplicative tasks, promote efficiency and reduce
administrative costs;
o a reduction in total expenditures in the long term, particularly
defense expenditures;
o a reform of the Fiscal Prudence Act to provide for automatic
adjustments in government expenditures to match revenue streams,
while providing the government with fiscal flexibility in
recessionary periods; and
o an overall reduction in the role of the Government in the
economy, especially with respect to large scale public investment
projects, which are expected to be relegated to the private
sector through concessions and privatizations.
Tax Regime
All central government taxes in Peru are collected through SUNAT and
the Superintendencia Nacional de Aduanas, or National Superintendency for
Customs, which we refer to in this prospectus as "SUNAD." In accordance with
Supreme Decree number 061-2002-PCM, SUNAT and SUNAD merged on July 11, 2002.
SUNAT and SUNAD's budgets are determined through a percentage-based funding
mechanism, which provides each agency with 2% of its total tax collections. The
following table sets forth the composition of the Republic's tax revenues for
the periods indicated.
Tax Revenue of the Republic
(as a percentage of total tax revenue)
For the first 3 months of:
-------------------------------
1997 1998 1999 2000(1) 2001(1) 2001(1) 2002(1)
--------- --------- --------- --------- --------- --------- ---------
Income tax:
Individual............... 7.1% 8.0% 8.9% 9.1% 9.0% 9.5% 10.4%
Corporate................ 16.2 15.2 12.5 11.4 11.9 12.6 13.8
--------- --------- --------- --------- --------- --------- ---------
Clearing................. 2.5 2.3 1.8 2.2 3.2 1.7 0.4
Total income tax....... 25.8 25.6 23.2 22.7 24.1 23.8 24.6
Property tax............... 0.0 0.0 0.1 0.0 0.0 0.0 0.0
Taxes on goods and services:
General Sales Tax........ 46.8 48.2 50.5 53.2 50.5 51.1 53.5
Selective Consumption Tax:
Fuel tax............... 8.7 8.7 9.6 9.4 9.9 8.6 11.4
Other.................. 6.5 6.2 6.2 5.8 5.2 6.2 5.9
--------- --------- --------- --------- --------- --------- ---------
Total Selective
Consumption Tax..... 15.2 15.0 15.8 15.2 15.1 14.8 17.3
--------- --------- --------- --------- --------- --------- ---------
Total taxes on goods
and services...... 62.0 63.2 66.3 68.3 65.6 65.9 70.7
Import tariffs............. 11.2 12.6 13.0 12.9 11.7 12.4 10.9
Other taxes................ 7.9 6.8 7.2 8.3 10.7 12.1 4.3
Tax refund................. (6.9) (8.2) (9.8) (12.3) (12.1) (14.1) (10.6)
--------- --------- --------- --------- --------- --------- ---------
Total............. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
========= ========= ========= ========= ========= ========= =========
- ---------------------
(1) Reflects adjustments to reconcile estimated income tax withheld with
actual income tax liabilities.
Source: Central Bank.
Set forth below is a brief description of the Republic's current tax
regime, followed by a brief description of the Republic's tax enforcement
record.
Income Taxes
The current tax law provides for the following income tax rates for
2002:
Personal Annual Income
(in nuevos soles) 2002
- ------------------------------------------- ------------------
0-21,700................................... 0%
21,700-83,700.............................. 15
83,700-167,400............................. 21
> 167,400.................................. 27
- --------------------------
Source: Ministry of Economy.
The current tax law provides for the following corporate tax rates for
2002:
Corporate Tax 2002
- ------------------------------------------- ------------------
Tax on reinvested net profits.............. 27.0%
Tax on retained net profits................ 27.0
Dividend tax............................... 4.1
- --------------------------
Source: Ministry of Economy.
The corporate tax was raised from 20% to 27%, effective January 1,
2001, and applies to the worldwide income of enterprises legally regarded as
domiciled in Peru. A tax of 4.1% applicable to dividends will become effective
on January 1, 2003. Some forms of income are exempt from the corporate income
tax, including:
o income of religious and nonprofit institutions;
o interest on development loans granted by international
organizations or foreign governments;
o interest and other gains on loans to the public sector;
o interest on savings held in the domestic financial system;
o royalties for technical assistance provided by international or
foreign state agencies;
o capital gains from the sale of registered securities;
o interest and adjustments to principal from mortgage instruments;
and
o interest collected or paid by savings and loans cooperatives.
These exemptions are scheduled to expire on December 31, 2006.
The Republic offers companies in various industries the following tax
incentives to encourage their growth in various regions:
o companies operating in the Amazon region that are engaged in the
fishing, tourism or forestry industries, or engaged in
large-scale agricultural production or cultivation of marine life
for consumer consumption, are subject to a 10% tax rate;
o companies in the industries listed above that operate in the
departments of Loreto, Madre de Dios and some districts of
Ucayali are subject to a 5% tax rate; and
o companies that operate in the Amazon region that are engaged
principally in agriculture and/or the transformation or
processing of products classified as native or alternative crops
are exempt from income tax.
Capital Gains Tax
The Republic treats all capital gains as ordinary income for tax
purposes. Capital gains derived from the following activities are exempt from
income taxes:
o the sale of securities registered with the Public Registry of
Securities and Broker Dealers and sold through a securities
clearing agency;
o the sale of commodities through commodity exchanges regulated by
CONASEV; and
o the redemption and exchange of debt instruments and proprietary
interests issued through a public offering by corporations,
mutual funds, investment funds and trusts organized or established
in Peru.
These exemptions are scheduled to expire on December 31, 2006.
General Sales Tax
The Republic imposes an 18% Impuesto General a las Ventas, which we
refer to in this prospectus as the "General Sales Tax," a value-added tax that
applies to the sale, lease and import of new and used goods and services by
manufacturers, wholesalers, importers and retailers. Each party in the chain of
production generally collects the tax from its customer and pays to SUNAT the
difference between the tax paid to its suppliers and the tax collected from its
customers. For imports of goods, the taxable base is the c.i.f price plus
customs duties, surcharges and the selective consumption tax paid on such goods.
Some products and services are exempt from the General Sales Tax,
including fishmeal, various agricultural products, such as potatoes, tomatoes,
beans, coffee, tea, cocoa and wheat, public and cargo transport, financial
services, live entertainment and certain essential medicines. The Republic also
applies a special exemption for purchases made as part of the development of
natural resources. Individuals and companies operating in the Amazon region are
exempted from the General Sales Tax with respect to goods and services consumed
within this region.
The General Sales Tax does not apply to the export of goods or services
or construction contracts performed abroad. Exporters are reimbursed any General
Sales Tax they pay on the purchase of goods and services they export and can
apply such reimbursements as credits to offset General Sales Tax or income tax
liabilities.
Selective Consumption Tax
The Republic applies a selective consumption tax, which is an excise
tax, on selected goods and on gambling activities. The following table presents
a sample of the tax rates applicable to certain products.
Product Rate
- -------------------------------------------------- ------------
Soda.............................................. 17%
Gambling.......................................... 10
New cars.......................................... 10
Used cars......................................... 30
Wines, vermouths, ciders, whiskey, rum, gin....... 20
Cigarettes........................................ 125
Horse races....................................... 2
Beer.............................................. S/. 1.31 per liter
- --------------------------
Source: Ministry of Economy.
The Republic also imposes a tax on certain fuel products. The tax is
levied on the volume sold or imported, expressed in units of measurement
established by the Ministry of Economy. The following table presents a sample of
the tax rates applicable to certain fuel products.
Nuevos soles per
Fuels gallon
- ----------------------------------------------- -----------------
Gasoline:
< 84 octane................................. 1.84
84 - 90 octane.............................. 2.45
90 - 95 octane.............................. 2.69
> 95 octane................................. 2.97
Kerosene....................................... 0.52
Gasoils........................................ 1.24
Liquid petroleum gas........................... 0.52
- --------------------------
Source: Ministry of Economy.
Fuel consumed in the Amazon region is exempt from the fuel tax. Imports
or sales of diesel or residual fuel to enterprises engaged in the generation,
marketing and distribution of electrical power, as authorized by governmental
decrees, are exempt from the fuel tax until December 31, 2003.
Other Taxes
The Republic levies on employers a 2% tax, called the Extraordinary
Solidarity Tax, on the total compensation they pay to their employees. This tax
was reduced from 5% in September 2001 and is effective until December 31, 2002.
Independent workers earning total gross income of more than S/. 1,808 per month
must also pay this tax on their total gross earnings. The tax does not apply to
compensation for time of service, bonuses for national holidays and Christmas,
payments to household employees and annual profit-sharing allocations.
Tax Amnesty
In March 2002, the Government offered a tax amnesty that exonerated all
taxpayers from payment of penalty fees and penalty interests on overdue tax
payments. Taxpayers could elect to pay, in a single payment or in installments,
the principal amount in taxes owed plus a minimal interest to settle their
accounts. A similar amnesty was issued in April 2001.
Tax Enforcement
The Republic measures tax evasion mainly with respect to the General
Sales Tax, and the most recent statistical analysis was conducted in 1999 with
assistance from the IMF. This analysis indicated that the potential tax base for
the General Sales Tax represented 51.6% of GDP, which suggested potential
revenues from this tax of approximately 9.1% of GDP. Actual General Sales Tax
revenues, however, equaled 5.6% of GDP in 1999, suggesting losses in respect to
this tax equal to 3.7% of GDP.
The Republic has taken a series of steps to combat tax evasion and
improve collections, which include the following:
o establishing the Registro Unico de Contribuyentes, or Taxpayer
Registry, a computerized registry of taxpayers;
o creating a dual structure for monitoring taxpayers with special
units to monitor principal contributors, who currently account
for approximately 70% of total tax revenues collected. Principal
contributors are required to pay taxes directly at SUNAT's
premises, while the other taxpayers pay their taxes in a private
banking network of over 1,300 bank offices. The banking network
and a computerized system that automatically monitors tax arrears
for principal contributors help to plan auditing operations by
providing efficient means of conducting data analysis and
monitoring collection trends;
o simplifying the tax structure and a reduction in the number of
taxes;
o using more effectively SUNAT's powers to effect attachment of
delinquent taxpayers' assets;
o publishing delinquent taxpayers' names;
o increasing the number of audits of principal contributors; and
o implementing a system of tax withholding for the General Sales
Tax, applicable to approximately 40 to 50 principal
taxpayers and all public sector taxpayers.
SUNAT is currently planning the following additional measures to combat
tax evasion and improve collections:
o improving tax refund mechanisms to avoid refunds to companies
with outstanding tax liabilities;
o conducting approximately 17,000 audits of corporations and
independent professionals, focusing on collection of the General
Sales Tax and corporate taxes; audits of very large corporations
will be conducted annually while smaller corporations will be
audited every four years;
o increasing the use of a setoff mechanism that permits SUNAT to
deduct tax liabilities directly from a delinquent taxpayer's
debtors and bank accounts; and
o improving information-sharing mechanisms between SUNAT and other
government agencies with respect to principal taxpayers.
The Toledo Administration's Tax Reform Program
The Toledo administration's tax reform program is expected to include
the following proposals:
o eliminating special sectoral and regional exemptions, including
General Sales Tax exemptions for individuals and companies
operating within the Amazon region and for a number of
agricultural products, and the selective consumption tax
exemption for fuel consumed in the Amazon region;
o decreasing the number of allowable exemptions and deductions
under the personal and corporate income tax;
o reducing the number of taxes applicable to alcoholic
beverages; and
o working with municipalities to strengthen collection of property
taxes--the primary source of municipal tax revenue.
The 2002 Budget
Pursuant to the Constitution and the Ley de Gestion Presupuestaria del
Estado of 1996, which we refer to in this prospectus as the "Budgetary
Administration Law," the Ministry of Economy, acting through the Direccion
Nacional del Presupuesto Publico, which we refer to in this prospectus as the
"Public Budget Administration," is responsible for preparing the Republic's
annual budget.
The annual budget is prepared on the basis of:
o proposals submitted by the various public entities;
o matching revenue estimates with goals and priorities established
for each entity; and
o balances for previous fiscal years and estimates for future
years.
The Public Budget Administration submits its proposed budget to the
Council of Ministers for approval. If the Council of Ministers approves the
proposed budget, it is submitted by the President to Congress by August 30 of
each year. Upon Congressional approval, the proposed budget becomes the Annual
Law of the Public Sector Budget. Under the Constitution, if by November 30
Congress has not submitted to the Executive Branch an official document
commenting on or approving the budget, the budgetary proposal submitted by the
President is automatically adopted as the Annual Law of the Public Sector
Budget.
Congress approved the 2002 budget on November 29, 2001. The following
table sets forth the principal assumptions on which the Government's 2002 budget
is based.
Principal Budgetary Assumptions for 2002
2002
--------------------
Projected real GDP growth....................... 3.5-4.0%
Projected inflation............................. 2.50%
Projected average exchange rate................. S/. 3.54 per dollar
- --------------------------
Source: Ministry of Economy.
The 2002 budget projects fiscal revenues of S/. 26.7 billion, or US$7.6
billion, and public expenditures of S/. 35.8 billion, or US$10.4 billion,
US$6.05 billion of which was expected in privatization proceeds.
The 2002 budget projects a reduction in total public expenditures of
1.6% compared to the 2001 budget, with a projected 15% increase in education
expenses and a projected 17% reduction in military spending. Approximately 46%
of the 2002 budget is dedicated towards social investment programs in areas such
as education and health services. Overall, the 2002 budget projects a 12.4%
increase in spending on social programs as compared to the 2001 budget.
The 2002 budget projects an overall fiscal deficit for the central
government of US$1.3 billion, or 2.2% of projected GDP, and an overall
consolidated public sector deficit of approximately US$1.4 billion, or 2.3% of
projected GDP.
The 2002 budget provides for an automatic adjustment of the target
fiscal deficit if privatization receipts for 2002 exceed expectations. If
privatization revenues in 2002 exceed the Government's projections of US$700
million, the deficit target will be automatically adjusted by the amount of such
excess. Such adjustments shall not exceed 0.3% of GDP and all excess
privatization receipts will be directed towards spending on infrastructure
projects.
Because of the political events that occurred as a result of the June
privatizations of Egasa S.A. and Egesur, S.A., the privatization program
launched in 2002 was instead suspended until 2003. Without proceeds from such
privatizations, the Republic is now forced to rely on alternative sources of
financing in order to maintain its projected fiscal deficit of 2.3% of GDP and
safeguard its program of public investment intended to sustain GDP growth. To
compensate for setbacks created by political events, the Republic expects to
conduct an international offering, to be guaranteed by an international
organization.
The following table summarizes the Government's principal budgetary
targets for 2002.
Principal Economic Targets for 2002
2002
------------
Overall consolidated public sector deficit (as % of GDP)........ 1.9%
Discretionary public sector expenditures (as % of GDP).......... 25.6%
Gross public sector debt denominated in
foreign currency (in millions of US$)......................... US$ 19,789.0
Increase in net international reserves of the Central Bank
relative to December 2001 (in millions of US$)................ US$ 100.0
- --------------------------------
Source: Ministry of Economy.
The 2003 Budget
The President submitted a draft budget for 2003 to Congress on August
29, 2002. The budget is subject to congressional comment and amendment prior to
November 30, 2003. If Congress does not comment on or approve the budget prior
to that date, the budgetary proposal will be automatically adopted as the Annual
Law of the Public Sector Budget.
The 2003 draft budget is based on assumptions of projected real GDP
growth of 4.0%, projected inflation of 2.5%, and a projected average exchange
rate of S/. 3.56 per dollar. Based on those assumptions, the draft budget
projects:
o fiscal revenues of S/. 44.5 billion, or US$12.5 billion;
o public expenditures of S/. 44.5 billion, or US$12.5 billion, S/.
1.4 billion of which is expected to come from privatization
proceeds; and
o an overall consolidated public sector deficit of US$1.1 billion,
or 1.9% of projected GDP.
Social Security
Peru has a two-tier pension system. The public pension system is a
pay-as-you-go system by which current social security contributions are used to
pay benefits currently being provided by the Government. In 1993, the Government
also created AFPs as an alternative to the public pension system.
The public pension system has two components: the general
pay-as-you-go-system, which applies to the general population and is
administered by the Oficina de Normalizacion Previsional, or Office of Pension
Regularization, and the special public-sector regimes for the military, police,
teachers, certain judges and magistrates, and other special segments of the
population. The public sector has two pension reserve funds funded by
privatization receipts: the Fondo Consolidado de Reservas Previsionales, or
Consolidated Reserve Fund, an autonomous fund with resources earmarked to meet
public pension obligations falling due over the medium- and long-term, and the
Fondo Nacional de Ahorro Publico, or National Public Savings Fund, the objective
of which is to provide supplemental pensions to all low-income pensioners in the
private pension system.
The private pension system consists of four AFPs. New entrants to the
labor market can join the private pension system but they must exercise this
option within 10 days of employment. Otherwise, they are automatically enrolled
in a public fund. Workers may leave the public pension system for an AFP at any
time, but once they leave the public pension system, they cannot return. To
compensate individuals who switch to the AFPs for pension rights they had
accumulated while participating in the public pension system, the Government has
authorized the issuance of recognition bonds. These bonds are nontransferable,
zero-coupon bonds indexed to the consumer price index and redeemable at
retirement.
To provide an incentive for individuals to join AFPs and discourage
participation in the public pension system, the Government increased the private
pension system contribution rate to 11% from 3% in the early 1990s and to 13% in
1997. Workers are eligible to receive benefits at age 65. In December 2001, a
congressional commission approved a proposal to reduce the retirement age to 60
for both the private pension system and the AFPs. Congress has approved an
increase of the minimum pension from S/. 300 to S/. 415 a month.
The Government is considering proposals to improve the efficiency of
the private pension system, while maintaining the basic elements of the current
two-tier system. These proposals include the full-funding of the private pension
funds with individual capitalization accounts and restrictions on early
withdrawal of funds. The Government also expects to reduce the operating cost of
AFPs by lowering their required contributions to the SBS and streamlining
information disclosure requirements. The Government believes these measures will
allow AFPs to reduce commissions, which will continue to be determined by market
conditions.
PUBLIC SECTOR DEBT
The Republic's total public sector debt consists of foreign
currency-denominated and nuevo sol-denominated debt. The Republic's total public
external debt consists of loans from foreign creditors to the Government, the
Central Bank and public sector entities.
External Debt
Ninety-two percent of the Republic's public sector external debt
consists of foreign currency denominated debt. As of December 31, 2001, public
external debt totaled US$19.2 billion, or 35.1% of GDP, compared to US$19.6
billion, or 35.9% of GDP, as of December 31, 2000.
The following tables set forth further information on public sector
external debt for the periods shown.
Public Sector External Debt
(in millions of U.S. dollars, except for percentages)
As of
As of December 31, March 31,
------------------------------------------------------------ ----------
1997 1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ----------- ----------
Official reserves liabilities:
IMF credit use............. US$ 869 US$ 756 US$ 589 US$ 349 US$ 202 US$ 134
----------- ---------- ----------- ----------- ----------- ----------
Total official reserves
liabilities............ 869 756 589 349 202 134
Official non-reserves
liabilities:
Public sector.............. 18,787 19,562 19,500 19,205 18,967 19,113
----------- ---------- ----------- ----------- ----------- ----------
Total official
non-reserves liabilities 18,787 19,562 19,500 19,205 18,967 19,113
----------- ---------- ----------- ----------- ---------- ----------
Total official liabilities US$ 19,656 US$ 20,318 US$ 20,089 US$ 19,554 US$ 19,169 US$ 19,427
=========== ========== =========== =========== ========== ==========
Total public sector external
debt,
as % of GDP(1)............. 31.8% 34.4% 37.7% 35.9% 35.1% N/A
Total public sector external
debt,
as % of total exports(1)... 206.2% 235.1% 233.6% 205.4% 205.5% N/A
- -------------------------
(1) The Republic does not include IMF credit use in reporting total public
sector external debt. Debt ratios are calculated on the basis of the
Republic's total official non-reserves liabilities.
N/A = Not Available.
Source: Central Bank.
Public Sector External Debt, Net of Reserves
(in millions of U.S. dollars, at current prices)
As of
As of December 31, March 31,
------------------------------------------------------------ ----------
1997 1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ----------- ----------
Public sector external debt.. US$18,787 US$19,562 US$19,500 US$19,205 US$18,967 US$19,113
Gross international reserves
of the Central Bank........ (11,119) (9,982) (9,003) (8,563) (8,838) (8,940)
----------- ----------- ----------- ----------- ----------- ----------
Public sector external debt,
net
of reserves.............. US$ 7,668 US$ 9,580 US$10,497 US$10,642 US$10,129 US$10,173
=========== ========== =========== =========== ========== ==========
- ------------------------
Source: Central Bank.
Since 1997, the Republic's public sector external debt as a percentage
of GDP and as a percentage of total exports of goods and services has
fluctuated, rising from 31.8% of GDP and 206.2% of total exports of goods and
services in 1997 to 37.7% of GDP and 233.6% of total exports in 1999, before
dropping to 35.1% of GDP and 205.5% of total exports in 2001. This fluctuation
was due to decreases in nominal GDP from 1997 to 1999 and increases in nominal
GDP in 2000 and 2001.
During the period from 1997 to 2001, multilateral debt represented, on
average, 28.6% of the Republic's public sector external debt. The Republic's
principal multilateral creditors are the World Bank, representing, on average,
42.6% of outstanding multilateral debt each year from 1997 to 2001, and the IDB,
representing, on average, 44.6% of outstanding multilateral debt each year from
1997 to 2001. Loans from the World Bank have funded projects relating to
irrigation, agriculture, poverty reduction, education, health reform,
transportation and reconstruction efforts following the El Nino phenomenon in
1998. Loans from the IDB have been destined primarily for projects relating to
poverty reduction, education, financial-sector reform, state modernization
programs and reconstruction efforts following the El Nino phenomenon.
The following table sets forth information on capital flows from
multilateral lenders for the period from 1997 to 2001.
Capital Flows from Multilateral Lenders
(in millions of U.S. dollars)
As of
March 31,
---------
1997 1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ----------- ----------
World Bank:
Disbursements minus principal
amortizations............ US$ 422.1 US$ 205.2 US$ 291.7 US$ 172.9 US$ 35.4 US$ (30.5)
Disbursements minus
principal, interests
and commissions.......... 306.6 82.1 131.9 (15.7) (150.8) (74.9)
IDB:
Disbursements minus
principal amortizations.. 449.4 175.0 377.1 (6.1) 267.6 (13.7)
Disbursements minus
principal, interests and
commissions.............. 329.5 36.9 222.6 (180.9) 95.7 (69.1)
- -------------------------------
Source: Ministry of Economy (Direccion General de Credito Publico, or Office
of Public Credit).
The Republic has signed a letter of intent with the IMF establishing a
US$316 million stand-by credit facility for 2002-2004. In this letter, the
Republic agreed to economic targets and performance criteria upon which IMF
support will be conditioned, including the following key economic targets for
2002:
o GDP growth of 3.5% to 4.0%;
o a consolidated public sector deficit of 1.9% of GDP, which was
later revised to 2.2% and then 2.3%, subject to IMF final
approval;
o current account deficit of less than 3.0% of GDP;
o a 2.5% inflation rate;
o revenues of $700 million generated through the sale of
concessions and state assets; and
o maintenance of gross reserves adequate to cover 10 months of
imports of goods and services and the equivalent of 1.5 times the
balance of external debt incurred in the following twelve months.
The Republic's main goal in seeking the letter of intent is to gain the
IMF's support and oversight for its economic program, in order to promote other
sources of foreign credit. The Republic has, at present, suspended its
privatization program due to political opposition and public protest. The IMF
has accordingly agreed to adjust both the 2002 and 2003 targets for the
Republic's consolidated public sector deficit to 2.3% of GDP for 2002 and
1.9% for 2003, subject to final board approval.
The following tables summarize public sector external debt by creditor
for the years indicated.
Public Sector External Debt by Creditor(1)
(in millions of U.S. dollars, at current prices)
As of
As of December 31, March 31,
------------------------------------------------------------ ----------
1997 1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ----------- ----------
Official creditors:
Multilateral debt:
IDB........................ US$ 2,010 US$ 2,252 US$ 2,632 US$ 2,562 US$ 2,774 US$ 2,756
World Bank................. 1,919 2,127 2,417 2,590 2,626 2,595
IFAD(2).................... 28 28 27 23 23 22
IMF........................ 217 226 220 209 185 167
OPEC(3).................... 2 4 7 10 12 12
Other...................... 355 324 328 435 917 980
----------- ----------- ----------- ----------- ----------- ----------
Total multilateral debt.. 4,531 4,961 5,631 5,829 6,537 6,532
Bilateral debt:
Paris Club................. 5,803 6,033 5,350 4,904 4,493 4,454
United States.............. 1,406 1,172 1,117 1,059 997 993
Latin America.............. 213 152 96 75 71 71
East Europe countries and
China.................... 139 102 64 62 48 46
Japan...................... 1,468 1,740 2,163 2,429 2,198 2,196
Other countries............ 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------
Total bilateral debt..... 9,029 9,199 8,790 8,529 7,807 7,760
----------- ----------- ----------- ----------- ----------- ----------
Total official debt.... 13,560 14,160 14,421 14,358 14,344 14,292
Private creditors:
Banking...................... 155 249 225 110 21 21
Suppliers.................... 943 1,023 1,127 1,010 876 865
----------- ----------- ----------- ----------- ----------- ----------
Total private sector debt.. 1,098 1,272 1,352 1,120 897 886
Bonds:
Brady Bonds.................. 4,130 4,130 3,727 3,727 3,727 2,512
Global Bonds................. 0 0 0 0 0 1,423
----------- ----------- ----------- ----------- ----------- ----------
Total bonds................ 4,130 4,130 3,727 3,727 3,727 3,935
----------- ----------- ----------- ----------- ----------- ----------
Total public sector
external debt........ US$ 18,788 US$ 19,562 US$ 19,500 US$ 19,205 US$ 18,968 US$ 19,113
=========== =========== =========== =========== =========== ===========
- -------------------------------
(1) Medium- and long-term debt, excluding IMF financing.
(2) Refers to the International Fund for Agricultural Development.
(3) Refers to the Organization of Petroleum Exporting Countries.
Source: Ministry of Economy (Direccion General de Credito Publico, or Office of
Public Credit).
Public Sector External Debt by Creditor(1)
(as a percentage of total public sector external debt)
As of
As of December 31, March 31,
------------------------------------------------------------ ----------
1997 1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ----------- ----------
Official creditors:
Multilateral debt:
IDB........................ 10.7% 11.5% 13.5% 13.3% 14.6% 14.4%
World Bank................. 10.2 10.9 12.4 13.5 13.8 13.6
IFAD(2).................... 0.1 0.1 0.1 0.1 0.1 0.1
IMF........................ 1.2 1.2 1.1 1.1 1.0 0.9
OPEC(3).................... 0.0 0.0 0.0 0.1 0.1 0.1
Other...................... 1.9 1.7 1.7 2.3 4.8 5.1
----------- ----------- ----------- ----------- ----------- ----------
Total multilateral debt.. 24.1 25.4 28.9 30.4 34.5 34.2
Bilateral debt:
Paris Club................. 30.9 30.8 27.4 25.5 23.7 23.3
United States.............. 7.5 6.0 5.7 5.5 5.3 5.2
Latin America.............. 1.1 0.8 0.5 0.4 0.4 0.4
East Europe countries and
China.................... 0.7 0.5 0.3 0.3 0.3 0.2
Japan...................... 7.8 8.9 11.1 12.6 11.6 11.5
Other countries............ 0.0 0.0 0.0 0.0 0.0 0.0
----------- ----------- ----------- ----------- ----------- ----------
Total bilateral debt..... 48.1 47.0 45.1 44.4 41.2 40.6
----------- ----------- ----------- ----------- ----------- ----------
Total official debt.... 72.2 72.4 74.0 74.8 75.6 74.8
Private creditors:
Banking...................... 0.8 1.3 1.2 0.6 0.1 0.1
Suppliers.................... 5.0 5.2 5.8 5.3 4.6 4.5
----------- ----------- ----------- ----------- ----------- ----------
Total private sector debt. 5.8 6.5 6.9 5.8 4.7 4.6
Bonds:
Brady Bonds.................. 22.0 21.1 19.1 19.4 19.6 13.2
Global Bonds................. 0 0 0 0 0 7.4
----------- ----------- ----------- ----------- ----------- ----------
Total bonds............... 22.0 21.1 19.1 19.4 19.6 20.6
----------- ----------- ----------- ----------- ----------- ----------
Total public sector
external debt....... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
=========== =========== =========== =========== =========== ==========
- -------------------------------
(1) Medium- and long-term debt, excluding IMF financing.
(2) Refers to the International Fund for Agricultural Development.
(3) Refers to the Organization of Petroleum Exporting Countries.
Source: Ministry of Economy (Direccion General de Credito
Publico, or Office of Public Credit).
As of December 31, 2001, medium- and long-term debt constituted 99.9%
of the Republic's public sector external debt. Approximately 67.5% of the
Republic's outstanding loans are for terms greater than 12 years. The following
table sets forth information regarding the terms of the Republic's public sector
external debt for the periods shown.
Public Sector External Debt Structure, by Maturity Date
(in millions of U.S. dollars and as a percentage of total public
sector external debt)(1)
As of
As of December 31, March 31,
------------------------------------------------------------ ----------
1997 1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ----------- ----------
Short-term debt.............. US$ 81 US$ 43 US$ 10 US$ 34 US$ 23 US$ 20
Medium- and long-term debt... 19,656 20,318 20,089 19,554 19,169 19,247
Short-term debt (as % of total
public sector external debt). 0.4% 0.2% 0.0% 0.2% 0.1% 0.1%
- -----------------------------------
(1) Includes Central Bank debt.
Source: Central Bank.
The following table sets forth public sector external debt by currency,
as of March 31, 2002.
Summary of Public Sector External Debt by Currency(1)
(in millions of U.S. dollars, except for percentages)
As of March 31, 2002
----------------------------
Currency US$ %
---------- ----------
U.S. dollar.......................... 10,599,589 55.5
Japanese yen......................... 2,970,295 15.5
Special Drawing Rights (SDR)(2)...... 188,478 1.0
Single currency pool (SCP)(3)........ 1,185,891 6.2
IDB unit of account.................. 1,178,475 6.2
English pound........................ 199,147 1.0
Canadian dollar...................... 82,370 0.4
Swedish krona........................ 59,524 0.3
Norwegian kroner..................... 44,705 0.2
Euro................................. 2,604,259 13.6
Swiss franc.......................... 571 0.0
Venezuelan Bolivar................... 80 0.0
---------- ----------
Total............................. 19,113,384 100.0
========== ==========
- -----------------------
(1) Includes multilateral, Paris Club and suppliers debt.
(2) IMF unit of account, based on a basket of national currencies.
(3) World Bank unit of account, based on a basket of national currencies.
Source: Ministry of Economy (Direccion General de Credito Publico, or Office of
Public Credit).
From 1997 to 2001, total public sector external debt service ranged, as
a percentage of total fiscal revenue, from a low of 19.5% in 1998 to a high of
26.9% in 2000. Public sector external debt service measured as a percentage of
total exports of goods and services increased from 21.9% in 1997 to 24.3% in
1999, before dropping to 21.6% in 2001. For 2002, the Republic expects public
sector external debt service to represent 22.8% of total fiscal revenue and
33.6% of total exports of goods and services. As a percentage of GDP, public
sector external debt service increased from 3.4% in 1997 to 4.0% in 2000 before
dropping to 3.7% in 2001. It is expected to decrease to 3.2% in 2002.
The following table sets forth information regarding the Republic's
public sector external debt service for the periods indicated.
Public Sector External Debt Service(1)
As of December 31, As of March 31,
------------------------------------------------------------ ---------------------
1997 1998 1999 2000 2001 2001 2002
----------- ----------- ----------- ----------- ----------- ----------- ----------
Interest payments............ US$ 1,037 US$ 1,032 US$ 1,057 US$ 1,112 US$ 1,076 US$ 268 US$ 234
Amortization................. 955 738 971 1,042 918 205 1,059(3)
----------- ----------- ----------- ----------- ----------- ----------- ----------
Total public sector
external debt service... US$ 1,992 US$ 1,770 US$ 2,028 US$ 2,154 US$ 1,994 US$ 473 US$ 1,293
=========== =========== =========== =========== =========== =========== ===========
As % of total exports(2)..... 21.9% 21.3% 24.3% 23.0% 21.6% 21.5% 63.7%
As % of total exports and
workers' remittances....... 20.4 19.7 22.5 21.4 20.0 N/A N/A
As % of GDP.................. 3.4 3.1 3.9 4.0 3.7 3.7 9.7
As % of total fiscal revenue. 21.1 19.5 26.6 26.9 25.9 N/A N/A
- -----------------
(1) Excludes Central Bank debt.
(2) Includes exports of goods and services and investment income.
(3) Includes US$902 million in Brady Bonds exchanged for Global Bonds.
N/A = Not Available.
Source: Central Bank.
In 2001, interest payments decreased to US$1.08 billion, or 2.0% of
GDP, from US$1.1 billion in 2000, or 2.1% of GDP, as a result of a decrease in
international interest rates. In 2001, the Republic paid US$427 million in
interest to Paris Club creditors, US$423 million to multilateral creditors,
US$161 million to Brady bondholders and US$65 million to other creditors.
The following table sets forth estimated public sector external debt
service through 2007.
Estimated Public Sector Debt Service by Debtor (1)(2)
2003 - 2007
(in millions of U.S. dollars)
2003 2004 2005
---------------------------- ---------------------------- ----------------------------
Principal Interest Total Principal Interest Total Principal Interest Total
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Non-financial public
sector:
Central Government..... US$ 1,007 US$ 1,039 US$ 2,046 US$ 1,119 US$ 986 US$ 2,105 US$ 1,167 US$ 921 US$ 2,088
Public enterprises..... 28 13 41 28 12 40 29 11 40
--------- --------- --------- --------- --------- --------- --------- --------- ---------
1,035 1,052 2,087 1,147 998 2,145 1,196 932 2,128
Financial public sector.. 40 14 54 34 12 46 30 11 41
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total public sector.. US$ 1,075 US$1,066 US$ 2,141 US$ 1,181 US$ 1,010 US$ 2,191 US$ 1,226 US$ 943 US$ 2,169
========= ========= ========= ========= ========= ========= ========= ========= =========
2006 2007
---------------------------- ----------------------------
Principal Interest Total Principal Interest Total
--------- --------- --------- --------- --------- ---------
Non-financial public
sector:
Central Government..... US$ 1,201 US$ 854 US$ 2,055 US$ 1,246 US$ 798 US$ 2,044
Public enterprises..... 31 10 41 32 9 41
1,232 864 2,096 1,278 807 2,085
Financial public sector.. 19 10 29 19 10 28
--------- --------- --------- --------- --------- ---------
Total public sector.. US$ 1,251 US$ 874 US$ 2,125 US$ 1,297 US$ 817 US$ 2,113
========= ========= ========= ========= ========= =========
- ---------------------------
(1)Disbursements preliminary estimates, as of March 2002.
(2)Includes Loans of COFIDE without the Republic Guarantee.
Source: Central Bank and Ministry of Economy (Direccion General de Credito
Publico, or Office of Public Credit).
The Republic has issued public sector external bonds only in connection
with the Brady restructuring. For a description of the Brady restructuring, see
"--Debt Management and Restructuring." As of March 31, 2002, approximately
US$2.5 billion principal amount remained outstanding on the Brady bonds.
Domestic Debt
The following table sets forth total public sector domestic debt,
excluding intra-governmental debt.
Total Public Sector Domestic Debt
(in millions of U.S. dollars, at current prices)
As of
As of December 31, March 31,
------------------------------------------------------------ ----------
1997 1998 1999 2000 2001 2002
----------- ----------- ----------- ----------- ----------- ----------
Long-term debt:
Banco de la Nacion...... US$ 695.8 US$ 702.9 US$ 922.0 US$ 951.2 US$ 954.4 US$ 937.7
Treasury bonds.......... 123.7 150.6 1,006.0 977.4 1,504.3 1,644.1
Pension Reform Bonds.... N/A N/A 2,393.0 2,681.0 2,765.0 2,766.0
Other(1)................ 92.0 91.4 94.0 43.4 52.6 53.2
----------- ----------- ----------- ----------- ----------- -----------
Total long-term debt.. 911.5 944.9 4,415.0 4,653.0 5,276.3 5,401.0
Short-term debt........... N/A N/A 400.0 392.0 465.0 319.0
----------- ----------- ----------- ----------- ----------- -----------
Total............... N/A N/A US $4,815.0 US$ 5,045.0 US$ 5,741.3 US$ 5,720.0
=========== =========== =========== =========== =========== ===========
Total public sector
domestic debt, as %
of GDP................. N/A N/A 9.3% 9.4% N/A N/A
- ---------------------
(1) Includes credits from Banco de la Nacion to local governments and reflects
discrepancies in the data available from different government entities.
N/A = Not Available.
Source: Ministry of Economy (Direccion General de Credito Publico, or Office
of Public Credit), Central Bank.
The following table sets forth a list of the Republic's outstanding
domestic public sector bonds.
Public Sector Domestic Bonds(1)
(in millions of U.S. dollars, at current prices)
Principal Amount
Outstanding
as of March 31, 2002
--------------------
Central Bank capitalization bonds............... US$ 105
Financial system support bonds.................. 776
Debt securities................................. 244
Pension reform bonds............................ 2,766
Sovereign bonds................................. 486
Other bonds..................................... 34
--------------------
Total......................................... US$ 4,411
====================
- ---------------------------
(1) Excludes intra-government debt issued in the form of bonds.
Source: Central Bank.
In March 2001, the Government established a public auction system for
bonds in Peruvian legal currency. This system has increased the availability of
investment instruments in the domestic capital markets and reduced the
Republic's exposure to currency exchange risk.
Debt Management and Restructuring
The regional debt crisis, which started in 1982, resulted in growing
unwillingness on the part of foreign commercial banks to lend to the Republic.
At the same time, a sharp decrease in the export prices of mining products and
the 1982-1983 El Nino phenomenon led to a deterioration in the Republic's
balance of payments and fiscal accounts, which made it difficult for the
Republic to service its debt. Faced with an unsustainable debt burden, the
Government suspended payment on its external commercial bank debt in 1984. By
the end of 1984, the Republic had failed to make scheduled payments of US$1.0
billion in principal and interest on its commercial bank debt.
In 1985, the Garcia administration declared that service of the public
sector external debt would not exceed 10% of total exports. In 1986, the IMF
declared Peru ineligible for additional funds, and in 1987 the World Bank
suspended loan disbursements. Despite a decline in new loans, the Republic's
total public sector debt increased from US$10.9 billion to US$18.9 billion in
the period from 1985 to 1990, as unpaid interest continued to accrue.
In 1991, the Fujimori administration began a series of negotiations
that led to a normalization of relations with multilateral creditors. In
September 1991, the Republic paid all amounts in arrears owed to the IDB, and in
March 1993, it paid a total of US$1.8 billion in arrears owed to the IMF and the
World Bank. Since 1993, the IMF has approved the following credit facilities:
o in 1993, the IMF approved a US$1.5 billion Extended Fund Facility
for the period from 1993 to 1995;
o in 1996, the IMF approved a US$358 million Extended Fund Facility
for the period from 1996 to 1998;
o in 1999, the IMF approved a US$512 million Extended Fund Facility
for the period from 1999 to 2000; and
o in 2002, the IMF approved a US$316 million stand-by credit
facility for the period from 2002 to 2004.
These credit facilities were and are primarily intended to help the
Republic overcome its fiscal deficits.
The Fujimori administration also negotiated substantial reductions in
the Republic's short-term external debt with its principal bilateral creditors.
During the 1990s, the Republic conducted the following three rounds of
negotiations with the Paris Club:
o in September 1991, the Republic successfully rescheduled US$4.7
billion of its Paris Club debt maturing between October 1991 and
December 1992;
o in May 1993, the Republic rescheduled an additional US$1.9
billion of its Paris Club debt maturing between March 1993 and
March 1996; and
o in July 1996, the Republic rescheduled an additional US$6.8
billion of its Paris Club debt maturing between April 1996 and
December 1998.
As a result of this restructuring, the Republic obtained the following
extensions with respect to credits maturing in the relevant period:
o a 20-year extension for concessionary credits, with a 10-year
grace period; and
o a 14-year extension on commercial credits, representing the
majority of the Republic's Paris Club debt, with a 7-year grace
period.
Additionally, as a result of the 1996 restructuring, the Republic
obtained the following reductions in its debt:
o a reduction in debt payments from US$970 million per year to
approximately US$530 million per year with respect to
indebtedness maturing between April 1996 and December 1998; and
o a reduction in debt payments from US$1.2 billion per year to
approximately US$ 1.0 billion per year with respect to
indebtedness maturing between 1999 and 2006.
In 1997, the Republic renegotiated its debt with international
commercial banks under the Brady program. The Brady restructuring reduced the
Republic's international commercial bank debt from US$10.6 billion to US$4.9
billion, US$2.4 billion of which were Past-Due Interest, or "PDI," Bonds, US$1.7
billion Front-Loaded Interest Reduction Bonds, or "FLIRBs," US$572 million
Floating Rate, or "Discount," Bonds and US$183 million in Fixed Rate, or "Par,"
Bonds. The PDI Bonds and FLIRBs each have a 20-year term. The Discount Bonds and
the Par Bonds each have a 30-year term and are collateralized by zero-coupon
U.S. Treasury bonds.
In February 2002, the Republic launched its first international bond in
74 years. The Republic issued and sold the Global Bonds, raising US$500 million.
At the same time, the Republic retired US$1.2 billion in principal amount of
Brady bonds in exchange for a further US$923 million in principal amount of the
Global Bond. The exchange lowered the Republic's debt by US$281 million and
freed up a further US$50 million in collateral backing the Brady bonds, the
issuance of the Global Bonds pushed up total debt by only US$170 million. After
issuing the Global Bonds and taking into account amortization of the PDI Bonds
in March 2002, the current amounts outstanding are US$1.1 billion of PDI Bonds,
US$1.2 billion of FLIRBs, US$198 million of Discount Bonds and US$64 million Par
Bonds.
Debt Record
Since the Brady restructuring in 1997, the Republic has serviced its
external debt without default except as described below.
Upon completion of the Brady restructuring, the Republic ceased making
payments of principal or interest to lenders who had failed to participate in
the restructuring. These lenders included Elliot Associates, L.P., a private
investment firm that acquired US$20.0 million in Peruvian debt. This firm
obtained a US$55.7 million judgment against the Republic for non-payment of
interest, and an attachment of the Republic's assets held at Chase Manhattan
Bank of New York, which the Republic had originally allocated for interest
payments on its Brady bonds. As a result, on September 7, 2000, the Republic
failed to make a required interest payment of US$80 million to its Brady
bondholders, even though it had deposited in its Chase account sufficient funds
with the purpose of making such payment. On September 26, 2000, Elliot
Associates, L.P. obtained an injunction against the clearing agency Euroclear
that prevented it from receiving or distributing funds supplied by the Republic
for the payment of interest on the Republic's Brady Bonds. The Elliot
Associates, L.P. litigation was settled following the issuance of the injunction
against Euroclear and the Republic made interest payments to its Brady
bondholders on October 4, 2000, within the 30-day applicable grace period for
the Brady bonds. The Republic has made all its debt payments to Elliot
Associates, L.P. in accordance with the terms of the settlement.
Four other creditors also failed to participate in the Brady
restructuring for reasons that included failure to provide the required
documentation and failure to identify the actual holder of the debt to be
exchanged. Since the Brady restructuring, the Republic has been in default on
payments to these creditors. As of March 31, 2002, these payments totaled
US$32.0 million in principal and interest. There are no further scheduled
amortizations or interest payments on these debts. None of these creditors has
submitted claims against the Republic for overdue amounts.
As of the date of this prospectus, the Republic is not aware of any
claims filed against it, in Peru or abroad, for overdue debt payments, nor is
the Republic involved in any disputes with its internal or external creditors.
DESCRIPTION OF THE SECURITIES
This prospectus provides a general description of the debt securities,
warrants and units that the Republic may offer. Each time the Republic sells
securities, the Republic will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus supplement
may also add, update or change information contained in this prospectus. If the
information in this prospectus differs from any prospectus supplement, you
should rely on the updated information in the prospectus supplement.
Debt Securities
The Republic will issue the debt securities pursuant to a fiscal agency
agreement, to be entered into by the Republic and a fiscal agent, prior to the
first issuance of debt securities, and substantially in the form appearing as an
exhibit to the registration statement of which this prospectus forms part.
The following description is a summary of the material provisions of
the debt securities and the fiscal agency agreement. You should read the fiscal
agency agreement, the form of debt securities attached at the end of the fiscal
agency agreement and the applicable prospectus supplement before making your
decision on whether to invest in the debt securities. The Republic has filed or
will file copies of these documents with the SEC and at the office of the fiscal
agent in The City of New York
In this description of debt securities, you will see some capitalized
terms. These terms have particular legal meanings and you can find their
definitions under the heading "Defined Terms" below.
Overview
The prospectus supplement relating to any series of debt securities
offered will include specific terms relating to the debt securities of that
series. These terms will include some or all of the following:
o the title of the series of debt securities;
o any limit on the aggregate principal amount of the series of debt
securities;
o the issue price of the series of debt securities;
o the date or dates on which the series of debt securities will
mature;
o if the series of debt securities will bear interest, the interest
rate per annum, which may be fixed or floating, and the date or
dates from which interest, if any, will accrue;
o the dates on which interest, if any, on the series of debt
securities will be payable and the regular record dates for the
interest payment dates;
o any index, formula or other method the Republic will use to
determine the amount of principal or any premium or interest
payments and how it will use such index, formula or other method;
o the place or places where and manner in which principal, interest
and other payments, if any, with respect to the series of debt
securities will be paid;
o the form of debt security, global or certificated and registered
or bearer;
o if the series of debt securities will be guaranteed, who will be
the guarantor and whether the guarantee will be partial or full;
o any mandatory or optional sinking fund provisions;
o any provisions that allow the Republic to redeem the series of
debt securities at its option;
o any provisions that entitle the holders of the series of debt
securities to early repayment of all or a portion of the series
of debt securities at their option;
o the currency or currencies in which the series of debt securities
are denominated and the currency or currencies in which the
Republic will make payments;
o if other than the law of the State of New York, the law of the
jurisdiction governing the series of debt securities;
o the authorized denominations of the series of debt securities;
o any additional covenants or agreements of the Republic and any
additional events that automatically accelerate, or that give
holders the right to accelerate, the maturity of their debt
securities;
o any terms that allow holders to exchange or convert their debt
securities;
o whether the series of debt securities will be listed and, if
listed, the stock exchange on which these debt securities will be
listed; and
o any other terms of the series of debt securities.
The Republic may issue debt securities in exchange for other debt
securities or which are convertible into new debt securities. The specific terms
of the exchange or conversion of any debt security and the debt security for
which it will be exchangeable or converted will be described in the prospectus
supplement relating to the exchangeable or convertible debt security.
The Republic may issue debt securities at a discount below their stated
principal amount, bearing no interest or interest at a rate which, at the time
of issuance, is below market rates. The Republic may also issue debt securities
that have floating rates of interest but are exchangeable for fixed rate debt
securities. The specific terms of an offering of debt securities may raise
United States federal income tax considerations in addition to those described
herein. A description of any such considerations will be provided in the
applicable prospectus supplement.
The Republic is not required to issue all of its debt securities under
the fiscal agency agreement and this prospectus, but instead may issue debt
securities other than those described in this prospectus under other fiscal
agency agreements and documentation. That documentation may contain terms
different from those included in the fiscal agency agreement and described in
this prospectus.
Status
The debt securities will be direct, general, unconditional,
unsubordinated and unsecured obligations of the Republic. The Republic has
pledged its full faith and credit for the due and punctual payment of all
amounts due in respect of the debt securities. The debt securities will rank
pari passu, without any preference among themselves, with all other existing and
future unsecured and unsubordinated obligations of the Republic relating to
Public External Indebtedness.
Form and Denomination
Unless otherwise provided in the prospectus supplement for an offering,
the Republic will issue debt securities:
o denominated in U.S. dollars;
o in fully registered book-entry form;
o without coupons; and
o in denominations of US$1,000 and integral multiples of US$1,000.
Debt securities in book-entry form will be represented by one or more
global securities registered in the name of a nominee of the Depositary Trust
and Clearing Corporation, or "DTC". Beneficial ownership interests in a global
security will only be recorded on, and transferred through, the records
maintained by DTC and its participants, including the depositaries for Euroclear
Bank S.A./N.V. as operator of the Euroclear System and Clearstream Banking
societe anonyme.
Payments
Unless otherwise provided in the applicable prospectus supplement, the
Republic will pay:
o principal and interest payable on any maturity date in U.S.
dollars in immediately available funds to the person in whose
name such debt security is registered on the maturity date, upon
presentation and surrender of the debt security at the corporate
trust office of the fiscal agent or, subject to applicable laws
and regulations, at the office of any paying agent; and
o interest on each debt security, other than interest payable on
any maturity date, to the person in whose name the debt security
is registered at the close of business on the record date for the
relevant interest payment date.
Because each debt security will be represented by one or more global
notes and beneficial interests in the debt securities may not be exchanged for
debt securities in physically certificated form except in limited circumstances,
the Republic will make payments of principal and interest on each debt security
by directing the fiscal agent to make a wire transfer of U.S. dollars to DTC or
its nominee as the registered owner of the debt securities, which will receive
the funds for distribution to the beneficial owners. Upon receipt of any payment
of principal of or interest on any debt securities, DTC will credit the
appropriate DTC participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such debt
securities as shown on the records of DTC. Payments by DTC participants to
owners of beneficial interests in debt securities held through such participants
will be the responsibility of such participants. Beneficial owners should
contact the institution through which they intend to hold their beneficial
interests in debt securities to determine how payments of principal of or
interest on the those debt securities will be credited to their accounts.
None of the Republic, the fiscal agent or any paying agent will have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the debt
securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
If the Republic does not pay interest by wire transfer for any reason,
it will, subject to applicable laws and regulations, mail, or direct the fiscal
agent to mail, a check to the holder of the affected debt security on or before
the due date for the payment at the address that appears on the security
register maintained by the fiscal agent on the applicable record date.
The record date with respect to any interest payment date will be the
15th day prior to such date, whether or not such day is a business day.
Any payment of principal or interest required to be made on a payment
date which is not a business day need not be made on such day, but may be made
on the next succeeding business day with the same force and effect as if made on
such payment date, and no interest shall accrue with respect to such payment for
the period from and after such payment date.
The Republic agrees that so long as any of the debt securities are
outstanding, it will maintain a paying agent and a transfer agent in a Western
European city for payments on and transfers of the debt securities, which will
be Luxembourg so long as any debt securities are listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require, a registrar
having a specified office in New York City and a paying agent having a specified
office in New York City. The Republic will appoint a paying agent and transfer
agent for the debt securities and a registrar. The Republic shall have the right
at any time to terminate any such appointment and to appoint any other paying
agents or transfer agents in such other places as it may deem appropriate upon
notice in accordance with "--Notices" below
Pending payment of principal or interest on the debt securities that
becomes due, the fiscal agent shall hold in trust, for the benefit of the
beneficial owners of the debt securities, the amounts transferred by the
Republic to the fiscal agent for such purpose. Any moneys held by the fiscal
agent in respect of the debt securities and remaining unclaimed for two years
after such amounts shall have become due and payable must be returned by the
fiscal agent to the Republic, and the holders of such debt securities shall
thereafter look only to the Republic for any payment to which such holders may
be entitled.
Redemption, Repurchase and Early Repayment
Unless otherwise provided in the applicable prospectus supplement, the
debt securities will not be redeemable before maturity at the option of the
Republic or repayable before maturity at the option of the holder. Nevertheless,
the Republic may at any time purchase or acquire any of the debt securities in
any manner and at any price. Debt securities that are purchased or acquired by
the Republic may, at the Republic's discretion, be held, resold or surrendered
to the fiscal agent for cancellation, but any debt securities so purchased by
the Republic may not be re-issued or resold except in compliance with the
Securities Act and other applicable law.
Replacement, Exchange and Transfer of Debt Securities
Under certain limited circumstances, beneficial interests in any global
security representing debt securities may be exchanged for physical debt
securities. See "Book Entry; Delivery and Form." If the Republic issues physical
debt securities, the holder may present its debt securities for exchange with
debt securities of a different authorized denomination, together with a written
request for an exchange, at the office of the fiscal agent in the city of New
York, or at the office of any paying agent. In addition, the holder of any
physical debt security may transfer it in whole or in part by surrendering it at
any of these offices together with an executed instrument of transfer. The
Republic will not charge the holders for the costs and expenses associated with
the exchange, transfer or registration of transfer of the debt securities. The
Republic may, however, charge the holders for applicable stamp duty, tax or
other governmental charges.
If a physical debt security becomes mutilated, defaced, destroyed, lost
or stolen, the Republic may issue, and the fiscal agent will authenticate and
deliver, a substitute debt security in replacement. In each case, the affected
holder will be required to furnish to the Republic, the fiscal agent and certain
other specified parties an indemnity under which it will agree to pay the
Republic, the fiscal agent and certain other specified parties for any losses
the may suffer relating to the debt security that was mutilated, defaced,
destroyed, lost or stolen. The Republic and they fiscal agent may also require
that the applicant present other documents and proof. The affected holder will
be required to pay all expenses and reasonable charges associated with the
replacement of the mutilated, defaced, destroyed, lost or stolen debt security.
Additional Amounts
The payment by the Republic of principal of or interest on the debt
securities will be made without withholding or deduction for or on account of
any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied, collected, withheld or assessed by the
Republic, any political subdivision thereof or any taxing authority in the
Republic. If the Republic is required by law to make any such withholding or
deduction, it will pay such additional amounts, which we refer to in this
prospectus as the Additional Amounts, as may be necessary in order to ensure
that the net amounts receivable by the holders of the affected debt securities
after such withholding or deduction shall equal the amount that would have been
receivable in respect of such debt securities in the absence of such withholding
or deduction. The Republic will not, however, pay any Additional Amounts where
the holder is subject to such withholding or deduction due to one of the
following reasons:
o the holder has some connection with the Republic other than the
mere holding of such debt security or the receipt of principal of
or interest on any debt security;
o the holder has failed to comply with any reasonable
certification, identification or other reporting requirement
concerning the nationality, residence, identity or connection
with the Republic, or any political subdivision or taxing
authority thereof or therein, of the holder of a debt security or
any interest therein or rights in respect thereof, if compliance
is required by the Republic, or any political subdivision or
taxing authority thereof or therein, pursuant to applicable law
or to any international treaty in effect, as a precondition to
exemption from such deduction or withholding; or
o the holder has failed to present its debt security for payment
within 30 days after the Republic first makes available a payment
of principal or interest on such debt security.
Defined Terms
The following are certain definitions used in the debt securities:
"External Indebtedness" means obligations of, or guaranteed, whether by
contract, statute or otherwise, by the Republic for borrowed money or evidenced
by bonds, debentures, notes or similar instruments denominated or payable, or
which, at the option of the holder thereof, may be payable, in a currency other
than the currency of the Republic or by reference to a currency other than the
currency of the Republic, other than any such obligations originally issued or
incurred within the Republic.
"Public External Indebtedness" means, with respect to the Republic, any
External Indebtedness that (i) is in the form of, or represented by, bonds,
notes or other securities that are, or were intended at the time of issuance to
be, quoted, listed or traded on any securities exchange or other securities
market, including without limiting the generality of the foregoing, securities
for resale pursuant to Rule 144A under the Securities Act, or any successor law
or regulation of similar effect, and (ii) has an original maturity of more than
one year or are combined with a commitment so that the original maturity of one
year or less may be extended at the option of the Republic to a period in excess
of one year.
"Project Financing" means any financing of all or part of the costs of
the acquisition, construction or development of any project if the person or
persons providing such financing expressly agree to limit their recourse to the
project financed and the revenues derived from such project as the principal
source of repayment for the moneys advanced.
"Security Interest" means any security interest, including without
limitation any lien, pledge, mortgage, deed of trust or charge, or any
encumbrance or preferential arrangement that has the practical effect of
constituting a security interest.
Negative Pledge
The Republic undertakes with respect to each series of debt securities
that so long as any of the debt securities of that series remain outstanding, it
will not create or permit to subsist any Security Interest in the whole or any
part of its present or future revenues or assets to secure Public External
Indebtedness of the Republic, unless the debt securities of that series are
secured equally and ratably with such Public External Indebtedness; provided,
however, that the Republic may create or permit to subsist:
o Security Interests created prior to February 7, 2002;
o Security Interests securing Public External Indebtedness incurred
in connection with a Project Financing, provided that the
Security Interest is solely in assets or revenues of the project
for which the Project Financing was incurred;
o Security Interests securing Public External Indebtedness incurred
or assumed by the Republic to finance or refinance the
acquisition of the assets in which such Security Interests have
been created or permitted to subsist and any Security Interests
existing on such assets at the time of their acquisition;
o Security Interests securing Public External Indebtedness arising
in the ordinary course to finance export, import or other trade
transactions, and in which Public External Indebtedness matures,
after giving effect to all renewals and refinancing thereof, not
more than one year after the date on which such Public External
Indebtedness was originally incurred;
o Security Interests securing Public External Indebtedness which,
together with all other Public External Indebtedness secured by
Security Interests, excluding Public External Indebtedness
secured by other permitted Security Interests, does not exceed
US$25,000,000 principal amount, or its equivalent in other
currencies, in the aggregate;
o Security Interests arising by operation of a currently existing
law in connection with Public External Indebtedness, including
without limitation any right of set-off with respect to demand or
time deposits maintained with financial institutions and bankers'
liens with respect to property held by financial institutions, in
each case deposited with or delivered to such financial
institutions in the ordinary course of the depositor's
activities;
o Security Interests created in connection with the transactions
contemplated by the Republic's 1996 financing plan dated June 5,
1996, and its implementing documentation, including Security
Interests to secure obligations under the collateralized bonds
issued under the 1996 financing plan (the Republic's Par Bonds,
Discount Bonds and FLIRBs) and any Security Interest securing
obligations of the Republic outstanding as of June 5, 1996, to
the extent required to be equally and ratably secured with any
such bonds;
o Security Interests issued upon surrender or cancellation of the
Par Bonds, the Discount Bonds or the FLIRBs, or the principal
amount of any Public External Indebtedness outstanding as of June
5, 1996, in each case, to the extent such Security Interest is
created to secure Public External Indebtedness on a basis
comparable to the Par Bonds, the Discount Bonds and the FLIRBs;
o Security Interests on shares of, or other assets of, any present
or former Peruvian public sector entity created or granted by the
Republic in connection with, or in anticipation of, the
privatization of such entity; and
o any renewal or extension of any of the Security Interests stated
above.
Default; Acceleration of Maturity
Unless otherwise specified in the applicable prospectus supplement,
each of the following events will constitute an "Event of Default" under any
series of debt securities:
(1) Non-Payment:
o if the Republic fails to pay for 30 days principal on that
series of debt securities when due; or
o if the Republic fails to pay for 30 days interest on that
series of debt securities when due; or
(2) Breach of Other Obligations: if the Republic does not perform any
other obligation under that series of debt securities and such failure is
incapable of remedy or is not remedied within 60 days after written notice has
been given to the Republic by the fiscal agent; or
(3) Cross Default: if the Republic fails to make any payment in respect
of:
o External Indebtedness outstanding as of February 21, 2002;
and
o Public External Indebtedness;
in an aggregate principal amount in excess of US$25,000,000, or its equivalent
in any other currency, when due, and such failure continues beyond the
applicable grace period; or
(4) Cross Acceleration: if any event or condition occurs that results
in the acceleration of the maturity of:
o External Indebtedness outstanding as of February 21, 2002;
and
o Public External Indebtedness;
in an aggregate principal amount in excess of US$25,000,000, or its equivalent
in any other currency; or
(5) Moratorium: if the Republic declares a general suspension on or
moratorium with respect to the payment of principal of or interest on all or a
portion of its External Indebtedness; or
(6) Validity:
o if the Republic contests the validity of, or its obligations
under, that series of debt securities or, to the extent
adversely affecting such debt securities, the fiscal agency
agreement; or
o if the Republic denies any of its obligations under that
series of debt securities or, to the extent adversely
affecting such debt securities, the fiscal agency agreement;
or
o if any constitutional provision, treaty, law, regulation,
decree, or other official pronouncement of the Republic, or
any final decision by any court in Peru having jurisdiction,
renders it unlawful for the Republic to pay any amount due
on that series of debt securities or to perform any of its
obligations under such debt securities or, to the extent
adversely affecting such debt securities, the fiscal agency
agreement; or
(7) Judgments: if any writ, execution, attachment or similar process is
levied against all or any substantial part of the assets of the Republic in
connection with any judgment for the payment of money exceeding US$25,000,000,
or its equivalent in any other currency, and the Republic fails to satisfy or
discharge such judgment, or adequately bond, contest in good faith or receive a
stay or execution or continuance in respect of such judgment, within a period of
120 days; or
(8) Membership in the IMF: if Peru fails to maintain its membership in,
and its eligibility to use the general resources of, the IMF.
Upon the occurrence and during the continuance of an Event of Default:
o in the case of any Event of Default described in clauses (2),
(3), (4), (6), (7) or (8), the holders of at least 25% in
aggregate principal amount of all debt securities of that series,
other than debt securities of that series held by the Republic,
then outstanding may by written demand given to the Republic,
with a copy to the fiscal agent, declare the debt securities of
that series held by it to be immediately due and payable; or
o in the case of any Event of Default described in clauses (1) or
(5), each holder of debt securities of that series may by written
demand given to the Republic, with a copy to the fiscal agent,
declare the debt securities of that series held by it to be
immediately due and payable;
and upon such declaration the principal and interest accrued on the relevant
debt securities will become immediately due and payable upon the date that such
written notices are received at the office of the fiscal agent, unless prior to
such date all Events of Default in respect of the relevant debt securities have
been cured.
Securityholders holding in the aggregate at least 66 2/3% in principal
amount of the then outstanding debt securities of that series may waive any
existing defaults, and their consequences, on behalf of all holders of debt
securities of that series, if:
o following the declaration of the debt securities of that series
due and payable immediately, the Republic deposits with the
fiscal agent a sum sufficient to pay all overdue installments of
principal, interest and other amounts in respect of the debt
securities of that series, as well as the reasonable fees and
compensation of the fiscal agent; and
o all other events of default have been remedied.
Fiscal Agent
The fiscal agency agreement establishes the obligations and duties of
the fiscal agent, the right to indemnification of the fiscal agent and the
liability and responsibility, including limitations on liabilities and
responsibilities, for actions that the fiscal agent takes. The fiscal agent is
entitled to enter into business transactions with the Republic as freely as if
it were not the fiscal agent.
The Republic may replace the fiscal agent at any time, subject to the
appointment of a replacement fiscal agent. In addition, the Republic may appoint
different fiscal agents for different series of debt securities. The fiscal
agent is not a trustee for the holders of debt securities and does not have the
same responsibilities or duties to act for such holders as would a trustee. The
Republic may maintain deposit accounts and conduct other banking and financial
transactions with the fiscal agent.
Paying Agents; Transfer Agents; Registrar
The Republic may appoint paying agents, transfer agents and registrars
with respect to any series of debt securities, which will be listed at the back
of the applicable prospectus supplement. While the Republic may at any time
appoint additional or replacement paying agents, transfer agents and registrars,
it will, however, maintain a paying agent and a registrar in The City of New
York until the debt securities are paid.
In addition, the Republic will maintain a paying agent and a transfer
agent in Luxembourg with respect to any series of debt securities listed on the
Luxembourg Stock Exchange so long as the rules of the Luxembourg Stock Exchange
so require. The Republic will promptly provide notice of the termination,
appointment or change in the office of any paying agent, transfer agent or
registrar acting in connection with a series of the debt securities.
Amendments and Waivers
The Republic and the fiscal agent may, with the consent of the holders
of at least 66 2/3% in aggregate principal amount of the then outstanding debt
securities of any series, modify and amend the provisions of that series of debt
securities or the fiscal agency agreement, including to grant waivers of future
compliance or past default by the Republic. However, no such amendment or
modification will apply, without the consent of each securityholder of the
relevant series affected thereby, to the debt securities owned or held by such
securityholder with respect to the following matters:
o change the stated maturity of the principal of or interest on
debt securities of that series;
o reduce the principal amount of or interest on debt securities of
that series;
o change the obligation of the Republic to pay additional amounts
on account of withholding or deductions as set forth under
"--Additional Amounts";
o change the currency or place of payment of principal or interest
on debt securities of that series; and
o impair the right to institute suit for the enforcement of any
payment in respect of debt securities of that series.
In addition, no such amendment or notification may, without the consent
of each securityholder of the relevant series of debt securities, reduce the
percentage of principal amount of the debt securities of that series outstanding
necessary to make these modifications or amendments to the debt securities of
that series or the fiscal agency agreement or to reduce the quorum requirements
or the percentages of votes required for the adoption of any action at a meeting
of holders of that series of debt securities.
The Republic may also agree to amend any provision of any debt security
with the holder thereof, but that amendment will not affect the rights of the
other securityholders or the obligations of the Republic with respect to the
other securityholders.
No consent of the securityholders is or will be required for any
modification or amendment requested by the Republic or by the fiscal agent or
with the consent of the Republic to:
o add to the Republic's covenants for the benefit of the holders of
any series of debt securities;
o surrender any right or power of the Republic in respect of any
series of debt securities or the fiscal agency agreement;
o provide security or collateral for any series of debt securities;
o cure any ambiguity in any provision, or correct any defective
provision, of any series of debt securities; or
o change the terms and conditions of any series of debt securities
or the fiscal agency agreement in any manner which the Republic
and the fiscal agent mutually deem necessary or desirable so long
as any such change does not, and will not, adversely affect the
rights or interest of any securityholder.
The Republic may at any time ask for written consents or call a meeting
of the holders of any series of debt securities to seek their approval of the
modification of or amendment to, or obtain a waiver of, any provision of that
series of debt securities. This meeting will be held at the time and place
determined by the Republic and specified in a notice of such meeting furnished
to the affected securityholders. This notice must be given at least 30 days and
not more than 60 days prior to the meeting.
If at any time the holders of at least 10% in principal amount for any
then outstanding series of debt securities request the fiscal agent to call a
meeting of the holders of that series of debt securities for any purpose, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, the fiscal agent will call the meeting for such purpose.
This meeting will be held at the time and place determined by the fiscal agent,
after consultation with the Republic, and specified in a notice of such meeting
furnished to the affected securityholders. This notice must be given at least 30
days and not more than 60 days prior to the meeting.
Holders who hold a majority in principal amount of the then outstanding
debt securities of that series will constitute a quorum at a securityholders'
meeting. In the absence of a quorum, a meeting may be adjourned for a period of
at least 20 days. At the reconvening of a meeting adjourned for lack of quorum,
holders of 25% in principal amount of the then outstanding debt securities of
that series shall constitute a quorum. Notice of the reconvening of any meeting
may be given only once, but must be given at least ten days and not more than 15
days prior to the meeting.
At any meeting when there is a quorum present, holders of a majority in
principal amount of the debt securities of that series represented and voting at
the meeting may approve the modification or amendment of, or a waiver of
compliance for, any provision of the debt securities of that series except for
specified matters requiring the consent of each securityholder as set forth
above. Modifications, amendments or waivers made at such a meeting will be
binding on all current and future holders of debt securities of that series.
Notices
Notices will be mailed to holders of debt securities at their
registered addresses and will be deemed to have been given on the date of such
mailing. All notices to holders of the debt securities will be published if and
so long as the debt securities are listed on the Luxembourg Stock Exchange and
the rules of the Luxembourg Stock Exchange so require in a daily newspaper of
general circulation in Luxembourg. If publication as aforesaid is not
practicable, notice will be validly given if made in accordance with the rules
of the Luxembourg Stock Exchange.
Further Issues
Without the consent of the holders, the Republic may create and issue
additional debt securities with the same terms and conditions as an outstanding
series of debt securities, or the same except for the payment of interest
scheduled on them and paid prior to the time of their issue. The Republic may
consolidate the additional debt securities to form a single series with an
outstanding series of debt securities.
Warrants
If the Republic issues warrants, their specific terms will be provided
in a prospectus supplement, and a warrant agreement or amendment to the fiscal
agency agreement and form of warrant will be filed with the SEC. The following
description briefly summarizes some of the general terms that apply to warrants.
You should read the applicable prospectus supplement, warrant agreement and form
of warrant before making your investment decision.
The Republic may issue warrants or other similar securities, either
separately or together with any debt securities, that would entitle the holder
to purchase debt securities or obligate the Republic to repurchase or exchange
debt securities. If the Republic issues any warrants, each issue of warrants
will be issued under a warrant agreement to be entered into between the Republic
and a bank or trust company, which may be the fiscal agent, as warrant agent.
The warrant agent will act solely as the agent of the Republic in connection
with the warrants of such issue and will not assume any obligation or
relationship of agency for or with the holders or beneficial owners of warrants.
The prospectus supplement relating to the particular issue of warrants or other
similar securities will describe:
o the initial offering price;
o the currency required to purchase the warrants;
o the title and terms of the debt securities or other consideration
that the holders will receive on exercise of their warrants;
o the principal amount of debt securities or amount of other
consideration that a holder will receive on exercise of each
warrant;
o the principal amount and type of debt securities that the holders
may obligate the Republic to purchase or exchange if the holders
exercise their warrants and the purchase price of those debt
securities;
o the exercise price or ratio;
o the procedures of, and conditions to, exercise of the warrants
and the date or dates on which the holders can exercise their
warrants;
o whether and under what conditions the Republic may cancel the
warrants;
o the title and terms of any debt securities issued with the
warrants, and the amount of debt securities issued with each
warrant;
o the date, if any, on and after which the warrants and any debt
securities issued with the warrants will trade separately;
o the form of the warrants (global or certificated and registered),
whether they will be exchangeable for another form and, if
registered, where they may be transferred and exchanged;
o the identity of the warrant agent;
o any special U.S. federal income tax considerations; and
o any other terms of the warrants.
The warrants will be direct, unconditional and unsecured obligations of
the Republic and will not constitute indebtedness of the Republic.
Units
The Republic may issue units comprised of one or more of the other
securities described in this prospectus in any combination. Each unit will be
issued so that the holder of the unit is also the holder of each security
included in the unit. Thus, the holder of a unit will have the rights and
obligations of a holder of each included security. The unit agreement under
which a unit is issued may provide that the securities included in the unit may
not be held or transferred separately, at any time or at any time before a
specified date.
The prospectus supplement relating to the particular issue of units
will describe:
o the designation and terms of the units and of the securities
comprising the units, including whether and under what
circumstances those securities may be held or transferred
separately;
o any provisions for the issuance, payment, settlement, transfer or
exchange of the units or of the securities comprising the units;
and
o whether the units will be issued in fully registered or global
form.
The applicable prospectus supplement will describe the terms of any
units. The preceding description and any description of units in the applicable
prospectus supplement does not purport to be complete and is subject to and is
qualified in its entirety by reference to the unit agreement and, if applicable,
collateral arrangements and depositary arrangements relating to such units.
Jurisdiction, Consent to Service and Enforceability
The Republic is a foreign sovereign state. Consequently, it may be
difficult for you to obtain or realize upon judgments of courts in the United
States or elsewhere against the Republic. Furthermore, it may be difficult for
you to enforce, in the United States or elsewhere, the judgments of U.S. or
foreign courts against the Republic.
In connection with any suit, action or proceeding against the Republic
or its properties, assets or revenues arising out of or relating to the fiscal
agency agreement or any debt securities or warrants, which we refer to in this
prospectus as a related proceeding, the Republic will agree:
o to submit to the exclusive jurisdiction of any New York State or
U.S. federal court sitting in New York City, and any appellate
court thereof;
o that all claims in respect of such related proceeding may be
heard and determined in such New York State or U.S. federal
court; that any judgment obtained in such New York State or U.S.
federal court arising out of any related proceeding may be
enforced or executed in any other court of competent jurisdiction
whatsoever; and that any judgment obtained in any such other
court as a result of such enforcement or execution may be
enforced or executed in any such other court of competent
jurisdiction, by means of a suit on the judgment or in any other
manner provided by law; provided that in order to enforce or
execute any such judgment ordering any payment by the Republic,
Peruvian courts will require that such payment be included in the
corresponding annual budget laws;
o to consent to and waive, to the fullest extent permitted by law,
any objection which it may have to the laying of venue of any
related proceeding brought in such New York State or U.S. federal
court or to the laying of venue of any suit, action or proceeding
brought solely for the purpose of enforcing or executing any
related judgment in such New York State or U.S. federal court or
any other courts;
o to waive, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of any related
proceeding or any such suit, action or proceeding in any such
court; and
o to appoint CT Corporation System, presently located at 111 Eighth
Avenue, 13th Floor, New York, New York, as its process agent and
to maintain at all times an agent with offices in New York to act
as its process agent.
The process agent will receive on behalf of the Republic and its
property service of all writs, process and summonses in any related proceeding
or any suit, action or proceeding to enforce or execute any related judgment
brought against it in such New York State or U.S. federal courts sitting in New
York City. Failure of the process agent to give any notice to the Republic of
any such service of process shall not impair or affect the validity of such
service or of any judgment based thereon. Nothing in the fiscal agency agreement
shall in any way be deemed to limit the ability to serve any such writs, process
or summonses in any other manner permitted by applicable law.
To the extent that the Republic or any of its revenues, assets or
properties may be entitled to any sovereign or other immunity under any law, the
Republic will agree not to claim and to waive such immunity to the fullest
extent permitted by the laws of such jurisdiction. This waiver covers the
Republic's sovereign immunity and immunity from prejudgment attachment,
post-judgment attachment and attachment in aid, but does not extend to the
attachment of revenues, assets and property of the Republic located in the
Republic unless permitted under Peruvian law. Additionally, in accordance with
Peruvian law currently in effect, the Republic's waiver of immunity will not
extend to property that is:
o used by a diplomatic or consular mission of the Republic;
o of a military character and under the control of a military
authority or defense agency of the Republic;
o public property;
o shares of Peruvian public sector entities or shares of Peruvian
private sector entities owned or controlled by the Republic or by
a Peruvian public sector entity, or revenues collected from the
sale of such shares, to the extent such shares or revenues are
exempt by Peruvian law from attachment or execution; or
o funds deposited in Peru's accounts held in the Peruvian financial
system.
The Republic, however, reserves the right to plead sovereign immunity
under the U.S. Foreign Sovereign Immunities Act of 1976, which we refer to in
this prospectus as the Immunities Act, with respect to actions brought against
it under U.S. federal securities laws or any state securities law. Without an
effective waiver of immunity by the Republic with respect to such actions, it
would be impossible to obtain a U.S. judgment in such an action against the
Republic unless a court were to determine that the Republic is not entitled
under the Immunities Act to sovereign immunity with respect to such action. In
addition, execution upon property of the Republic located in the United States
to enforce a judgment obtained the Immunities Act may not be possible except in
the limited circumstances specified in the Immunities Act.
Even if a U.S. judgment could be obtained against the Republic in any
such action, you may not be able to enforce in Peru a judgment based on such a
U.S. judgment.
The Republic will also consent generally for the purposes of the State
Immunity Act of 1978 of the United Kingdom to the giving of any relief or the
issue of any process.
Governing Law
The fiscal agency agreement and, unless otherwise provided in the
applicable prospectus supplement, any warrant agreement, as well as any debt
securities, warrants or units, will be governed by and must be interpreted in
accordance with the laws of the State of New York, except that all matters
governing authorization and execution by the Republic will be governed by the
laws of the Republic.
Book-Entry; Delivery and Form
Unless otherwise provided in the applicable prospectus supplement, the
certificates representing the debt securities will be issued in the form of one
or more global notes, to which we refer to in this prospectus as the global
notes. Each global note will be deposited with or on behalf of DTC and
registered in the name of DTC or its nominee. Except as set forth below, a
global note may be transferred in whole and not in part and only to DTC or to
other nominees of DTC.
Ownership of beneficial interests in the global notes will be limited
to "participants" who have accounts with DTC or persons who hold interests
through participants. Ownership of beneficial interests in the global notes will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee with respect to interests of
participants and the records of participants with respect to interests of
persons other than participants.
The Republic understands that DTC is:
o a limited purpose trust company organized under the laws of the
State of New York;
o a "banking organization" within the meaning of the New York
Banking Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the Uniform
Commercial Code; and
o a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and facilitate
the clearance and settlement of securities transactions between participants
through electronic book-entry changes in accounts of its participants, thereby
eliminating the need for the physical movement of certificates. Indirect access
to the DTC system is available to others such as banks, brokers, dealers and
trust companies and certain other organizations that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
So long as DTC, or its nominee, is the registered owner or holder of
the global notes, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the debt securities represented by the global notes for
all purposes under the fiscal agency agreement and the debt securities. No
beneficial owner of an interest in any global note will be able to transfer that
interest except in accordance with DTC's applicable procedures, in addition to
those provided for under the fiscal agency agreement and, if applicable, those
of Euroclear Bank S.A./N.V., as operator of the Euroclear System, or Euroclear,
and Clearstream Banking, Luxembourg, societe anonyme, or Clearstream,
Luxembourg.
Payments of the principal of, and interest on, the global notes will be
made to DTC or its nominee, as the case may be, as the registered owner of the
global notes. Neither the Republic, the fiscal agent nor any paying agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the global
notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Republic expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of the global notes, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global notes as
shown on the records of DTC or its nominee. The Republic also expects that
payments by participants to owners of beneficial interests in the global notes
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.
The Republic expects that DTC will take any action permitted to be
taken by a holder of any debt security, including the presentation of such debt
security for exchange as described below, only at the direction of one or more
participants to whose account the DTC interests in the global note is credited
and only in respect of such portion of the aggregate principal amount of such
debt security as to which such participant or participants has or have given
such direction. However, if there is an event of default under the any series of
debt securities, DTC will exchange the applicable global notes for registered
certificated notes, which it will distribute to its participants.
If DTC is at any time unwilling or unable to continue as a depositary
for the global notes and a successor depositary is not appointed by the Republic
within 90 days, the Republic will issue registered certificated notes without
interest coupons in exchange for the global notes.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
Transfers between participants in Euroclear and Clearstream, Luxembourg will be
effected in the ordinary way in accordance with their respective rules and
operating procedures.
Subject to compliance, if any, with the transfer restrictions
applicable to the debt securities, cross-market transfers between participants
in DTC, on the one hand, and Euroclear or Clearstream, Luxembourg
accountholders, on the other hand, will be effected through DTC in accordance
with DTC's rules on behalf of Euroclear or Clearstream, Luxembourg, as the case
may be, by its respective depositary. However, any cross-market transactions
will require delivery of instructions to Euroclear or Clearstream, Luxembourg,
as the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Clearstream Luxembourg, as the case may be, will, if
the transaction meets its respective settlement requirements, deliver
instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the global
notes to DTC, and making or receiving payments in accordance with normal
procedures for same-day fund settlement applicable to DTC. Euroclear
accountholders and Clearstream, Luxembourg participants may not deliver
instructions directly to the depositaries for Euroclear or Clearstream,
Luxembourg.
Because of time zone differences, the securities account of a Euroclear
or Clearstream, Luxembourg accountholder purchasing an interest in any global
note from a participant in DTC will be credited, and any such crediting will be
reported to the relevant Euroclear or Clearstream, Luxembourg accountholder,
during the securities settlement processing day, which must be a business day
for Euroclear and Clearstream, Luxembourg immediately following the settlement
date of DTC. Cash received in Euroclear or Clearstream, Luxembourg as a result
of sales of interests in any global note by or through a Euroclear or
Clearstream, Luxembourg accountholder to a participant in DTC will be received
with value on the settlement date of DTC but will be available in the relevant
Euroclear or Clearstream, Luxembourg cash account only as of the business day
for Euroclear or Clearstream, Luxembourg following DTC's settlement date.
Although DTC, Euroclear and Clearstream, Luxembourg are expected to
follow the foregoing procedures in order to facilitate transfers of interests in
the global notes among the participants of DTC, Euroclear and Clearstream,
Luxembourg, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time. Neither the
Republic nor the fiscal agent will have any responsibility for the performance
by DTC, Euroclear or Clearstream, Luxembourg, or their respective participants
or indirect participants of their respective obligations under the rules and
procedures governing their operations.
TAXATION
United States Federal Taxation
The specific terms of an offering of debt securities may raise United
States federal income tax considerations in addition to those described below. A
description of any such considerations, or certain United States federal income
tax considerations related to the offering of warrants or units, will be
provided in the applicable prospectus supplement.
In general, a United States person who holds the debt securities or
owns a beneficial interest in the debt securities will be subject to United
States federal taxation. You are a United States person for U.S. federal income
tax purposes if you are:
o a citizen or resident of the United States or its territories,
possessions or other areas subject to its jurisdiction;
o a corporation, partnership or other entity organized under the
laws of the United States or any political subdivision;
o an estate, the income of which is subject to United States
federal income taxation regardless of its source; or
o a trust if (i) a United States court is able to exercise primary
supervision over the trust's administration and (ii) one or more
United States persons have the authority to control all of the
trust's substantial decisions.
If you are a United States person, the interest you receive on the debt
securities will generally be subject to United States taxation and will be
considered ordinary interest income. Under current United States federal income
tax law, if you are not a United States person, the interest payments that you
receive on the debt securities generally will be exempt from United States
federal income taxes, including withholding tax. However, to receive this
exemption you may be required to satisfy certain certification requirements,
described below, of the United States Internal Revenue Service to establish that
you are not a United States person.
Even if you are not a United States person, you may still be subject to
United States federal income taxes on any interest payments you receive if:
o you are an insurance company carrying on a United States insurance
business, within the meaning of the United States Internal Revenue
Code of 1986; or
o you have an office or other fixed place of business in the United
States that receives the interest and you earn the interest in the
course of operating (i) a banking, financing or similar business
in the United States or (ii) a corporation the principal business
of which is trading in stock or securities for its own account,
and certain other conditions exist.
If you are not a United States person, any gain you realize on a sale
or exchange of the debt securities generally will be exempt from United States
federal income tax, including withholding tax, unless:
o your gain is effectively connected with your conduct of a trade or
business in the United States; or
o you are an individual holder and are present in the United States
for 183 days or more in the taxable year of the sale, and either
(i) your gain is attributable to an office or other fixed place of
business that you maintain in the United States or (ii) you have a
tax home in the United States.
The fiscal agent must file information returns with the United States
Internal Revenue Service in connection with debt security payments made to
certain United States persons. If you are a United States person, you generally
will not be subject to United States backup withholding tax on such payments if
you provide your taxpayer identification number to the fiscal agent. You may
also be subject to information reporting and backup withholding tax requirements
with respect to the proceeds from a sale of the debt securities. If you are not
a United States person, in order to avoid information reporting and backup
withholding tax requirements you may have to comply with certification
procedures to establish that you are not a United States person.
Debt securities held by an individual holder who at the time of death
is a non-resident alien will not be subject to United States federal estate tax.
The specific terms of an offering of debt securities may raise United
States federal income tax considerations in addition to those described above. A
description of any such considerations will be provided in the applicable
prospectus supplement.
PLAN OF DISTRIBUTION
General
The Republic may sell the securities in any of three ways:
o through underwriters or dealers;
o directly to one or more purchasers; or
o through agents.
Each prospectus supplement will set forth, relating to an issuance of
the securities:
o the name or names of any underwriters or agents;
o the purchase price of the securities;
o the net proceeds to the Republic from the sale of the securities;
o any underwriting discounts, and other items constituting
underwriters' compensation;
o any agents' commissions and other items constituting agents'
compensation;
o any initial public offering price of the securities;
o any discounts or concessions allowed or reallowed or paid to
dealers; and
o any securities exchange on which such securities may be listed.
If the Republic uses underwriters or dealers in a sale, they will
acquire the securities for their own accounts and may resell them in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The Republic may
offer the securities to the public either through underwriting syndicates
represented by managing underwriters or directly through underwriters. The
obligations of the underwriters to purchase a particular offering of securities
may be subject to conditions. The underwriters may change the initial public
offering price or any concessions allowed or reallowed or paid to dealers.
The Republic may also sell the securities directly to the public or
through agents. Unless specified otherwise in the applicable prospectus
supplement, any agent will act on a reasonable best efforts basis for the period
of its appointment.
The Republic may authorize agents, underwriters or dealers to solicit
offers by certain institutions to purchase a particular offering of securities
at the public offering price using delayed delivery contracts. These contracts
provide for payment and delivery on a specified date in the future. The
applicable prospectus supplement will describe the commission payable for
solicitation and the terms and conditions of these contracts.
The Republic may offer the securities to holders of other securities of
the Republic as consideration for the Republic's purchase or exchange of other
securities. The Republic may conduct such an offer either (a) through a publicly
announced tender or exchange offer for the other securities or (b) through
privately negotiated transactions. This type of offer may be in addition to
sales of the same securities using the methods discussed above.
The Republic may agree to indemnify any agents and underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, which we refer to in this prospectus as the Securities Act. The agents
and underwriters may also be entitled to contribution from the Republic for
payments they make relating to these liabilities. Agents and underwriters may
engage in transactions with or perform services for the Republic in the ordinary
course of business.
Non-U.S. Offerings
The Republic will generally not register under the Securities Act the
securities that it will offer and sell outside the United States. Thus, subject
to certain exceptions, the Republic cannot offer, sell or deliver such
securities within the United States or to U.S. persons. When the Republic offers
or sells securities outside the United States, each underwriter, dealer or agent
will acknowledge that the securities:
o have not been and will not be registered under the Securities
Act; and
o may not be offered or sold within the United States except
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act.
Each underwriter, dealer or agent will agree that:
o it has not offered or sold or solicited offers to purchase, and
will not offer or sell or solicit offers to purchase, any such
securities not registered with the Securities and Exchange
Commission, or SEC, within the United States, except pursuant to
Rule 903 of Regulation S under the Securities Act; and
o neither it nor its affiliates nor any persons acting on its or
their behalf have engaged or will engage in any directed selling
efforts regarding these securities.
OFFICIAL STATEMENTS
Information included in this prospectus that is identified as being
derived from a publication of the Republic or one of its agencies or
instrumentalities is included in this prospectus on the authority of such
publication as a public official document of the Republic. All other information
included in this prospectus, other than that included in "Plan of Distribution,"
is included as a public official statement made on the authority of the
Republic.
VALIDITY OF THE SECURITIES
The following persons, or other counsel specified in the relevant
prospectus supplement, will pass upon the validity of the securities:
o For the Republic:
o Cleary, Gottlieb, Steen & Hamilton, New York counsel to the
Republic; and
o Chief of the General Office of Legal Counseling at the Ministry
of Economy and Finance, Peruvian counsel to the Republic.
As to all matters of Peruvian law, Cleary Gottlieb, Steen & Hamilton
may rely on the opinion of the Chief of the General Office of Legal Counseling
at the Ministry of Economy and Finance. As to all maters of United States law,
the Chief of the General Office of Legal Counseling at the Ministry of Economy
and Finance may rely on the opinion of Cleary, Gottlieb, Steen & Hamilton.
o For the Underwriters:
o Sullivan & Cromwell, New York counsel to the underwriters; and
o Peruvian counsel to the underwriters specified in the applicable
prospectus supplement.
As to all matters of Peruvian law, Sullivan & Cromwell may rely on the
opinion of the Peruvian counsel to the underwriters specified in the applicable
prospectus supplement. As to all matters of United States law, Peruvian counsel
to the underwriters specified in the applicable pricing supplement may rely on
the opinion of Sullivan & Cromwell.
AUTHORIZED REPRESENTATIVE
The authorized representative of the Republic in the United States is
Heli Pelaez Castro of the Consulate General of Peru, whose address is 241 East
49th Street, New York, New York 10017.
WHERE YOU CAN FIND MORE INFORMATION
The Republic has filed with the SEC a registration statement under the
Securities Act covering the securities. This prospectus does not contain all of
the information included in the registration statement. Any statement made in
this prospectus concerning the contents of any contract, agreement or other
document is not necessarily complete. If the Republic has filed any contract,
agreement or other document as an exhibit to the registration statement, you
should read the exhibit for a more complete understanding of the document or
matter involved. Each statement regarding a contract, agreement or other
document is qualified in its entirety by reference to the actual document.
You may read and copy the registration statement, including its various
exhibits, and any reports, statements or other information that the Republic has
filed at the SEC's public reference room in Washington, D.C. You can request
copies of these documents, upon payment of a duplicating fee, by writing the
SEC. Please call the SEC at l-800-SEC-0330 for further information on the
operation of the public reference rooms. Our SEC filings are also available to
the public from the SEC's website at http://www.sec.gov.
ANNEX A
REPUBLIC OF PERU: GLOBAL PUBLIC SECTOR EXTERNAL DEBT
TABLES AND OTHER SUPPLEMENTAL INFORMATION
as of December 31, 2001
(in millions of U.S. dollars, at current prices)
Type of
Type of Lender Country Lender Currency Interest Rate
- --------------- ---------- ----------------------------- -------- ----------------
Paris Club Germany HERMES Kreditversicherungs-AG EURO Fixed
Paris Club Germany HERMES Kreditversicherungs-AG EURO Fixed
Paris Club Germany HERMES Kreditversicherungs-AG EURO Fixed
Paris Club Germany HERMES Kreditversicherungs-AG EURO Fixed
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Germany Kreditanstalt fur Wiederaufbau EURO Fixed
(KFW)
Paris Club Austria Oesterreichische Kontrollbank EURO Official Statutory
rate of Austria for
OS
Paris Club Austria Oesterreichische Kontrollbank EURO Official Statutory
rate of Austria for
OS
Paris Club Austria Oesterreichische Kontrollbank EURO Official Statutory
rate of Austria for
OS
Paris Club Austria Oesterreichische Kontrollbank EURO Official Statutory
rate of Austria for
OS
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO Fixed
Paris Club Belgium Government of Belgium EURO 0.00%
Paris Club Belgium Government of Belgium EURO 0.00%
Paris Club Belgium Government of Belgium EURO 0.00%
Paris Club Belgium Office du Ducroire EURO Fixed
Paris Club Belgium Office du Ducroire EURO Fixed
Paris Club Belgium Office du Ducroire EURO Fixed
Paris Club Belgium Office du Ducroire EURO Fixed
Paris Club Belgium Office du Ducroire EURO Bruxellas Interbank
Offered Rate for FRB
Paris Club Belgium Office du Ducroire EURO Bruxellas Interbank
Offered Rate for FRB
Paris Club Belgium Office du Ducroire EURO 6-month Libor for DM
Paris Club Belgium Office du Ducroire EURO 6-month Libor for DM
Paris Club Canada Export Development Corporation CAN$ 12-month prime rate
for CAN$
Paris Club Canada Export Development Corporation CAN$ 12-month prime rate
for CAN$
Paris Club Canada Export Development Corporation US$ 6-month Libor for
US$
Paris Club Canada Export Development Corporation US$ 6-month Libor for
US$
Paris Club Canada Export Development Corporation CAN$ 6-month CDOR for
CAN$
Paris Club Canada Export Development Corporation CAN$ 6-month CDOR for
CAN$
Paris Club Canada Export Development Corporation US$ 6-month Libor for
US$
Paris Club Canada Export Development Corporation US$ 6-month Libor for
US$
Paris Club Canada The Canadian Wheat Board US$ 6-month Libor for
US$
Paris Club Canada The Canadian Wheat Board US$ 6-month Libor for
US$
Paris Club Canada The Canadian Wheat Board US$ 6-month Libor for
US$
Paris Club Canada The Canadian Wheat Board US$ 6-month Libor for
US$
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de EURO Fixed
Credito a la Exportacion (CESCE)
Paris Club Spain Compania Espanola de Seguros de EURO Fixed
Credito a la Exportacion (CESCE)
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de EURO 6-month Libor for
Credito a la Exportacion (CESCE) PTAS.
Paris Club Spain Compania Espanola de Seguros de EURO 6-month Libor for
Credito a la Exportacion (CESCE) PTAS.
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Compania Espanola de Seguros de US$ 6-month Libor for
Credito a la Exportacion (CESCE) US$
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial US$ Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial US$ Fixed
Paris Club Spain Instituto de Credito Oficial US$ Fixed
Paris Club Spain Instituto de Credito Oficial US$ Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial EURO Fixed
Paris Club Spain Instituto de Credito Oficial US$ Fixed
Paris Club Spain Instituto de Credito Oficial US$ Fixed
Paris Club Spain Instituto de Credito Oficial US$ Fixed
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Agency for International US$ Fixed
States Development
Paris Club United Comodit Credit Corporation US$ Fixed
States
Paris Club United Comodit Credit Corporation US$ Fixed
States
Paris Club United Comodit Credit Corporation US$ Fixed
States
Paris Club United Comodit Credit Corporation US$ Fixed
States
Paris Club United U.S. Department of Defense US$ Fixed
States
Paris Club United U.S. Department of Defense US$ Fixed
States
Paris Club United U.S. Department of Defense US$ Fixed
States
Paris Club United U.S. Department of Defense US$ Fixed
States
Paris Club United Export-Import Bank of the U.S. US$ Short-term U.S.
States Treasury
Paris Club United Export-Import Bank of the U.S. US$ Short-term U.S.
States Treasury
Paris Club United Export-Import Bank of the U.S. US$ Short-term U.S.
States Treasury
Paris Club United Export-Import Bank of the U.S. US$ Short-term U.S.
States Treasury
Paris Club United Federal Home of N.Y. US$ Fixed
States
Paris Club United Housing Guarantee US$ Fixed
States
Paris Club United Housing Guarantee US$ Fixed
States
Paris Club United Housing Guarantee US$ Fixed
States
Paris Club United Housing Guarantee US$ Fixed
States
Paris Club United Hutton and Co. US$ Fixed
States
Paris Club United Merrill Lynch US$ 13-week U.S.
States Treasury
Paris Club United Merrill Lynch US$ Fixed
States
Paris Club United Paine Webber US$ 26-week U.S.
States Treasury
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club United Agency for International US$ Fixed
States Development - PL 480
Paris Club Finland Valtiontakuukeskus (Finnish SFR 6-month Libor for
Guarantee Board) SFrs
Paris Club Finland Valtiontakuukeskus (Finnish FR.SZ. 6-month Libor for
Guarantee Board) SFrs.
Paris Club Finland Valtiontakuukeskus (Finnish US$ 6-month Libor for
Guarantee Board) US$
Paris Club Finland Valtiontakuukeskus (Finnish US$ 6-month Libor for
Guarantee Board) US$
Paris Club Finland Valtiontakuukeskus (Finnish FR.SZ. 6-month Libor for
Guarantee Board) SFrs.
Paris Club Finland Valtiontakuukeskus (Finnish FR.SZ. 6-month Libor for
Guarantee Board) SFrs.
Paris Club Finland Valtiontakuukeskus (Finnish US$ 6-month Libor for
Guarantee Board) US$
Paris Club Finland Valtiontakuukeskus (Finnish US$ 6-month Libor for
Guarantee Board) US$
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France US$ 3-month Libor for
US$
Paris Club France Banque de France US$ 3-month Libor for
US$
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France US$ 3-month Libor for
US$
Paris Club France Banque de France US$ 3-month Libor for
US$
Paris Club France Banque de France EURO Fixed
Paris Club France Banque de France EURO Fixed
Paris Club France Compagnie Francaise d'Assurance EURO Fixed
pour le Commerce Exterieur
(COFACE)
Paris Club France Compagnie Francaise d'Assurance EURO Fixed
pour le Commerce Exterieur
(COFACE)
Paris Club France Compagnie Francaise d'Assurance US$ 3-month Libor for
pour le Commerce Exterieur US$
(COFACE)
Paris Club France Compagnie Francaise d'Assurance US$ 3-month Libor for
pour le Commerce Exterieur US$
(COFACE)
Paris Club France Compagnie Francaise d'Assurance EURO Fixed
pour le Commerce Exterieur
(COFACE)
Paris Club France Compagnie Francaise d'Assurance EURO Fixed
pour le Commerce Exterieur
(COFACE)
Paris Club France Compagnie Francaise d'Assurance US$ 3-month Libor for
pour le Commerce Exterieur US$
(COFACE)
Paris Club France Compagnie Francaise d'Assurance US$ 3-month Libor for
pour le Commerce Exterieur US$
(COFACE)
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club France French Treasury EURO Fixed
Paris Club Italy Mediocredito Centrale US$ Fixed
Paris Club Italy Mediocredito Centrale US$ Fixed
Paris Club Italy Mediocredito Centrale EURO Fixed
Paris Club Italy Mediocredito Centrale US$ Fixed
Paris Club Italy Mediocredito Centrale US$ Fixed
Paris Club Italy Mediocredito Centrale EURO Fixed
Paris Club Italy Mediocredito Centrale EURO Fixed
Paris Club Italy Mediocredito Centrale US$ Fixed
Paris Club Italy Mediocredito Centrale EURO Fixed
Paris Club Italy Mediocredito Centrale EURO Fixed
Paris Club Italy Mediocredito Centrale EURO Fixed
Paris Club Italy Mediocredito Centrale EURO Fixed
Paris Club Italy Sezione Speciale per EURO Fixed
l'Assicurazone del Credito
all'Esportazione (SACE)
Paris Club Italy Sezione Speciale per EURO Fixed
l'Assicurazone del Credito
all'Esportazione (SACE)
Paris Club Italy Sezione Speciale per US$ Fixed
l'Assicurazone del Credito
all'Esportazione (SACE)
Paris Club Italy Sezione Speciale per US$ Fixed
l'Assicurazone del Credito
all'Esportazione (SACE)
Paris Club Italy Sezione Speciale per EURO Fixed
l'Assicurazone del Credito
all'Esportazione (SACE)
Paris Club Italy Sezione Speciale per EURO Fixed
l'Assicurazone del Credito
all'Esportazione (SACE)
Paris Club Italy Sezione Speciale per US$ Fixed
l'Assicuraziones del Credito
all'Esportazione (SACE)
Paris Club Italy Sezione Speciale per US$ Fixed
l'Assicurazone del Credito
all'Esportazione (SACE)
Paris Club Japan Government of Japan (Y) Fixed
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan Bank for International (Y) Fixed
Cooperation
Paris Club Japan Japan NOC (Y) Fixed
Paris Club Japan Japan NOC (Y) Fixed
Paris Club Japan Japan NOC (Y) Fixed
Paris Club Japan Japan NOC (Y) Fixed
Paris Club Japan Nippon Export and Investment (Y) Fixed
Insurance
Paris Club Japan Nippon Export and Investment (Y) Fixed
Insurance
Paris Club Japan Nippon Export and Investment (Y) Fixed
Insurance
Paris Club Japan Nippon Export and Investment (Y) Fixed
Insurance
Paris Club Japan Nippon Export and Investment (Y) 6-month Japan
Insurance long-term prime
rate for(Y)
Paris Club Japan Nippon Export and Investment (Y) 6-month Japan
Insurance long-term prime
rate for(Y)
Paris Club Japan Nippon Export and Investment (Y) 6-month Japan
Insurance long-term prime
rate for(Y)
Paris Club Japan Nippon Export and Investment (Y) 6-month Japan
Insurance long-term prime
rate for(Y)
Paris Club Norway Garanti-Instituttet for NKR Fixed
Eksportkreditt (GIEK)
Paris Club Norway Garanti-Instituttet for NKR Fixed
Eksportkreditt (GIEK)
Paris Club Norway Garanti-Instituttet for US$ 6-month Libor for
Eksportkreditt (GIEK) US$
Paris Club Norway Garanti-Instituttet for US$ 6-month Libor for
Eksportkreditt (GIEK) US$
Paris Club Norway Garanti-Instituttet for NKR Fixed
Eksportkreditt (GIEK)
Paris Club Norway Garanti-Instituttet for NKR Fixed
Eksportkreditt (GIEK)
Paris Club Norway Garanti-Instituttet for US$ 6-month Libor for
Eksportkreditt (GIEK) US$
Paris Club Norway Garanti-Instituttet for US$ 6-month Libor for
Eksportkreditt (GIEK) US$
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlandsche Credietverzekening EURO Fixed
Maatschappj (NCM)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Nederlanse Investiringsbank Voor EURO Fixed
Ontwikellingslanden (NIO)
Paris Club Netherlands Ocean Going Vessels EURO Fixed
Paris Club Netherlands Ocean Going Vessels EURO Fixed
Paris Club Netherlands Ocean Going Vessels EURO Fixed
Paris Club Netherlands Ocean Going Vessels EURO Fixed
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee US$ 6 month Libor for
Kingdom Department (ECGD) US$
Paris Club United Export Credits Guarantee US$ 6 month Libor for
Kingdom Department (ECGD) US$
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee (pound) 6 month Libor for(pound)
Kingdom Department (ECGD)
Paris Club United Export Credits Guarantee US$ 6 month Libor for
Kingdom Department (ECGD) US$
Paris Club United Export Credits Guarantee US$ 6 month Libor for
Kingdom Department (ECGD) US$
Paris Club South Africa Industrial Development US$ Fixed
Corporation of South Africa Ltd.
Paris Club South Africa Industrial Development US$ Fixed
Corporation of South Africa Ltd.
Paris Club South Africa Industrial Development US$ Fixed
Corporation of South Africa Ltd.
Paris Club South Africa Industrial Development US$ Fixed
Corporation of South Africa Ltd.
Paris Club Sweden The Swedish Export Credits SK Stockholm Offered
Guarantee Board Rate for SK
Paris Club Sweden The Swedish Export Credits CR.SC. Stockholm Offered
Guarantee Board Rate for CR.SC.
Paris Club Sweden The Swedish Export Credits US$ 6 month Libor for
Guarantee Board US$
Paris Club Sweden The Swedish Export Credits US$ 6 month Libor for
Guarantee Board US$
Paris Club Sweden The Swedish Export Credits CR.SC. Stockholm Offered
Guarantee Board Rate for CR.SC.
Paris Club Sweden The Swedish Export Credits CR.SC. Stockholm Offered
Guarantee Board Rate for CR.SC.
Paris Club Sweden The Swedish Export Credits US$ 6 month Libor for
Guarantee Board US$
Paris Club Sweden The Swedish Export Credits US$ 6 month Libor for
Guarantee Board US$
International Banco Europeo de Inversiones US$ Fixed
Organization
International Banco Europeo de Inversiones US$ Fixed
Organization
International 5-CD-PE Inter-American Development Bank CAN$ no interest
Organization (IDB)
International 368-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 368-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 367-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 392-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 392-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 392-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 392-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 421-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 421-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 456-SF-RG Inter-American Development Bank US$ Fixed
Organization (IDB)
International 456-SF-RG Inter-American Development Bank US$ Fixed
Organization (IDB)
International 456-SF-RG Inter-American Development Bank EURO Fixed
Organization (IDB)
International 497-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 497-SF-PE Inter-American Development Bank CAN$ Fixed
Organization (IDB)
International 497-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 497-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 497-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 497-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 344-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 344-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 553-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 553-SF-PE Inter-American Development Bank CAN$ Fixed
Organization (IDB)
International 567-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 567-SF-PE Inter-American Development Bank CAN$ Fixed
Organization (IDB)
International 567-SF-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 567-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 567-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 355-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 589-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 589-SF-PE Inter-American Development Bank(pound) Fixed
Organization (IDB)
International 589-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 602-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 602-SF-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 602-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 602-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 602-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 602-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 363-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 363-OC-PE Inter-American Development Bank(pound) Fixed
Organization (IDB)
International 363-OC-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 634-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 634-SF-PE Inter-American Development Bank(pound) Fixed
Organization (IDB)
International 634-SF-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 634-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 629-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 629-SF-PE Inter-American Development Bank CAN$ Fixed
Organization (IDB)
International 629-SF-PE Inter-American Development Bank(pound) Fixed
Organization (IDB)
International 629-SF-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 629-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 629-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 650-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 400-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 400-OC-PE Inter-American Development Bank CAN$ Fixed
Organization (IDB)
International 652-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 652-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 652-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 404-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 404-OC-PE Inter-American Development Bank CAN$ Fixed
Organization (IDB)
International 404-OC-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 404-OC-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 411-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 411-OC-PE Inter-American Development Bank(pound) Fixed
Organization (IDB)
International 420-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 686-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 686-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 686-SF-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 428-OC-PE Inter-American Development Bank UAV Fixed
Organization (IDB)
International 697-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 697-SF-PE Inter-American Development Bank (Y) Fixed
Organization (IDB)
International 697-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 697-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 706-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 706-SF-PE Inter-American Development Bank FR.SZ Fixed
Organization (IDB)
International 706-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 706-SF-PE Inter-American Development Bank EURO Fixed
Organization (IDB)
International 431-OC-PE Inter-American Development Bank UAV Fixed
Organization (IDB)
International 431-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 423-OC-PE Inter-American Development Bank UAV Fixed
Organization (IDB)
International 689-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 720-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 125-IC-PE Inter-American Development Bank UAV Fixed
Organization (IDB)
International 445-OC-PE Inter-American Development Bank UAV Fixed
Organization (IDB)
International 492-OC-PE Inter-American Development Bank UAV Fixed
Organization (IDB)
International 240-IC-PE Inter-American Development Bank US$ 6-month Libor for
Organization (IDB) US$
International 517-OC-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 238-IC-PE Inter-American Development Bank UAV Fixed
Organization (IDB)
International 631-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 665-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 651-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 677-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 678-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 678-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 741-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 806-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 790-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 836-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 847-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 820-OC-PE Inter-American Development Bank UAV Interest rate for
Organization (IDB) IDB loans
International 852-1-OC-PE Inter-American Development Bank US$ 6-month Libor for
Organization (IDB) US$
International 852-2-OC-PE Inter-American Development Bank US$ 6-month Libor for
Organization (IDB) US$
International 902-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 901-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 958-SF-PE Inter-American Development Bank US$ Fixed
Organization (IDB)
International 906-OC-PE Inter-American Development Bank UAV 1990 Variable IBD
Organization (IDB) exchange rate
International 931-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 944-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 956-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 985-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 966-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1025-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1058-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1036-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1061-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1050-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1115-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1128-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1150-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1137-OC-PE Inter-American Development Bank US$ 6-month Libor for
Organization (IDB) US$
International 1144-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1196-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1235-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1236-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1237-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1321-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International 1329-OC-PE Inter-American Development Bank US$ Interest rate for
Organization (IDB) IDB loans
International CFA-7 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-43 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-041 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-46 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-062 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-75 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-120 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-128 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-135 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-1009 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-0544 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-1127 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-1372 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-1408 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-1593 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-1769 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International CFA-1902 Corporacion Andina de Fomento US$ 6-month Libor for
Organization US$
International 3540-A-PE World Bank US$ Fixed
Organization
International 3540-A-PE World Bank US$ Fixed
Organization
International 3540-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3437-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3489-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3452-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3595-A-PE World Bank US$ Fixed
Organization
International 3595-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3610-A-PE World Bank US$ Fixed
Organization
International 3610-A-PE World Bank US$ Fixed
Organization
International 3610-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3684-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3717-A-PE World Bank US$ 6-month Libor for
Organization US$
International 3717-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3701-A-PE World Bank US$ 6-month Libor for
Organization US$
International 3701-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3810-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3811-A-PE World Bank US$ 6-month Libor for
Organization US$
International 3811-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3962-O-PE World Bank US$ 6-month Libor for
Organization US$
International 3826-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 3826-A-PE World Bank US$ 6-month Libor for
Organization US$
International 4068-S-PE World Bank S/POOL Tasa Canasta Moneda
Organization Unica BIRF
International 4068-A-PE World Bank US$ 6-month Libor for
Organization US$
International 4076-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4134-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4133-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4130-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4250-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4384-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4497-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4519-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4536-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4527-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4615-O-PE World Bank US$ 6-month Libor for
Organization US$
International 4614-O-PE World Bank US$ 6-month Libor for
Organization US$
International 116-PE International Fund For DEG Fixed
Organization Agricultural Development
International 185-PE International Fund For DEG Fixed
Organization Agricultural Development
International 297-PE International Fund For DEG Fixed
Organization Agricultural Development
International 386-PE International Fund For DEG IFAD interest rate
Organization Agricultural Development policy
International 467-PE International Fund For DEG IFAD interest rate
Organization Agricultural Development policy
International IMF International Monetary Fund DEG IMF interest rate
Organization policy
International 423-PE The Opec Fund For International US$ Fixed
Organization Development
International 630-PE The Opec Fund For International US$ Fixed
Organization Development
International 696-PE The Opec Fund For International US$ Fixed
Organization Development
International 755-PE The Opec Fund For International US$ Fixed
Organization Development
Latin American Argentina Government of Argentina US$ Fixed
Countries
Latin American Argentina Government of Argentina US$ Fixed
Countries
Latin American Argentina Government of Argentina US$ Fixed
Countries
Latin American Argentina Government of Argentina US$ Fixed
Countries
Latin American Argentina Government of Argentina US$ Fixed
Countries
Latin American Brazil Centeral Bank of Brazil US$ 6-month Libor for
Countries US$
Latin American Brazil Centeral Bank of Brazil US$ 6-month Libor for
Countries US$
Latin American Brazil Centeral Bank of Brazil US$ 6-month Libor for
Countries US$
Latin American Brazil Centeral Bank of Brazil US$ 6-month Libor for
Countries US$
Latin American Brazil Centeral Bank of Brazil US$ 6-month Libor for
Countries US$
Latin American Brazil Banco Do Brasil S.A. US$ 6-month Libor for
Countries US$
Latin American Brazil Ciber Equipamientos Rodoviarios US$ Fixed
Countries Ltda.
Latin American Brazil Government of Brazil US$ Fixed
Countries
Latin American Brazil Saturnia Baterias Ltda. US$ 6-month Libor for
Countries US$
Latin American Brazil Svedala Faco Ltda. US$ Fixed
Countries
Eastern Europe China Bank of China US$ Fixed
Eastern Europe China Bank of China US$ Fixed
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's US$ No Interest
Republic of China
Eastern Europe China Government of The People's (pound) No Interest
Republic of China
Eastern Europe China Government of The People's US$ No Interest
Republic of China
Suppliers Israel Industrias Aeronauticas Israel US$ 6-month Libor for
Ltd. US$
Suppliers Italy Armamenti e Aerospazio S.P.A. US$ Fixed
Suppliers Italy Armamenti e Aerospazio S.P.A. US$ Fixed
Suppliers Italy Bitelli S.A. US$ Fixed
Suppliers Italy Bitelli S.A. US$ Fixed
Suppliers Japan Japan Peru Oil Co. Ltd (JAPECO) (Y) Fixed
Suppliers Japan Japan Peru Oil CO.LTD (JAPECO) (Y) Fixed
Suppliers Japan Japan Peru Oil CO.LTD (JAPECO) (Y) Fixed
Suppliers Japan Japan Peru Oil CO.LTD (JAPECO) (Y) Fixed
Suppliers Panama Cormed S.A. US$ Fixed
Suppliers Panama Mobetek Representaciones US$ Fixed
S.A.-Sucursal Panama
Commercial Bank Banco Latinoamerico de US$ 6-month Libor for
Exportacion S.A. US$
Commercial Bank Banco Latinoamerico de US$ 6-month Libor for
Exportacion S.A. US$
Commercial Bank First Union National Bank US$ 6-month Libor for
US$
Commercial Bank First Union National Bank US$ Fixed
Bonds Par Bonds US$ Variable Rate
Bonds Par Bonds US$ Variable Rate
Bonds Discount Bonds US$ 6-month Libor for
US$
Bonds PDI Bonds US$ Variable Rate
Outstanding Amount
as of December 31,
Interest Rate 2001 Years to
Type of Lender Country Spread (%) (%) (in millions of US$) Maturity
- --------------- ---------- ---------- ------------- -------------------- ---------
Paris Club Germany 0.00 6.80 8,391 7
Paris Club Germany 0.00 6.80 177 .5
Paris Club Germany 0.00 6.75 9,631 14
Paris Club Germany 0.00 6.75 31,221 14
Paris Club Germany 0.00 2.00 600 2
Paris Club Germany 0.00 2.00 951 2
Paris Club Germany 0.00 2.00 494 2
Paris Club Germany 0.00 2.00 590 4
Paris Club Germany 0.00 2.00 679 5
Paris Club Germany 0.00 2.00 3,337 5
Paris Club Germany 0.00 2.00 11,829 5
Paris Club Germany 0.00 2.00 5,635 8
Paris Club Germany 0.00 2.00 8,490 7
Paris Club Germany 0.00 2.00 25,205 14
Paris Club Germany 0.00 3.00 11,880 14
Paris Club Germany 0.00 2.00 1,698 7
Paris Club Germany 0.00 2.00 1,693 8
Paris Club Germany 0.00 2.00 339 8
Paris Club Germany 0.00 3.00 2,253 10
Paris Club Germany 0.00 2.00 5,434 12
Paris Club Germany 0.00 2.00 3,170 14
Paris Club Germany 0.00 2.00 4,913 14
Paris Club Germany 0.00 3.00 1,426 14
Paris Club Germany 0.00 2.00 951 14
Paris Club Germany 0.00 2.00 5,094 15
Paris Club Germany 0.00 3.00 15,774 11
Paris Club Germany 0.00 2.00 1,925 17
Paris Club Germany 0.00 0.75 4,528 30
Paris Club Germany 0.00 2.00 10,900 20
Paris Club Germany 0.00 3.00 7,212 20
Paris Club Germany 0.00 3.00 41,468 10
Paris Club Germany 0.00 3.00 220 .5
Paris Club Germany 0.00 0.75 4,528 30
Paris Club Germany 0.00 3.00 2,520 20
Paris Club Germany 0.00 3.00 15,462 20
Paris Club Germany 0.00 0.75 2,264 30
Paris Club Germany 0.00 0.75 18,106 30
Paris Club Germany 0.00 2.00 18,936 20
Paris Club Germany 0.00 0.75 4,569 30
Paris Club Germany 0.00 2.00 913 20
Paris Club Germany 0.00 3.10 26,711 10
Paris Club Germany 0.00 3.10 68,560 16
Paris Club Germany 0.00 0.75 3,943 30
Paris Club Germany 0.00 0.75 6,792 30
Paris Club Germany 0.00 2.00 4,990 20
Paris Club Germany 0.00 2.00 6,026 20
Paris Club Germany 0.00 2.00 2,851 20
Paris Club Germany 0.00 2.00 278 20
Paris Club Germany 0.00 2.00 417 20
Paris Club Germany 0.00 0.75 36 30
Paris Club Germany 0.00 2.00 2,780 20
Paris Club Austria 0.60 Variable 340 .5
Paris Club Austria 0.60 Variable 11,486 7
Paris Club Austria 0.60 Variable 6,686 14
Paris Club Austria 0.60 Variable 46,237 14
Paris Club Belgium 2.00 0.00 329 3
Paris Club Belgium 2.00 0.00 220 4
Paris Club Belgium 2.00 0.00 329 .5
Paris Club Belgium 2.00 0.00 384 7
Paris Club Belgium 2.00 0.00 439 8
Paris Club Belgium 2.00 0.00 220 8
Paris Club Belgium 2.00 0.00 202 9
Paris Club Belgium 2.00 0.00 115 9
Paris Club Belgium 2.00 0.00 474 9
Paris Club Belgium 2.00 0.00 198 9
Paris Club Belgium 2.00 0.00 796 11
Paris Club Belgium 2.00 0.00 411 11
Paris Club Belgium 0.00 0.00 2,232 10
Paris Club Belgium 0.00 0.00 2,149 10
Paris Club Belgium 0.00 0.00 2,637 16
Paris Club Belgium 0.00 7.75 21,950 7
Paris Club Belgium 0.00 7.75 783 .5
Paris Club Belgium 0.00 6.75 74 7
Paris Club Belgium 0.00 6.75 3 .5
Paris Club Belgium 0.50 Variable 13,502 14
Paris Club Belgium 0.50 Variable 92,422 14
Paris Club Belgium 0.50 Variable 46 14
Paris Club Belgium 0.50 Variable 346 14
Paris Club Canada 0.50 Variable 13,737 7
Paris Club Canada 0.50 Variable 398 .5
Paris Club Canada 0.50 Variable 40,375 7
Paris Club Canada 0.50 Variable 944 .5
Paris Club Canada 1.25 Variable 11,321 14
Paris Club Canada 1.25 Variable 55,509 14
Paris Club Canada 0.50 Variable 42,219 14
Paris Club Canada 0.50 Variable 224,160 14
Paris Club Canada 0.50 Variable 1,465 7
Paris Club Canada 0.50 Variable 22 .5
Paris Club Canada 0.50 Variable 1,481 14
Paris Club Canada 0.50 Variable 8,071 14
Paris Club Spain 0.75 Variable 4,505 3
Paris Club Spain 0.75 Variable 11,122 .5
Paris Club Spain 0.75 Variable 1,351 5
Paris Club Spain 0.75 Variable 602 .5
Paris Club Spain 0.75 Variable 57 5
Paris Club Spain 0.00 9.50 99,558 7
Paris Club Spain 0.00 9.50 1,915 .5
Paris Club Spain 0.50 Variable 29,505 7
Paris Club Spain 0.50 Variable 654 .5
Paris Club Spain 0.50 Variable 79,064 14
Paris Club Spain 0.50 Variable 208,493 14
Paris Club Spain 0.50 Variable 24,424 14
Paris Club Spain 0.50 Variable 114,416 14
Paris Club Spain 0.00 5.50 251 .5
Paris Club Spain 0.00 5.50 177 2
Paris Club Spain 0.00 5.50 270 2
Paris Club Spain 0.00 5.50 667 2
Paris Club Spain 0.00 5.50 156 2
Paris Club Spain 0.00 5.50 1,217 6
Paris Club Spain 0.00 3.75 7,424 8
Paris Club Spain 0.00 5.50 1,956 10
Paris Club Spain 0.00 5.50 10 .5
Paris Club Spain 0.00 3.00 1,712 10
Paris Club Spain 0.00 3.00 6 .5
Paris Club Spain 0.00 3.40 9,585 8
Paris Club Spain 0.00 4.50 1,676 10
Paris Club Spain 0.00 4.50 2,678 17
Paris Club Spain 0.00 3.00 270 10
Paris Club Spain 0.00 3.00 2,300 17
Paris Club Spain 0.00 1.00 13,166 5
Paris Club United 0.00 0.75 19 .5
States
Paris Club United 0.00 0.75 987 3
States
Paris Club United 0.00 0.75 220 3
States
Paris Club United 0.00 2.00 216 3
States
Paris Club United 0.00 2.00 1,641 4
States
Paris Club United 0.00 2.00 649 3
States
Paris Club United 0.00 0.75 255 3
States
Paris Club United 0.00 2.00 787 4
States
Paris Club United 0.00 2.50 328 5
States
Paris Club United 0.00 2.50 106 5
States
Paris Club United 0.00 2.50 1,815 5
States
Paris Club United 0.00 2.50 287 5
States
Paris Club United 0.00 2.50 504 6
States
Paris Club United 0.00 2.50 117 6
States
Paris Club United 0.00 2.50 509 8
States
Paris Club United 0.00 3.00 2,430 11
States
Paris Club United 0.00 3.00 2,478 11
States
Paris Club United 0.00 3.00 2,141 3
States
Paris Club United 0.00 3.00 4,568 4
States
Paris Club United 0.00 3.00 1,514 3
States
Paris Club United 0.00 3.00 3,665 5
States
Paris Club United 0.00 3.00 3,728 6
States
Paris Club United 0.00 3.00 2,760 5
States
Paris Club United 0.00 3.00 1,761 6
States
Paris Club United 0.00 3.00 5,956 5
States
Paris Club United 0.00 3.00 4,755 6
States
Paris Club United 0.00 3.00 3,770 6
States
Paris Club United 0.00 3.00 3,864 7
States
Paris Club United 0.00 3.00 20,419 7
States
Paris Club United 0.00 3.00 5,519 8
States
Paris Club United 0.00 3.00 32,484 7
States
Paris Club United 0.00 2.84 75 .5
States
Paris Club United 0.00 6.50 58,594 7
States
Paris Club United 0.00 6.50 1,586 .5
States
Paris Club United 0.00 7.125 59,522 14
States
Paris Club United 0.00 7.125 266,418 14
States
Paris Club United 0.00 6.6905 2,297 7
States
Paris Club United 0.00 6.5076 55 .5
States
Paris Club United 0.00 6.825 2,107 14
States
Paris Club United 0.00 5.375 9,268 14
States
Paris Club United 0.50 Variable 13,606 7
States
Paris Club United 0.50 Variable 361 .5
States
Paris Club United 0.50 Variable 15,433 14
States
Paris Club United 0.50 Variable 88,552 14
States
Paris Club United 0.00 8.35 5,835 5
States
Paris Club United 0.00 6.188 57,440 7
States
Paris Club United 0.00 6.133 611 .5
States
Paris Club United 0.00 6.69 44,316 14
States
Paris Club United 0.00 6.69 87,634 14
States
Paris Club United 0.00 8.025 6,019 8
States
Paris Club United 1.14 Variable 500 .5
States
Paris Club United 0.00 9.98 8,711 7
States
Paris Club United 0.35 Variable 9,628 12
States
Paris Club United 0.00 3.00 568 1
States
Paris Club United 0.00 3.00 1,807 2
States
Paris Club United 0.00 3.00 2,714 3
States
Paris Club United 0.00 4.00 950 1
States
Paris Club United 0.00 4.00 3,403 2
States
Paris Club United 0.00 4.00 7,165 8
States
Paris Club United 0.00 4.00 10,585 9
States
Paris Club United 0.00 4.00 9,268 10
States
Paris Club United 0.00 4.00 10,223 11
States
Paris Club United 0.00 4.00 5,674 12
States
Paris Club United 0.00 4.00 5,700 12
States
Paris Club United 0.00 4.00 6,150 13
States
Paris Club United 0.00 4.00 13,160 14
States
Paris Club United 0.00 3.26 19,050 10
States
Paris Club United 0.00 3.26 19 .5
States
Paris Club United 0.00 3.26 15,721 10
States
Paris Club United 0.00 3.26 12,594 17
States
Paris Club United 0.00 4.00 9,936 26
States
Paris Club United 0.00 2.50 4,167 26
States
Paris Club United 0.00 1.00 9,697 26
States
Paris Club Finland 0.50 Variable 35 7
Paris Club Finland 0.50 Variable 1 .5
Paris Club Finland 0.50 Variable 2,756 7
Paris Club Finland 0.50 Variable 50 .5
Paris Club Finland 0.50 Variable 14 14
Paris Club Finland 0.50 Variable 201 14
Paris Club Finland 0.50 Variable 2,834 14
Paris Club Finland 0.50 Variable 15,375 14
Paris Club France 0.00 3.50 9,675 10
Paris Club France 0.00 3.50 2,803 10
Paris Club France 0.00 3.50 4 .5
Paris Club France 0.50 Variable 0 .5
Paris Club France 0.50 Variable 15 7
Paris Club France 0.00 6.50 34,338 7
Paris Club France 0.00 6.50 710 .5
Paris Club France 0.00 3.50 5,847 10
Paris Club France 0.00 3.50 3,405 10
Paris Club France 0.00 3.50 27,274 17
Paris Club France 0.50 Variable 18 14
Paris Club France 0.50 Variable 98 14
Paris Club France 0.00 6.85 28,013 14
Paris Club France 0.00 6.85 135,684 14
Paris Club France 0.00 6.50 174,698 7
Paris Club France 0.00 6.50 3,906 .5
Paris Club France 0.50 Variable 18 7
Paris Club France 0.50 Variable 0 .5
Paris Club France 0.00 6.85 117,865 14
Paris Club France 0.00 6.85 552,478 14
Paris Club France 0.50 Variable 21 14
Paris Club France 0.50 Variable 117 14
Paris Club France 0.00 3.50 1,644 4
Paris Club France 0.00 3.50 1,451 9
Paris Club France 0.00 3.50 754 8
Paris Club France 0.00 3.50 619 8
Paris Club France 0.00 3.50 522 9
Paris Club France 0.00 3.50 715 9
Paris Club France 0.00 3.50 229 9
Paris Club France 0.00 3.50 702 11
Paris Club France 0.00 3.50 602 11
Paris Club France 0.00 3.50 253 9
Paris Club France 0.00 4.00 5,426 15
Paris Club France 0.00 3.00 230 21
Paris Club France 0.00 3.00 7,863 21
Paris Club France 0.00 3.40 4,401 19
Paris Club France 0.00 3.40 3,857 17
Paris Club Italy 0.00 2.50 673 6
Paris Club Italy 0.00 1.50 3,099 6
Paris Club Italy 0.00 1.50 2,078 8
Paris Club Italy 0.00 1.50 10,004 8
Paris Club Italy 0.00 1.50 26,106 7
Paris Club Italy 0.00 1.50 21,889 7
Paris Club Italy 0.00 1.50 2,579 7
Paris Club Italy 0.00 1.50 75,000 7
Paris Club Italy 0.00 1.50 1,705 8
Paris Club Italy 0.00 1.50 4,181 9
Paris Club Italy 0.00 1.50 6,520 10
Paris Club Italy 0.00 1.50 12,581 10
Paris Club Italy 0.00 7.90 49,053 7
Paris Club Italy 0.00 7.90 1,228 .5
Paris Club Italy 0.00 6.25 136,773 7
Paris Club Italy 0.00 6.25 2,440 .5
Paris Club Italy 0.00 7.92 46,151 14
Paris Club Italy 0.00 7.92 133,909 14
Paris Club Italy 0.00 7.07 99,187 14
Paris Club Italy 0.00 7.07 395,578 14
Paris Club Japan 0.00 3.00 7,875 1
Paris Club Japan 0.00 3.50 886 1
Paris Club Japan 0.00 4.25 1,889 3
Paris Club Japan 0.00 4.25 2,773 3
Paris Club Japan 0.00 4.25 2,369 3
Paris Club Japan 0.00 3.00 406,373 20
Paris Club Japan 0.00 3.00 96,774 20
Paris Club Japan 0.00 2.10 11,929 3
Paris Club Japan 0.00 4.10 40,638 10
Paris Club Japan 0.00 4.10 253 .5
Paris Club Japan 0.00 5.60 21,238 10
Paris Club Japan 0.00 5.60 510 .5
Paris Club Japan 0.00 4.90 2,806 7
Paris Club Japan 0.00 4.90 42 .5
Paris Club Japan 0.00 3.00 16,936 20
Paris Club Japan 0.00 3.50 13,030 12
Paris Club Japan 0.00 3.50 98,502 12
Paris Club Japan 0.00 3.60 32,255 3
Paris Club Japan 0.00 3.10 6,543 3
Paris Club Japan 0.00 3.00 3,406 3
Paris Club Japan 0.00 2.40 5,728 3
Paris Club Japan 0.00 2.60 2,876 3
Paris Club Japan 0.00 2.60 147 3
Paris Club Japan 0.00 3.00 5,352 20
Paris Club Japan 0.00 3.00 26,520 20
Paris Club Japan 0.00 2.50 72,117 18
Paris Club Japan 0.00 2.10 7,381 18
Paris Club Japan 0.00 2.70 44,688 18
Paris Club Japan 0.00 2.30 12,889 18
Paris Club Japan 0.00 2.90 40,365 12
Paris Club Japan 0.00 2.90 17,305 5
Paris Club Japan 0.00 2.70 112,208 18
Paris Club Japan 0.00 2.30 9,932 18
Paris Club Japan 0.00 2.70 32,880 18
Paris Club Japan 0.00 2.30 2,307 18
Paris Club Japan 0.00 2.10 1,329 18
Paris Club Japan 0.00 2.50 18,069 18
Paris Club Japan 0.00 2.70 13,268 18
Paris Club Japan 0.00 2.50 17,619 18
Paris Club Japan 0.00 2.70 2,540 18
Paris Club Japan 0.00 2.30 3,884 18
Paris Club Japan 0.00 4.10 29,259 10
Paris Club Japan 0.00 4.10 94,728 17
Paris Club Japan 0.00 4.30 1,879 14
Paris Club Japan 0.00 5.50 10,346 14
Paris Club Japan 0.00 5.60 20,966 10
Paris Club Japan 0.00 5.60 124,749 17
Paris Club Japan 0.00 2.70 12,015 7
Paris Club Japan 0.00 2.70 13,037 7
Paris Club Japan 0.00 1.70 635 7
Paris Club Japan 0.00 1.70 5,414 7
Paris Club Japan 0.00 1.70 14,598 18
Paris Club Japan 0.00 0.75 519 18
Paris Club Japan 0.00 0.75 2,662 30
Paris Club Japan 0.00 1.70 10,630 18
Paris Club Japan 0.00 2.20 3,736 18
Paris Club Japan 0.00 0.75 6,612 30
Paris Club Japan 0.00 3.70 20,206 3
Paris Club Japan 0.00 1.60 63,826 15
Paris Club Japan 0.00 3.50 53,787 5
Paris Club Japan 0.00 2.00 243,965 12
Paris Club Japan 0.00 1.70 2,290 18
Paris Club Japan 0.00 2.20 1,844 18
Paris Club Japan 0.00 4.90 25,517 7
Paris Club Japan 0.00 4.90 624 .5
Paris Club Japan 0.00 4.30 22,744 14
Paris Club Japan 0.00 5.50 145,427 14
Paris Club Japan 0.00 6.30 8,440 7
Paris Club Japan 0.00 6.30 182 6
Paris Club Japan 0.00 6.30 95 7
Paris Club Japan 0.00 6.30 2 .5
Paris Club Japan 0.50 Variable 6,862 14
Paris Club Japan 0.50 Variable 36,396 14
Paris Club Japan 0.50 Variable 85 14
Paris Club Japan 0.50 Variable 458 14
Paris Club Norway 0.00 6.75 8,992 7
Paris Club Norway 0.00 6.75 253 .5
Paris Club Norway 0.50 Variable 12,799 7
Paris Club Norway 0.50 Variable 49 .5
Paris Club Norway 0.00 6.75 8,522 14
Paris Club Norway 0.00 6.75 26,073 14
Paris Club Norway 0.50 Variable 10,652 14
Paris Club Norway 0.50 Variable 15,283 14
Paris Club Netherlands 0.00 7.40 13,485 7
Paris Club Netherlands 0.00 7.40 285 .5
Paris Club Netherlands 0.00 7.40 192 7
Paris Club Netherlands 0.00 7.40 5 .5
Paris Club Netherlands 0.00 6.95 11,454 14
Paris Club Netherlands 0.00 5.00 40,179 14
Paris Club Netherlands 0.00 6.95 180 14
Paris Club Netherlands 0.00 5.00 644 14
Paris Club Netherlands 0.00 2.50 384 2
Paris Club Netherlands 0.00 2.50 384 2
Paris Club Netherlands 0.00 2.50 769 4
Paris Club Netherlands 0.00 2.50 2,009 5
Paris Club Netherlands 0.00 2.50 2,184 5
Paris Club Netherlands 0.00 0.75 1,245 27
Paris Club Netherlands 0.00 2.50 3,058 7
Paris Club Netherlands 0.00 0.75 4,493 25
Paris Club Netherlands 0.00 2.50 3,125 8
Paris Club Netherlands 0.00 2.50 4,893 8
Paris Club Netherlands 0.00 2.50 4,194 16
Paris Club Netherlands 0.00 7.40 12,224 7
Paris Club Netherlands 0.00 7.40 299 .5
Paris Club Netherlands 0.00 6.95 11,462 14
Paris Club Netherlands 0.00 6.95 40,899 14
Paris Club United 0.50 Variable 34,547 7
Kingdom
Paris Club United 0.50 Variable 917 .5
Kingdom
Paris Club United nd) 0.50 Variable 17 7
Kingdom
Paris Club United nd) 0.50 Variable 1 .5
Kingdom
Paris Club United 0.50 Variable 2,315 7
Kingdom
Paris Club United 0.50 Variable 62 .5
Kingdom
Paris Club United nd) 0.50 Variable 26,326 14
Kingdom
Paris Club United nd) 0.50 Variable 121,133 14
Kingdom
Paris Club United nd) 0.50 Variable 17 14
Kingdom
Paris Club United nd) 0.50 Variable 79 14
Kingdom
Paris Club United 0.50 Variable 2,383 14
Kingdom
Paris Club United 0.50 Variable 13,235 14
Kingdom
Paris Club South Africa 0.00 5.00 4,615 7
Paris Club South Africa 0.00 5.00 85 .5
Paris Club South Africa 0.00 5.00 3,291 14
Paris Club South Africa 0.00 5.00 22,320 14
Paris Club Sweden 0.50 Variable 4,797 7
Paris Club Sweden 0.50 Variable 406 .5
Paris Club Sweden 0.50 Variable 9,491 7
Paris Club Sweden 0.50 Variable 283 .5
Paris Club Sweden 0.50 Variable 8,261 14
Paris Club Sweden 0.50 Variable 45,405 14
Paris Club Sweden 0.50 Variable 12,616 14
Paris Club Sweden 0.50 Variable 68,535 14
International 0.00 6.73 30,367 14
Organization
International 0.00 7.06 1,887 14
Organization
International 5-CD-PE 0.00 0.00 39 16
Organization
International 368-SF-PE 0.00 2.00 195 2
Organization
International 368-SF-PE 0.00 2.00 177 2
Organization
International 367-SF-PE 0.00 2.00 52 2
Organization
International 392-SF-PE 0.00 2.00 250 3
Organization
International 392-SF-PE 0.00 2.00 7 3
Organization
International 392-SF-PE 0.00 2.00 6 3
Organization
International 392-SF-PE 0.00 2.00 323 3
Organization
International 421-SF-PE 0.00 2.00 2,696 4
Organization
International 421-SF-PE 0.00 2.00 2,609 4
Organization
International 456-SF-RG 0.00 2.00 99 4
Organization
International 456-SF-RG 0.00 2.00 104 4
Organization
International 456-SF-RG 0.00 2.00 19 4
Organization
International 497-SF-PE 0.00 2.00 1,893 5
Organization
International 497-SF-PE 0.00 2.00 575 5
Organization
International 497-SF-PE 0.00 2.00 2,890 5
Organization
International 497-SF-PE 0.00 2.00 48 5
Organization
International 497-SF-PE 0.00 2.00 200 5
Organization
International 497-SF-PE 0.00 2.00 306 5
Organization
International 344-OC-PE 0.00 7.50 500 2
Organization
International 344-OC-PE 0.00 7.50 232 2
Organization
International 553-SF-PE 0.00 2.00 200 7
Organization
International 553-SF-PE 0.00 2.00 62 7
Organization
International 567-SF-PE 0.00 2.00 3,429 7
Organization
International 567-SF-PE 0.00 2.00 400 7
Organization
International 567-SF-PE 0.00 2.00 476 7
Organization
International 567-SF-PE 0.00 2.00 326 7
Organization
International 567-SF-PE 0.00 2.00 518 7
Organization
International 355-OC-PE 0.00 7.90 467 3
Organization
International 589-SF-PE 0.00 2.00 685 8
Organization
International 589-SF-PE 0.00 2.00 90 8
Organization
International 589-SF-PE 0.00 2.00 2,402 8
Organization
International 602-SF-PE 0.00 2.00 6,849 8
Organization
International 602-SF-PE 0.00 2.00 1,744 8
Organization
International 602-SF-PE 0.00 2.00 4,714 8
Organization
International 602-SF-PE 0.00 2.00 430 8
Organization
International 602-SF-PE 0.00 2.00 633 8
Organization
International 602-SF-PE 0.00 2.00 123 8
Organization
International 363-OC-PE 0.00 7.90 630 3
Organization
International 363-OC-PE 0.00 7.90 48 3
Organization
International 363-OC-PE 0.00 7.90 11 3
Organization
International 634-SF-PE 0.00 2.00 2,590 9
Organization
International 634-SF-PE 0.00 2.00 487 9
Organization
International 634-SF-PE 0.00 2.00 1,856 9
Organization
International 634-SF-PE 0.00 2.00 2,897 9
Organization
International 629-SF-PE 0.00 2.00 8,338 9
Organization
International 629-SF-PE 0.00 2.00 346 9
Organization
International 629-SF-PE 0.00 2.00 1,463 9
Organization
International 629-SF-PE 0.00 2.00 380 9
Organization
International 629-SF-PE 0.00 2.00 3,435 9
Organization
International 629-SF-PE 0.00 2.00 483 9
Organization
International 650-SF-PE 0.00 2.00 1,642 9
Organization
International 400-OC-PE 0.00 9.25 538 4
Organization
International 400-OC-PE 0.00 9.25 53 4
Organization
International 652-SF-PE 0.00 2.00 2,961 9
Organization
International 652-SF-PE 0.00 2.00 4,427 9
Organization
International 652-SF-PE 0.00 2.00 502 9
Organization
International 404-OC-PE 0.00 9.25 1,399 4
Organization
International 404-OC-PE 0.00 9.25 130 4
Organization
International 404-OC-PE 0.00 9.25 87 4
Organization
International 404-OC-PE 0.00 9.25 339 4
Organization
International 411-OC-PE 0.00 9.25 7,566 5
Organization
International 411-OC-PE 0.00 9.25 249 5
Organization
International 420-OC-PE 0.00 4.00 65 1
Organization
International 686-SF-PE 0.00 2.00 702 11
Organization
International 686-SF-PE 0.00 2.00 942 11
Organization
International 686-SF-PE 0.00 2.00 89 11
Organization
International 428-OC-PE 0.00 10.50 1,039 1
Organization
International 697-SF-PE 0.00 2.00 2,707 11
Organization
International 697-SF-PE 0.00 2.00 1,431 11
Organization
International 697-SF-PE 0.00 2.00 358 11
Organization
International 697-SF-PE 0.00 2.00 1,106 11
Organization
International 706-SF-PE 0.00 2.00 3,250 11
Organization
International 706-SF-PE 0.00 2.00 318 11
Organization
International 706-SF-PE 0.00 2.00 1,039 11
Organization
International 706-SF-PE 0.00 2.00 491 11
Organization
International 431-OC-PE 0.00 10.50 746 1
Organization
International 431-OC-PE 0.00 4.00 26 1
Organization
International 423-OC-PE 0.00 10.50 1,073 2
Organization
International 689-SF-PE 0.00 2.00 986 12
Organization
International 720-SF-PE 0.00 2.00 2,661 12
Organization
International 125-IC-PE 0.00 8.0233 17,678 2
Organization
International 445-OC-PE 0.00 8.6741 2,933 2
Organization
International 492-OC-PE 0.00 7.8710 2,049 4
Organization
International 240-IC-PE 1.00 Variable 2,444 5
Organization
International 517-OC-PE 0.00 4.00 1,513 6
Organization
International 238-IC-PE 0.00 6.5028 10,937 5
Organization
International 631-OC-PE 0.00 Variable 276,450 10
Organization
International 665-OC-PE 0.00 Variable 3,280 10
Organization
International 651-OC-PE 0.00 Variable 126,502 10
Organization
International 677-OC-PE 0.00 Variable 136,123 11
Organization
International 678-OC-PE 0.00 Variable 13,719 11
Organization
International 678-OC-PE 0.00 Variable 1,477 11
Organization
International 741-OC-PE 0.00 Variable 56,876 16
Organization
International 806-OC-PE 0.00 Variable 68,535 17
Organization
International 790-OC-PE 0.00 Variable 30,639 12
Organization
International 836-OC-PE 0.00 Variable 228,840 12
Organization
International 847-OC-PE 0.00 Variable 124,954 17
Organization
International 820-OC-PE 0.00 Variable 982 13
Organization
International 852-1-OC-PE 0.00 Variable 56,583 3
Organization
International 852-2-OC-PE 0.00 Variable 9,654 13
Organization
International 902-OC-PE 0.50 Variable 3,995 14
Organization
International 901-OC-PE 0.00 Variable 82,379 19
Organization
International 958-SF-PE 0.00 2.00 25,000 23
Organization
International 906-OC-PE 0.00 Variable 19,617 14
Organization
International 931-OC-PE 0.50 Variable 150,000 18
Organization
International 944-OC-PE 0.00 Variable 750 2
Organization
International 956-OC-PE 0.00 Variable 66,996 19
Organization
International 985-OC-PE 0.00 Variable 76,138 15
Organization
International 966-OC-PE 0.00 Variable 235,500 15
Organization
International 1025-OC-PE 0.00 Variable 20,509 15
Organization
International 1058-OC-PE 0.00 Variable 140,230 20
Organization
International 1036-OC-PE 0.00 Variable 704 16
Organization
International 1061-OC-PE 0.00 Variable 11,493 20
Organization
International 1050-OC-PE 0.00 Variable 2,546 15
Organization
International 1115-OC-PE 0.50 Variable 1,417 17
Organization
International 1128-OC-PE 0.00 Variable 30,000 22
Organization
International 1150-OC-PE 0.00 Variable 44,555 13
Organization
International 1137-OC-PE 0.00 Variable 115,251 15
Organization
International 1144-OC-PE 0.00 Variable 12,901 20
Organization
International 1196-OC-PE 0.00 Variable 2,013 16
Organization
International 1235-OC-PE 0.00 Variable 200,000 15
Organization
International 1236-OC-PE 0.00 Variable 3,090 16
Organization
International 1237-OC-PE 0.00 Variable 1,306 22
Organization
International 1321-OC-PE 0.00 Variable 250,000 15
Organization
International 1329-OC-PE 0.00 Variable 5,077 19
Organization
International CFA-7 2.50 Variable 2,550 1
Organization
International CFA-43 2.50 Variable 15,000 1
Organization
International CFA-041 2.50 Variable 18,300 3
Organization
International CFA-46 2.50 Variable 33,250 3
Organization
International CFA-062 2.50 Variable 37,615 5
Organization
International CFA-75 2.45 Variable 9,771 4
Organization
International CFA-120 1.90 Variable 3,872 5
Organization
International CFA-128 2.50 Variable 16,150 9
Organization
International CFA-135 3.10 Variable 14,118 8
Organization
International CFA-1009 3.10 Variable 33,488 8
Organization
International CFA-0544 1.75 Variable 10,222 2
Organization
International CFA-1127 2.80 Variable 610 6
Organization
International CFA-1372 2.80 Variable 8,133 6
Organization
International CFA-1408 3.10 Variable 250,000 8
Organization
International CFA-1593 3.50 Variable 300,000 10
Organization
International CFA-1769 3.10 Variable 6,380 6
Organization
International CFA-1902 3.75 Variable 125,000 10
Organization
International 3540-A-PE 0.00 6.28 2,840 5
Organization
International 3540-A-PE 0.00 6.34 5,314 6
Organization
International 3540-S-PE 0.50 Variable 16,313 11
Organization
International 3437-S-PE 0.50 Variable 245,510 11
Organization
International 3489-S-PE 0.50 Variable 318,567 12
Organization
International 3452-S-PE 0.50 Variable 238,640 11
Organization
International 3595-A-PE 0.00 6.41 91,667 5
Organization
International 3595-S-PE 0.50 Variable 115,494 11
Organization
International 3610-A-PE 0.00 7.11 574 5
Organization
International 3610-A-PE 0.00 5.92 95 6
Organization
International 3610-S-PE 0.50 Variable 7,689 12
Organization
International 3684-S-PE 0.50 Variable 76,011 12
Organization
International 3717-A-PE 0.50 Variable 68,456 12
Organization
International 3717-S-PE 0.50 Variable 59,682 12
Organization
International 3701-A-PE 0.50 Variable 20,818 12
Organization
International 3701-S-PE 0.50 Variable 8,392 12
Organization
International 3810-S-PE 0.50 Variable 79,072 13
Organization
International 3811-A-PE 0.50 Variable 104,653 13
Organization
International 3811-S-PE 0.50 Variable 17,401 13
Organization
International 3962-O-PE 0.50 Variable 79,406 11
Organization
International 3826-S-PE 0.50 Variable 6,874 10
Organization
International 3826-A-PE 0.50 Variable 98,264 10
Organization
International 4068-S-PE 0.50 Variable 17,216 12
Organization
International 4068-A-PE 0.50 Variable 106,497 12
Organization
International 4076-O-PE 0.50 Variable 48,615 8
Organization
International 4134-O-PE 0.50 Variable 76,164 9
Organization
International 4133-O-PE 0.50 Variable 183,000 12
Organization
International 4130-O-PE 0.50 Variable 41,189 11
Organization
International 4250-O-PE 0.50 Variable 66,407 12
Organization
International 4384-O-PE 0.01 Variable 21,022 7
Organization
International 4497-O-PE 0.75 Variable 300,000 12
Organization
International 4519-O-PE 0.75 Variable 2,559 4
Organization
International 4536-O-PE 0.75 Variable 300 1
Organization
International 4527-O-PE 0.75 Variable 270 1
Organization
International 4615-O-PE 0.75 Variable 100,000 11
Organization
International 4614-O-PE 0.75 Variable 500 1
Organization
International 116-PE 0.00 4.00 2,243 1
Organization
International 185-PE 0.00 4.00 2,290 4
Organization
International 297-PE 0.00 4.00 10,240 10
Organization
International 386-PE 0.00 Variable 6,629 10
Organization
International 467-PE 0.00 Variable 1,775 1
Organization
International IMF 0.00 Variable 184,733 5
Organization
International 423-PE 0.00 4.00 611 2
Organization
International 630-PE 0.00 3.75 4,167 10
Organization
International 696-PE 0.00 4.00 2,803 11
Organization
International 755-PE 0.00 4.00 4,000 11
Organization
Latin American Argentina 0.00 6.50 29 1
Countries
Latin American Argentina 0.00 6.50 1,702 4
Countries
Latin American Argentina 0.00 6.50 59 1
Countries
Latin American Argentina 0.00 6.50 575 1
Countries
Latin American Argentina 0.00 6.50 45 1
Countries
Latin American Brazil 0.00 Variable 2,273 1
Countries
Latin American Brazil 0.00 Variable 6,642 2
Countries
Latin American Brazil 0.00 Variable 6,167 3
Countries
Latin American Brazil 0.00 Variable 5,411 4
Countries
Latin American Brazil 0.00 Variable 3,163 5
Countries
Latin American Brazil 0.81 Variable 1,895 .5
Countries
Latin American Brazil 0.00 6.875 3,760 5
Countries
Latin American Brazil 0.00 7.875 26,629 8
Countries
Latin American Brazil 1.75 Variable 765 2
Countries
Latin American Brazil 0.00 6.780 1,666 5
Countries
Eastern Europe China 0.00 7.54 7,032 3
Eastern Europe China 0.00 7.68 13,364 6
Eastern Europe China 0.00 0.00 419 5
Eastern Europe China 0.00 0.00 246 5
Eastern Europe China 0.00 0.00 1,376 5
Eastern Europe China 0.00 0.00 414 5
Eastern Europe China 0.00 0.00 3,631 5
Eastern Europe China 0.00 0.00 1,322 5
Eastern Europe China 0.00 0.00 2,400 6
Eastern Europe China 0.00 0.00 468 5
Eastern Europe China 0.00 0.00 5,670 9
Eastern Europe China 0.00 0.00 2,066 5
Eastern Europe China 0.00 0.00 9,000 9
Suppliers Israel 1.50 Variable 735 .5
Suppliers Italy 0.00 5.0268275 33,970 16
Suppliers Italy 0.00 5.0268275 20,744 16
Suppliers Italy 0.00 7.00 1,320 4
Suppliers Italy 0.00 7.00 924 6
Suppliers Japan 0.00 5.50 626,163 11
Suppliers Japan 0.00 4.90 64,443 11
Suppliers Japan 0.00 4.90 3,051 .5
Suppliers Japan 0.00 4.30 85,110 14
Suppliers Panama 0.00 7.00 1,679 5
Suppliers Panama 0.00 7.00 3,958 3
Commercial Bank 2.125 Variable 10,000 1
Commercial Bank 2.00 Variable 6,000 1
Commercial Bank 2.00 Variable 1,304 3
Commercial Bank 0.00 9.00 3,429 4
Bonds 0.8125 Variable 1,624,495 12
Bonds 0.00 Variable 181,152 1
Bonds 0.8125 Variable 242,952 1
Bonds 0.8125 Variable 1,678,468 15
- ------------------------
Acronyms:
ATS = Austrian schilling
BF = Belgian franc
CAN$ = Canadian dollar
DM = German mark
ECU = European Currency
Unit FR = French franc
ITL = Italian lira
NKR = Norwegian krone
NLG = Dutch guilder
PTAS = Spanish pesetas
SCP = Single currency pool (World Bank unit of account, based on a basket of
national currencies)
SDR = IMF unit of account, based on a basket of national currencies
SFR = Swiss franc
SK = Swedish kroner
UAV = Inter-American Development Bank (IDB) unit of account
Source: Ministry of Economy (Direccion General de Credito Publico, or Office
of Public Credit).
PART II
(Required by Items (11), (13) and (14) of Schedule B
of the Securities Act of 1933)
1. The following are the estimated expenses of the issuance and
distribution of the securities being registered:
Registration fee............................................... US$46,000
Listing fees and expenses...................................... 15,000
Printing and engraving expenses................................ 15,000
Rating Agency fees............................................. 100,000
Fiscal Agent fees and expenses................................. 15,000
Legal fees and expenses........................................ 300,000
Other.......................................................... 40,000
Total(1).............................................. US$531,000
(1) A portion of expenses may be paid by the underwriters.
2. The Registrant hereby agrees to furnish an opinion or opinions of
counsel, with respect to the legality of the issue, in connection with any
offering of securities under this Registration Statement, and to furnish copies
of the necessary approvals authorizing each issue of securities offered under
this Registration Statement, and any other Peruvian governmental approvals
required in connection with such issue, in post-effective amendments to this
Registration Statement, in each case together with translations of the same into
the English language.
UNDERTAKINGS
The Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall
be deemed to be part of this Registration Statement as of the time it
was declared effective.
CONTENTS
This Registration Statement comprises:
1. The facing sheet.
2. The Cross Reference Sheet between Schedule B of the
Securities Act of 1933 and the Prospectus.
3. Part I consisting of the Prospectus.
4. Part II consisting of pages II-1 to II-6.
5. The following exhibits:
A. Form of Underwriting Agreement.
B. Form of Fiscal Agency Agreement, including form of certain Debt
Securities.
C. Form of Warrant Agreement, including form of Warrant.*
D. Form of Unit.*
E. Opinion of the Chief of the General Office of Legal Counseling of the
Ministry of Economy and Finance of the Republic of Peru, with respect
to the legality of the securities.
F. Opinion of Cleary, Gottlieb, Steen & Hamilton, special New York Counsel
to the Republic of Peru, with respect to the legality of the
securities.
G. Consent of the Chief of the General Office of Legal Counseling of the
Ministry of Economy and Finance of the Republic of Peru (included in
Exhibit E).
H. Consent of Cleary, Gottlieb, Steen & Hamilton (included in Exhibit F).
- -------------------------
* To be filed by amendment.
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant, the Republic of Peru, has duly caused this Registration
Statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Lima, Peru on the 7th day of November,
2002.
By: /s/ JOSE F. LITUMA AGUERO
-----------------------------------
Jose F. Lituma Aguero
Director General de Credito Publico
SIGNATURE OF AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of the Securities Act of 1933, as amended,
the undersigned, as duly authorized representative in the United States of the
Registrant, has signed this Registration Statement or amendment thereto in the
City of New York, New York on the 7th day of November, 2002.
By: /s/ HELI PALAEZ CASTRO
---------------------------------
Heli Palaez Castro
Ambassador Consul General of Peru
EXHIBIT INDEX
Exhibit Page No.
- ------- --------
A. Form of Underwriting Agreement.
B. Form of Fiscal Agency Agreement, including
form of certain Debt Securities.
C. Form of Warrant Agreement, including
form of Warrant.*
D. Form of Unit.*
E. Opinion of the Chief of the General Office
of Legal Counseling of the Ministry of Economy
and Finance of the Republic of Peru, with respect
to the legality of the securities.
F. Opinion of Cleary, Gottlieb, Steen & Hamilton,
special New York Counsel to the Republic of Peru,
with respect to the legality of the securities.
G. Consent of the Chief of the General Office
of Legal Counseling of the Ministry of Economy and
Finance of the Republic of Peru (included in
Exhibit E).
H. Consent of Cleary, Gottlieb, Steen & Hamilton
(included in Exhibit F).
---------------------
* To be filed by amendment.
The Republic of Peru
Debt Securities
Warrants
Units
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
November , 2002
EXHIBIT A
FORM OF UNDERWRITING AGREEMENT
Dated as of [ ]
REPUBLIC OF PERU
[NAMES OF REPRESENTATIVES]
AND
THE OTHER UNDERWRITERS NAMED HEREIN
----------------------------------------------
UNDERWRITING AGREEMENT
U.S.$____________
[Title of Securities]
REPUBLIC OF PERU
U.S.$_____________
[Title of Securities]
UNDERWRITING AGREEMENT
[ ]
[Representatives]
as Representatives of the several Underwriters listed herein
Ladies and Gentlemen:
THE REPUBLIC OF PERU (the "Republic" or "Peru") proposes to issue and
sell to [ ] acting severally, not jointly (each an "Underwriter" and,
collectively, the "Underwriters"), for whom [Representatives] are acting as
representatives (in such capacity, the "Representatives"), U.S.$[______]
aggregate principal amount of its securities identified in Schedule I hereto
(the "Securities") consisting of debt securities to be issued pursuant to a
Fiscal Agency Agreement (the "Fiscal Agency Agreement") dated [______], between
the Republic and [______] (the "Fiscal Agent") and, if so specified in Schedule
I(1) hereto, warrants (the "Warrants") to be issued under a warrant agreement
(the "Warrant Agreement") with the warrant agent named therein (the "Warrant
Agent"). To the extent there are no additional Underwriters listed on Schedule
II other than you, the term Representatives as used herein shall mean you, as
Underwriters, and the terms Representatives and Underwriters shall mean either
the singular or plural as the context requires. The Securities to be issued by
the Republic will be evidenced initially by one or more Registered Securities
(each a "Registered Bond") representing the Securities sold or resold pursuant
to a registration statement under Schedule B of the Securities Act of 1933, as
amended (the "Securities Act"), dated November [___], 2002. The Securities will
be in registered form without coupons and will be issued in denominations of
U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof. Except
where the context otherwise requires, terms not otherwise defined in this
Agreement shall have the meanings specified in the Fiscal Agency Agreement or in
the Securities.
- ---------------------
1 If it is specified in Schedule I hereto that this Agreement also relates to
the issue and sale of Units or Warrants: (i) the number of Units or Warrants to
be sold together with the applicable denominations of the Securities and the
title and principal amount of the securities covered by each Warrant and of all
the Units or Warrants are as specified in Schedule I hereto, (ii) all references
herein to "Securities" are deemed to include or refer to the Units or Warrants,
as the case may be, and all references to the "Fiscal Agency Agreement" are to
the Warrant Agreement, as further specified in Schedule I hereto, (iii) Section
8 hereof includes such other agreements of Peru as are set forth in Schedule I
hereto, and (iv) the legal opinions and other documents to be delivered pursuant
to Section 9 hereof shall be appropriately modified to cover the Units or the
Warrants, the Warrant Agreement, the securities covered by each of the Warrants
and such related matters in such manner as the Representatives or their counsel
may reasonably request.
1. Issue of Securities, Prospectus and Publicity
(a) The Republic agrees to issue and sell the Securities on [ ] or such
later date, not being later than [ ], as the Republic and the Representatives
may agree (the "Closing Date") to the Underwriters or as the Underwriters may
direct. Each Underwriter, severally and not jointly, agrees to purchase at a
price equal to [____]% of the aggregate principal amount thereof plus accrued
interest, if any, from [ ], to the Closing Date (the aggregate amount of the
purchase price paid by the Underwriters being the "Purchase Price"), subject to
the adjustments referred to in Section 6(c), the principal amount of the
Securities set forth opposite its name on Schedule II, as such amount may be
adjusted pursuant to Section 11.
(b) The Republic will enter into, not later than the Closing Date (and
provide the Representatives with copies of), the Fiscal Agency Agreement with
the Fiscal Agent. The Securities will be issued in accordance with the terms of
the Fiscal Agency Agreement and will be in the forms and contain such terms as
set forth therein.
(c) The Republic confirms the arrangements made on its behalf by the
Representatives for announcements in respect of the Securities to be published
on such dates and in such newspapers or other publications as the
Representatives may determine.
2. Stabilization
(a) The Representatives, for their own accounts, may to the extent
permitted by applicable law, engage in transactions that stabilize, maintain, or
otherwise affect the price of the Securities, including without limitation,
overalloting the offering, creating a short position and bidding for and
purchasing Securities to cover such short positions, and bidding for and
purchasing Securities to stabilize the price of the Securities. In doing so, the
Representatives shall act as principals and not as agents of the Republic and
any loss resulting from over-allotment or stabilization will be borne, and any
profit arising therefrom shall be retained, by the Representatives. Such
transactions may be effected on the Luxembourg Stock Exchange, in the
over-the-counter market or otherwise. The Representatives are not required to
engage in these activities and may end these activities at any time.
(b) Nothing in this Section 2 shall be construed as requiring the
Republic to issue more than U.S.$_________ in principal amount of the
Securities.
3. Agreements by the Underwriters
(a) The Underwriters agree severally, and not jointly, to purchase the
Securities at the Purchase Price on the Closing Date subject to the terms of
this Agreement.
(b) Each of the Underwriters represents, warrants and agrees that it
and, where applicable, each of its affiliates that participate in the
distribution of the Securities has complied and will comply with the terms set
out in Schedule II.
(c) The Republic acknowledges and agrees that the Underwriters may sell
to any of their affiliates Securities purchased by any Underwriter, and that any
of such affiliates may sell to other such affiliates or to the Underwriters
Securities purchased by such affiliates.
4. Listing
(a) The Republic confirms that it has authorized the Representatives to
make or cause to be made an application for the Securities, on behalf of the
Republic, to be listed on the Luxembourg Stock Exchange (the "Stock Exchange").
(b) The Republic agrees to supply to the Representatives for delivery
to the Stock Exchange copies of the Final Prospectus (as defined in Section
5(a)(i)), on behalf of the Republic, and such other documents, information and
undertakings as may be required for the purpose of obtaining such listing.
5. Representations, Warranties and Covenants of Peru
Peru represents, warrants and covenants to each of the Underwriters
that:
(a) (i) The Republic meets the requirements for use of Schedule B
under the Securities Act. The Republic has filed with the Securities
and Exchange Commission (the "Commission") a registration statement
under Schedule B (No. 33-[ ]) covering the registration of the
Securities under the Securities Act and including the related base
prospectus (the "Base Prospectus"). Such registration statement has
been declared effective by the Commission and no order preventing or
suspending use of the Base Prospectus has been issued by the
Commission. Such registration statement, as amended to the date hereof
and together with the Base Prospectus constituting a part thereof, any
prospectus supplement relating to the Securities and any documents
incorporated therein by reference, meets the requirements set forth in
Release No. 33-6424 (the "Release") and Schedule B under the
Securities Act. Such registration statement (including the Base
Prospectus), as amended to the date hereof, together with any exhibits
thereto, any documents incorporated by reference therein and a
registration statement, if any, increasing the size of the offering,
filed pursuant to Rule 462(b) under the Securities Act, which became
effective upon filing are hereinafter collectively referred to as the
"Registration Statement." The Republic proposes to file with the
Commission pursuant to Rule 424(b) under the Securities Act a
supplement to the Base Prospectus (the "Prospectus Supplement")
relating to the Securities and the plan of distribution thereof and
has previously advised you of all other information (financial,
statistical and other), if any, with respect to the Republic to be set
forth therein.
The Republic has adequately disseminated the Base Prospectus to
the Public a reasonable period before the offering of the Securities
in accordance with the Release. The Base Prospectus as supplemented by
the Prospectus Supplement in the form in which it shall be filed with
the Commission pursuant to Rule 424(b) is herein called the "Final
Prospectus." References to the "effective date" of the Registration
Statement shall be deemed to refer to the date the Registration
Statement was declared effective by the Commission.
(ii) Prior to the termination of the offering of the Securities,
the Republic will not file any amendment to the Registration Statement
or supplement to the Final Prospectus which shall not have previously
been furnished to each of the Representatives or of which each of the
Representatives shall not previously have been advised or to which any
of the Representatives shall have reasonably objected in writing.
(iii) With respect to the Registration Statement and any
amendment thereof, at the time such Registration Statement and any
amendment thereof became or becomes effective, and as of the date
hereof and at the Closing Date and, with respect to the Final
Prospectus and any amendment or supplement thereto, as of the date of
the Final Prospectus, as amended or supplemented as of any such time,
and any amendment or supplement thereto, and as of the date hereof and
at the Closing Date, the Registration Statement, as amended as of any
such time and the Final Prospectus does or will comply in all material
respects with the provisions of the Securities Act and the rules and
regulations thereunder, including the Release and Schedule B. None of
the Registration Statement, as amended as of any such time, or the
Final Prospectus, as amended or supplemented as of any such time,
contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated
therein or necessary to make the statements therein (with respect to
the Final Prospectus in the light of the circumstances under which
they were made) not misleading; provided, however, that the foregoing
representations and warranties in this subparagraph
(iii) shall not apply to statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Republic by any of the Underwriters, through the Representatives,
expressly for use in the Registration Statement or the Final
Prospectus.
(b) Since the respective dates as of which information is given in the
Final Prospectus and the Registration Statement, there has not been any material
adverse change, or any event that would reasonably be expected to result in a
prospective material adverse change in the financial, economic or political
condition of Peru, or in the ability of Peru to perform its obligations under
this Agreement, the Fiscal Agency Agreement or the Securities, otherwise than as
set forth in or contemplated in the Registration Statement or the Final
Prospectus.
(c) The execution and delivery of this Agreement, the Fiscal Agency
Agreement and all other documents to be executed and delivered by Peru hereunder
or thereunder, the issuance and delivery of the Securities and the performance
of the terms of the Securities have been duly authorized by Peru, and have been
or will be duly executed and delivered by Peru; and this Agreement, the Fiscal
Agency Agreement and, upon due authentication by the fiscal agent under the
Fiscal Agency Agreement, the Securities constitute or will constitute valid and
binding obligations of Peru, enforceable against Peru in accordance with their
respective terms and, in the case of the Securities, entitled to the benefits
provided by the Fiscal Agency Agreement, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally, to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and to possible judicial action
giving effect to foreign governmental actions or sovereign laws affecting
creditors' rights.
(d) The execution and delivery of this Agreement, the Fiscal Agency
Agreement, the issuance and delivery of the Securities and the performance of
the terms of the Securities constitute private and commercial acts rather than
public or governmental acts, as such terms are defined under the U.S. Foreign
Sovereign Immunities Act. Under the laws of Peru, neither Peru nor any of its
property, except for (i) property used by a diplomatic or consular mission of
Peru; (ii) property of a military character and under the control of a military
authority or defense agency of Peru; (iii) public property; (iv) shares of
Peruvian public sector entities or shares of Peruvian private sector entities
owned or controlled by Peru or by a Peruvian public sector entity, or revenues
collected from the sale of such shares, to the extent such shares or revenues
are exempt by Peruvian law from attachment or execution; or (v) funds deposited
in Peru's accounts held in the Peruvian financial system, has any immunity from
jurisdiction of any court or from set-off or from execution, attachment or any
other legal process. The waivers of immunity by Peru contained in this
Agreement, the Fiscal Agency Agreement and the Securities, the appointment of
the process agent in this Agreement, the Fiscal Agency Agreement and the
Securities, the consent by Peru to the jurisdiction of the courts specified in
this Agreement, the Fiscal Agency Agreement, and the terms and conditions of the
Securities and the provision that the laws of the State of New York govern this
Agreement, the Fiscal Agency Agreement and the Securities, are irrevocably
binding on Peru.
(e) There is no constitutional provision, or any provision of any
treaty, convention, statute, law, regulation, decree, court order or similar
authority binding upon Peru, or any provision of any contract, agreement or
instrument to which Peru or any Governmental Agency (as defined below) is a
party, which would be materially contravened or breached, or which would result
in the creation of any lien or encumbrance, or under which a default would arise
or a moratorium in respect of any obligations of Peru or any Governmental Agency
be effected, as a result of the execution and delivery by Peru of this
Agreement, the Fiscal Agency Agreement, [the Warrant Agreement](2) or the
issuance and delivery of the Securities as contemplated in this Agreement, or as
a result of the performance or observance by Peru of any of the terms of this
Agreement, the Fiscal Agency Agreement, [the Warrant Agreement] or the
Securities. "Governmental Agency" means each agency, department, ministry,
authority, municipality, statutory corporation or statutory body or judicial
entity of Peru or any political subdivision thereof or therein, now existing or
hereafter created, and any bank, corporation or other legal entity 51% or more
of the capital or voting stock or other ownership interest of which is now or
hereafter owned or controlled, directly or indirectly, by Peru or by any state
or municipality of Peru.
- ------------------
2 In the case of an issuance of Warrants or Units, or if the particular
issuance of Securities includes the execution of any other material
agreements by the Republic, throughout this Agreement add such agreements
after or in place of, as the case may be, "[the Warrant Agreement]."
(f) No Governmental Approval (as defined below) is required for the due
execution, delivery and performance by Peru of this Agreement, the Securities,
the Fiscal Agency Agreement, [the Warrant Agreement] or the issuance and
delivery of the Securities as contemplated in this Agreement, or for the
validity or enforceability of this Agreement, the Securities or the Fiscal
Agency Agreement against Peru, other than those Governmental Approvals that have
been duly obtained and are in full force and effect on the date hereof and all
of which will be in full force and effect on the Closing Date and provided that,
only in respect of the performance of the Securities, any payment of principal
or interest arising from such performance is included by Peru in the Budget Law
corresponding to the fiscal year in which such payment is to be due.
"Governmental Approval" means any approval, authorization, permit, consent,
exemption or license and other action of or by, and any notice to or filing or
registration with, Peru, any Governmental Agency or any other governmental
authority or agency or regulatory or administrative body of Peru or any
political subdivision thereof or therein (including, without limitation, any
thereof relating to budget approvals and exchange controls).
(g) There is no pending or, to the knowledge of Peru, threatened action
or proceeding affecting Peru or any Governmental Agency before any court,
governmental agency or arbitrator which may, individually or in the aggregate,
materially adversely affect the financial condition of Peru or its ability to
perform its obligations under this Agreement, the Fiscal Agency Agreement, [the
Warrant Agreement] or the Securities, which purports to affect the legality,
validity or enforceability of this Agreement, the Fiscal Agency Agreement, [the
Warrant Agreement] or the Securities, except as otherwise disclosed in the Final
Prospectus.
(h) Peru is a member of, and is eligible to use the general resources
of, the International Monetary Fund (the "IMF"), the Inter-American Development
Bank (the "IDB") and the International Bank for Reconstruction and Development
(the "World Bank"). The IMF, the IDB and the World Bank have not limited,
pursuant to their Articles of Agreement or Rules and Regulations, the use by
Peru of the general resources of the IMF, the IDB or the World Bank.
(i) Other than as set forth in the Final Prospectus, Peru is not in
default in the payment of principal, interest or any other amount owing on any
obligation in respect of indebtedness for money borrowed, and Peru has not
received any notice of default or acceleration with respect to any obligation in
respect of indebtedness for money borrowed, in each case or in the aggregate,
which would have a material adverse effect on the financial condition of Peru or
its ability to perform its obligations under this Agreement, the Fiscal Agency
Agreement, [the Warrant Agreement] or the Securities, or which is otherwise
material to the rights of the holders of the Securities; the issue and sale of
the Securities and the compliance by Peru with all of the provisions of this
Agreement, the Fiscal Agency Agreement, [the Warrant Agreement] or the
Securities and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, the Constitution of Peru, as
amended to the date hereof, any statutes, laws, decrees or regulations of Peru
or any treaty, convention or material agreement to which Peru is a party and
which default, in each case or in the aggregate, would have a material adverse
effect on the financial, fiscal or economic condition of Peru or its ability to
perform its obligations under this Agreement, the Fiscal Agency Agreement, [the
Warrant Agreement] or the Securities or which is otherwise material to the
rights of the holders of the Securities.
(j) This Agreement[,] [and] the Fiscal Agency Agreement [and the
Warrant Agreement] are, and upon authentication by the fiscal agent, the
Securities will be, in proper legal form under the laws of Peru for the
enforcement thereof in Peru against Peru. Any judgment issued by a New York
court under this Agreement, the Fiscal Agency Agreement, [the Warrant Agreement]
or the Securities will be recognized as legally binding and may be enforced or
executed in Peru against Peru without the local court reopening the case,
provided that the following requirements are met: (i) the judgment does not
resolve matters under the exclusive jurisdiction of Peruvian courts (such as
matters involving Peruvian real estate property); (ii) such court had
jurisdiction under its own conflicts of law rules and under general principles
of international procedural jurisdiction; (iii) the defendant was served in
accordance with the laws of the place where the proceeding took place, was
granted reasonable opportunity to appear before such foreign court, and was
guaranteed due process rights; (iv) the judgment has the status of res judicata
as defined in the jurisdiction of the court rendering such judgment; (v) there
is no pending litigation in Peru between the same parties for the same dispute,
which shall have been initiated before the commencement of the proceeding that
concluded with the foreign judgment; (vi) the judgment is not incompatible with
another judgment that fulfills the requirements of recognition and
enforceability established by Peruvian law unless such foreign judgment was
rendered first; (vii) the judgment is not contrary to public order or good
morals; and (viii) it is not proven that such foreign court denies enforcement
of Peruvian judgments or engages in a review of the merits thereof.
Notwithstanding the above, the execution by Peruvian courts of any judgment
ordering payment of any principal or interest arising from the Securities by the
Republic will be subject to availability of funds according to the Budget Law
corresponding to the fiscal year on which such payment is to be due.
(k) To ensure the legality, validity, enforceability, priority or
admissibility in evidence in Peru of this Agreement, the Fiscal Agency
Agreement, [the Warrant Agreement] or the Securities, it is not necessary that
this Agreement, the Fiscal Agency Agreement, [the Warrant Agreement,] the
Securities or any other document or instrument hereunder or thereunder be
registered, recorded or filed with any court or other authority in Peru or be
notarized or that any documentary, stamp or similar tax, imposition or charge be
paid on or in respect of this Agreement, the Fiscal Agency Agreement, [the
Warrant Agreement,] the Securities or any other document or instrument hereunder
or thereunder, other than any court tax of such amount as may apply from time to
time under applicable Peruvian law in respect of this Agreement, the Fiscal
Agency Agreement, [the Warrant Agreement,] the Securities or any other document
or instrument hereunder or thereunder brought before the Peruvian courts.
(l) The Securities, when duly authenticated by the fiscal agent, will
constitute direct, unconditional, unsecured and unsubordinated obligations of
Peru; the full faith and credit of Peru will be pledged for the due and punctual
payment of the principal of, interest on, and any additional amount with respect
to, the Securities and the performance of the covenants therein contained; the
Securities will at all times rank pari passu in priority of payment, in right to
security and in all other respects with all other existing and future External
Indebtedness (as defined in the Securities) of Peru.
(m) There is no tax, levy, deduction, charge or withholding imposed by
Peru or any political subdivision thereof either (i) on or by virtue of the
execution, delivery or enforcement of this Agreement, the Fiscal Agency
Agreement, [the Warrant Agreement] or the Securities or in connection with the
issuance of the Securities or (ii) on any payment to be made by Peru thereunder
or under the Securities, provided that the current exemption from Peruvian
income tax on interest accrued in connection with the Securities, which elapses
on December 31, 2006, is extended and maintained thereafter through the life of
the Securities.
(n) The execution and delivery of this Agreement, the Fiscal Agency
Agreement, the Securities and all other documents to be executed and delivered
by Peru hereunder or thereunder, the incurrence of the obligations herein and
therein set forth, the consummation of the transactions herein and therein
contemplated and the issuance and delivery of the Securities do not, and will
not, result in the exercise of, or right to exercise, any put, call or other
option which, if exercised, might result in a material adverse change in the
financial condition of Peru, and there are no puts, calls or other options to
which Peru is subject which if exercised would result in such a change.
(o) Peru has applied or will apply for the listing of the Securities on
the Luxembourg Stock Exchange and will use its best efforts to cause such
listing to be approved.
(p) Peru is not aware that either Standard & Poor's Ratings Service
("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's") has made
any announcement that it will have under surveillance or review, with possible
negative implications, its rating of any of Peru's debt securities; and Peru has
not been informed by either Standard & Poor's or Moody's that it intends or is
contemplating any downgrading in any rating accorded to Peru's debt securities
or any announcement that it will have under surveillance or review, with
possible negative implications, its rating of any of Peru's debt securities.
6. Sale and Purchase of Securities
(a) Not later than 10:00 a.m., New York City time (or such other time
as may be agreed between the Representatives, on behalf of the Underwriters, and
the Republic), on the Closing Date, the Republic will issue and deliver one or
more duly executed and authenticated Registered Securities in an aggregate
principal amount of U.S.$__________. The Representatives shall instruct DTC as
to the allocation of interests in the Registered Bond among the accounts of DTC
participants. The Republic agrees to have the Securities available for
inspection by the Representatives at the offices of Cleary, Gottlieb, Steen &
Hamilton, United States counsel to the Republic, not later than 1:00 p.m. on the
calendar day prior to the Closing Date.
(b) Against such delivery, the Underwriters will pay the
Representatives and the Representatives will transfer or cause to be transferred
to the Republic in same day funds the Purchase Price for the Securities, less
the amounts referred to in Section 6(c) below, on the Closing Date in U.S.
dollars to such U.S. dollar account as shall be designated by the Republic to
the Representatives, not later than three Business Days prior to the Closing
Date.
(c) As compensation to the Underwriters for their commitments
hereunder, the Republic agrees to pay to the Underwriters a combined management
and underwriting commission of [____]% of the aggregate principal amount of the
Securities and a selling concession of [____]% of the aggregate principal amount
of the Securities. Such commission and concession shall be deducted from the
Purchase Price for the Securities as provided in Section 6(b) and shall be paid
free and clear of any taxes, duties, governmental charges, levies, deductions or
withholdings of any nature imposed by the Republic or any political subdivision
or taxing authority thereof or therein, unless such withholding or deduction is
required by law, in which event the Republic shall pay such additional amounts
as shall result in the receipt by the Underwriters of such amounts as would have
been received by them had no such deduction or withholding been required.
7. Resales of Securities
Upon the authorization by you of the release of the Securities to be
delivered hereunder, the Underwriters are offering the Securities for sale upon
the terms and conditions set forth in the Final Prospectus. Each of the
Underwriters and its affiliates represents, warrants and agrees that the
Underwriters' offers and solicitations must be made only in the United States
and the jurisdictions identified in Schedule III to this Agreement and must be
conducted (including without limitation in respect of the use and distribution
of the Final Prospectus) in compliance with the limitations and qualifications
set forth in the Final Prospectus. No offers, distributions of the Final
Prospectus or solicitation may be made in any other jurisdiction without Peru's
prior written consent.
8. Covenants of the Republic
The Republic agrees with each of the several Underwriters as follows:
(a) The Republic will notify the Representatives promptly if at any
time prior to payment of the Purchase Price to the Republic and fulfillment of
all of the conditions precedent set forth in Section 9 anything occurs which
renders or may render untrue or incorrect in any material respect any of the
representations and warranties contained in Section 5 and will forthwith take
such steps as the Representatives may reasonably require to remedy the fact.
(b) Promptly after the execution and delivery of this Agreement and the
effective date of the Registration Statement, the Republic will file the
Prospectus Supplement, in a form approved by the Representatives, such approval
not to be unreasonably withheld, with the Commission pursuant to Rule 424 of the
Securities Act, within the applicable time period prescribed for such filing by
the rules and regulations under the Securities Act setting forth, among other
things, the necessary information with respect to the terms of the offering of
the Securities. The Republic will furnish to the Representatives prior to the
filing thereof with the Commission, a copy of any amendment or supplement to the
Registration Statement, the Prospectus Supplement or the Final Prospectus (other
than any amendment or supplement to the Registration Statement relating to an
offering of securities other than the Securities) providing reasonable
opportunity for comment. The Republic will promptly deliver to each of the
Underwriters and to their counsel copies of the Registration Statement in the
form when it becomes effective and all amendments or supplements thereto
hereafter made, which relate to the Securities including any post effective
amendment (in each case including all exhibits filed therewith and all documents
incorporated therein not previously furnished to the Underwriters), including
signed copies of each consent and certificate included therein or filed as an
exhibit thereto, and will deliver to each of the Underwriters as many unsigned
copies of the foregoing (excluding the exhibits) as the Underwriters may
reasonably request. The Republic will also send to the Underwriters as soon as
practicable after the date of this Agreement and thereafter from time to time as
many copies of the Final Prospectus as any of the Underwriters or dealers may
reasonably request for the purposes required by the Securities Act.
(c) During such period (not exceeding nine months) after the
commencement of the offering of the Securities as the Underwriters or any dealer
may be required by law to deliver a prospectus, if any event relating to or
affecting the Republic, or of which the Republic, shall be advised in writing by
the Representatives, shall occur, which should be set forth in a supplement to
or an amendment of the Final Prospectus in order to make the statements set
forth in the Final Prospectus, in the light of the circumstances under which
they were made, not misleading, or if it is necessary to amend the Final
Prospectus to comply with the Securities Act, the Republic will forthwith at its
expense prepare and furnish to the Underwriters and the dealers named by any of
the Underwriters a reasonable number of copies of a supplement or supplements or
an amendment or amendments to the Final Prospectus which will supplement or
amend the Final Prospectus so that as supplemented or amended it will comply
with the Securities Act and will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (the purchaser not knowing of such untruth or omission). In
case any Underwriter or dealer is required to deliver a prospectus after the
expiration of nine months after the commencement of the offering of the
Securities, the Republic, upon the request of such Underwriter or dealer, will
furnish to such Underwriter or dealer, a reasonable quantity of a supplemented
or amended Final Prospectus, or supplements or amendments to the Final
Prospectus, complying with Section 10(a) of the Securities Act.
(d) The Republic will use its best efforts promptly to do and perform
all things to be done and performed by it hereunder prior to the Closing Date
and to satisfy all conditions precedent to the delivery by it of the Securities.
(e) The Republic will advise the Representatives promptly of the filing
of the Prospectus Supplement pursuant to Rule 424(b) or otherwise and of any
amendment or supplement to the Final Prospectus or Registration Statement or of
notice of institution of proceeding for, or the entry of, a stop order or of any
order preventing or suspending the effectiveness of the Registration Statement
or for any request by the Commission for amending or supplementing of the
Registration Statement, the Prospectus Supplement or the Final Prospectus or for
additional information, in each case in respect of the offering of the
Securities and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of the Final Prospectus or suspending any such
qualification, use its best efforts to obtain the prompt withdrawal thereof.
(f) The Republic will take such actions as the Representatives may
reasonably request to qualify the Securities for offer and sale under the Blue
Sky or legal investment laws of such jurisdictions in the United States and
under the legal investment laws of such jurisdictions outside the United States
as the Representatives may reasonably designate, and will file and make in each
year such statements or reports as are or may be reasonably required by the laws
of such jurisdictions inside or outside the United States and to maintain such
qualifications; provided, however, that the Republic shall not be required to
qualify as a foreign corporation or dealer in securities under the laws of any
jurisdiction other than as set forth in this Agreement and the Fiscal Agency
Agreement or to file a general consent to service of process in any
jurisdiction.
(g) (i) The payment by Peru of principal of or interest on the
Securities will be made without withholding or deduction for or on account of
any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied by Peru, any political subdivision thereof or
any taxing authority in Peru. If Peru is required by law to make any such
withholding or deduction, it will pay such additional amounts ("Additional
Amounts") as may be necessary in order to ensure that the net amounts receivable
by the holders of Securities after such withholding or deduction shall equal the
amount that would have been receivable in respect of the Securities in the
absence of such withholding or deduction; except that no such additional amounts
shall be payable with respect to any Security to or on behalf of a holder who is
liable for taxes or duties in respect of such Security (a) by reason of such
holder having some connection with Peru other than the mere holding of such
Security or the receipt of principal of or interest on any Security; (b) by
reason of the failure to comply with any reasonable certification,
identification or other reporting requirement concerning the nationality,
residence, identity or connection with Peru, or any political subdivision or
taxing authority thereof or therein, of the holder of a Security or any interest
therein or rights in respect thereof, if compliance is required by Peru, or any
political subdivision or taxing authority thereof or therein, pursuant to
applicable law or to any international treaty in effect, as a precondition to
exemption from such deduction or withholding; or (c) by reason of the failure of
such holder to present such holder's Security for payment within 30 days after
the principal of or interest on any Security is first made available to payment
to the holder.
(ii) No Additional Amounts shall be payable in respect of any Security
to a holder that is a fiduciary or partnership or other than the
sole beneficial owner of such Security, to the extent the
beneficiary or settlor with respect to such fiduciary or a member
of such partnership or a beneficial owner would not have been
entitled to receive payment of the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder
of such Security.
(h) From the date hereof through the period ending 30 days after the
Closing Date, the Republic will ensure that no other dollar-denominated debt
securities of the Republic (other than debt securities with a maturity of one
year or less) are placed or sold in the international capital markets, directly
or indirectly on its behalf, in any manner which might, in the reasonable
opinion of the Representatives, have a detrimental effect on the successful
offering and distribution of the Securities, unless the Representatives
otherwise agree in writing.
9. Conditions
The obligations of the Underwriters hereunder are subject, in their
discretion, to the following conditions:
(a) All representations and warranties and other statements of Peru
contained in this Agreement are, on the date hereof, and on the Closing Date
will be, true and correct.
(b) Prior to the Closing Date, Peru must have performed all of its
obligations hereunder theretofore required to have been performed.
(c) The Registration Statement shall have been declared effective and
no stop order suspending the effectiveness of the Registration Statement shall
be in effect on the Closing Date and no proceedings for that purpose shall be
pending before, or threatened by, the Commission on the Closing Date; all
requests for additional information on the part of the Commission shall have
been complied with to the Representatives' reasonable satisfaction; and if Peru
has elected to rely upon Rule 462(b) under the Securities Act, the registration
statement filed pursuant to such Rule shall have become effective by 10:00 p.m.,
Washington D.C. time, on the date of this Agreement.
(d) On the Closing Date, Sullivan & Cromwell, your United States
counsel, must have furnished to you such written opinion or opinions, dated the
date of delivery thereof, in form and substance reasonably satisfactorily to
you, and such counsel must have received such papers and information as they may
request to enable them to pass upon such matters. In rendering such opinion or
opinions, Sullivan & Cromwell may rely as to all matters of Peruvian law upon
the opinions referred to in paragraphs (e) and (f) of this Section 9.
(e) On the Closing Date, [_______], your Peruvian counsel, must have
furnished to you such written opinion or opinions, dated the date of delivery
thereof, in form and substance satisfactory to you, and such counsel must have
received such papers and information as they may request to enable them to pass
upon such matters. In rendering such opinion or opinions, such counsel may rely
as to all matters of United States Federal and New York law upon the opinion of
Sullivan & Cromwell, referred to in paragraph (d) of this Section 9.
(f) On the Closing Date, [_______], Peruvian counsel for Peru, must
have furnished to you a written opinion, dated the date of delivery thereof, of,
in form and substance reasonably satisfactory to you. In rendering such opinion,
such counsel may rely as to all matters of United States Federal and New York
law upon the opinion of Cleary, Gottlieb, Steen & Hamilton, referred to in
paragraph (g) of this Section 9.
(g) On the Closing Date, Cleary, Gottlieb, Steen & Hamilton, United
States counsel for Peru, must have furnished to you their written opinion or
opinions, dated the date of delivery thereof, in form and substance reasonably
satisfactory to you. In rendering such opinion or opinions, such counsel may
rely as to all matters of Peruvian law upon the opinion or opinions of
[_______], referred to in paragraph (f) of this Section 9.
(h) On the Closing Date, Peru must have furnished to you, a certificate
in English, dated the date of delivery thereof, signed by a duly authorized
official of Peru, in which such official shall state that, to the best of her
knowledge after reasonable investigation: (i) the representations and warranties
of Peru in this Agreement are true and correct with the same effect as though
such representations and warranties had been made at and as of the respective
date of such certificate (other than such representations and warranties which
are made as of a specified date), (ii) Peru has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the respective date of such certificate and (iii) no proceeding has been
initiated, or to the best of her knowledge, threatened to restrain or enjoin the
issuance or delivery of the Securities or in any manner to question the laws,
proceedings, directives, resolutions, approvals, consents or orders under which
the issuance of the Securities will be effected or the Securities will be issued
or to question the validity of the Securities and none of said laws,
proceedings, directives, resolutions, approvals, consents or orders has been
repealed, revoked or rescinded in whole or in relevant part.
(i) Since the respective dates as of which information is given in the
Final Prospectus, on each of the date hereof and on or prior to the Closing
Date, there shall not have been any material adverse change, or any prospective
material adverse change, in or affecting the financial, economic or political
condition of Peru, in Peruvian currency exchange rates or exchange controls, or
in Peruvian taxation affecting the Securities, otherwise than as set forth in or
contemplated in the Final Prospectus, on each of the date hereof and at or prior
to the Closing Date, the effect of which, in any such case, is in your judgment
such as to make it impracticable or inadvisable to proceed with the issuance or
the delivery of the Securities on the terms and in the manner contemplated by
the Final Prospectus.
(j) Subsequent to the date hereof and on or prior to the Closing Date,
none of the following shall have occurred (if the effect of any such event in
your judgment makes it impracticable or inadvisable to proceed with the issuance
or the delivery of the Securities on the terms and in the manner contemplated by
the Final Prospectus, on each of the date hereof and on or prior to the Closing
Date, or would materially and adversely affect the international financial
markets or the market for the Securities): (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange,
the London Stock Exchange or the Luxembourg Stock Exchange; (ii) a suspension or
material limitation in trading any securities of Peru on any international
exchange; (iii) a general moratorium on commercial banking activities in New
York, London or Peru declared by either United States or New York State
authorities or authorities of London or Peru, respectively or a material
disruption in the commercial banking or securities settlement or clearance
services in the United States or elsewhere; (iv) the outbreak or escalation of
hostilities involving the United States or Peru or the declaration by the United
States or Peru of a national emergency or war; or (v) the occurrence of any
calamity or crisis or change in the existing financial, political or economic
conditions in the United States, Peru or elsewhere.
(k) On or after the date hereof and on or prior to the Closing Date,
(i) no downgrading must have occurred in the rating accorded Peru's debt
securities by Standard & Poor's or Moody's; (ii) no such organization must have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of Peru's debt securities; (iii) Peru
must not have been aware that either Standard & Poor's or Moody's has announced
that it will have under surveillance or review, with possible negative
implications, its rating of any of Peru's debt securities; and (iv) Peru must
not have been informed by Standard & Poor's or Moody's that it intends or is
contemplating any downgrading in any rating accorded to Peru's debt securities
or any announcement that it will have under surveillance or review, with
possible negative implications, its rating of any of Peru's debt securities.
(l) On each of the date hereof and the Closing Date, Peru must have
furnished to you such further information, certificates and documents as you may
reasonably request in order to evidence the accuracy and completeness of any of
the representations and warranties, or the fulfillment of any of the conditions
contained in this Agreement.
(m) The Representatives on behalf of the Underwriters may waive, at
their sole discretion and upon such terms as they deem appropriate, any of the
conditions set forth above.
The documents required to be delivered by this Section 9 shall be
delivered at the offices of Sullivan & Cromwell, counsel for the Underwriters on
the Closing Date.
10. Indemnification
(a) Peru shall indemnify and hold harmless each Underwriter and each of
its affiliates against (and, if applicable, reimburse them for): any loss,
damage, reasonable and documented expense, liability or claim (or action in
respect thereof) that arises out of or is based upon any untrue statement of a
material fact contained in the Registration Statement as originally filed or in
any amendment thereof, or in the Base Prospectus or Final Prospectus or any
preliminary prospectus or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, including any and all reasonable and
documented expenses whatsoever (including legal and other fees and reasonable
and documented expenses) reasonably incurred by you in connection with
investigating, preparing for or defending against any such losses, damages,
reasonable and documented expenses, liabilities or claims (or actions in respect
thereof), within a reasonable time after such expenses are incurred and a
detailed itemized statement thereof has been submitted to Peru; provided,
however, that Peru shall not be liable in any such case to the extent that any
such loss, claim, damage, expense or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to Peru by such Underwriter expressly for use therein; provided,
further, that such indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any of the Underwriters (or to the benefit of any of
their affiliates) if the person asserting any such loss, claim, damage or
liability purchased the securities which are the subject thereof did not receive
a copy of the Final Prospectus (or any amendments thereof or supplements
thereto), at or prior to the confirmation of the sale of such Securities to such
person in any case where such delivery is required by the Securities Act and the
untrue statement or omission of a material fact in such preliminary prospectus
was corrected in the Final Prospectus (or any amendments thereof or supplements
thereto).
(b) Each of the Underwriters severally, and not jointly, shall
indemnify and hold harmless Peru and each of its officials who signs the
Registration Statement against any and all losses, liabilities, claims, damages
and expenses as incurred which are based on and arise from written information
relating to such Underwriters which was furnished to Peru by such Underwriters
specifically for use in the preparation of the documents referred to in the
foregoing indemnity and will reimburse Peru for any and all reasonable and
documented expenses whatsoever (including legal and other fees and reasonable
and documented expenses) reasonably incurred by Peru in connection with
investigating, preparing for or defending against any such losses, damages,
reasonable and documented expenses, liabilities or claims (or actions in respect
thereof) within a reasonable time after such expenses are incurred and a
detailed itemized statement thereof has been submitted to the Underwriters.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 10, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under Section 10(a) or (b), as the case may be. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party, and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not, in connection with any such action or a related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate counsel (in additional to any local counsel), approved by you
in the case of paragraph (a) of this Section 10, representing the indemnified
parties under such paragraph who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clauses (i) and (iii).
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative economic benefits received by the indemnifying party on the one hand
and the indemnified party on the other. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of Peru on the one hand and
you on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative economic
benefits of Peru on the one hand and you on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by Peru bears to the total underwriting discounts
and commissions received by the Underwriters with respect to the Securities
purchased under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by Peru on the one hand or you on the other and
Peru's or your relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. Peru and you agree that it
would not be just and equitable if contribution pursuant to this subsection (d)
were determined by pro rata allocation (even if you were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
foregoing, (i) in no case shall any Underwriter (except as may be provided in
any Agreement Among Underwriters) be responsible for any amount in excess of the
total underwriting discounts or commissions received by such Underwriter in
respect of the Securities purchased by such Underwriter hereunder and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Your obligations in this subsection
(d) to contribute are several in proportion to your respective obligations
hereunder and not joint.
(e) The reimbursement, indemnity and contribution obligations under
this Section 10 shall be in addition to any liability that any indemnifying
party may otherwise have, shall extend upon the same terms and conditions to the
affiliates, partners, directors, agents, employees and controlling persons (if
any), as the case may be, of each indemnifying party, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of Peru, you, any such affiliate and any such person. If the
obligations of Peru or you set forth in this Section 10 are not assumed by
operation of law or by contract by a party or parties satisfactory to you, Peru
and you agree to arrange alternative means of providing for such obligations,
including providing insurance or creating an escrow, in each case in an amount
and upon terms and conditions reasonably satisfactory to you.
11. Default by an Underwriter
(a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties, reasonably satisfactory to
Peru, to purchase the Securities on the terms contained in this Agreement. If
within 36 hours after such default by any Underwriter you do not arrange for the
purchase of the Securities, then Peru shall be entitled to a further period of
36 hours within which to procure another party or other parties satisfactory to
you to purchase the Securities on such terms. In the event that, within the
respective prescribed periods, you notify Peru that you have so arranged for the
purchase of the Securities, or Peru notifies you that it has so arranged for the
purchase of the Securities, you or Peru shall have the right to postpone the
Closing Date for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
Final Prospectus or in any other documents or arrangements, and Peru agrees to
make promptly any amendments to the Registration Statement or Final Prospectus
that in the reasonable opinion of either you or Peru's counsel may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this subsection (a) with like effect as if such
person had originally been a party to this Agreement with respect to the
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and Peru as
provided in subsection (a) above, the aggregate principal amount of the
Securities to be issued pursuant to this Agreement which remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all such
Securities, then Peru shall have the right to require each non-defaulting
Underwriter to purchase the principal amount of such Securities which such
Underwriter agreed to purchase hereunder and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of such Securities which such Underwriter agreed to purchase
hereunder) of the Securities of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing in this Section 8 shall
relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and Peru as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities, or if Peru shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then this Agreement
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or Peru, except for the expenses to be borne by Peru and the
Underwriters as provided in Section 11 hereof and the indemnity and contribution
agreements in Section 10 hereof; but nothing in this Section 8 shall relieve a
defaulting Underwriter from liability for its default.
12. Expenses
The Underwriters shall pay an amount up to U.S.$[ ] in respect of costs
and expenses incurred in connection with the issuance and sale of the
Securities, including but not limited to: (a) the costs of printing the
Registration Statement and any Prospectus, (b) the costs of distributing the
Registration Statement and any Prospectus, (c) the costs of printing,
reproducing and distributing this Agreement, the Fiscal Agency Agreement, the
Securities and the related agreements, (d) any fees charged by rating agencies
for rating the Securities, (e) the initial, up-front fees and expenses of the
fiscal agent and any paying agent (including related fees and expenses of any
counsel for such parties), (f) all expenses and fees incurred in connection with
the clearance of the Securities for book-entry transfer through DTC, the
Euroclear System and Clearstream Banking, societe anonyme, (g) the fees and
expenses incurred in listing the Securities on the Luxembourg Stock Exchange,
(h) the fee payable to the Commission in connection with the initial filing of
the Registration Statement with the Commission, but only with respect to the
principal amount of Securities sold hereunder relating to the issuance of the
Securities offered as contemplated herein, (i) the fees and expenses of Peruvian
and United States counsel to the Republic and the Underwriters in connection
with the issuance of the Securities, and (j) the fees and expenses of qualifying
the Securities under any applicable securities laws of the several jurisdictions
as provided for in Section 8(f) and preparing, printing and distributing a Blue
Sky memorandum (including related fees and expenses of counsel); provided,
however, that, if this Agreement is terminated pursuant to Section 14 hereof,
the Republic agrees to pay all costs and expenses incurred in connection with
the preparation for the issuance and sale of the Securities and to pay, or
reimburse the Underwriters for, all of their reasonable and documented costs and
expenses related to the transaction, including without limitation, the fees and
expenses of Peruvian and United States counsel, unless it undertakes with the
Underwriters to issue the Securities within nine months following the date of
the first public filing of a Registration Statement with the Commission, except
for the Underwriters' out of pocket expenses and except that the Republic's
obligation to reimburse the Underwriters shall not exceed US$[ ].
Notwithstanding the above, the Republic agrees to pay (a) the fees and expenses
of Peruvian and United States counsel to the Republic in connection with the
issuance of the Securities, including any expenses of the Republic's counsel
associated with the due diligence review conducted by the Representatives and
(b) its out of pocket expenses.
13. Survival
The respective indemnities, agreements, representations, warranties and
other statements of Peru and the several Underwriters, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
of any Underwriter, or Peru, or any official of Peru, and shall survive delivery
of and payment for the Securities.
14. Effects of Termination
If this Agreement is terminated pursuant to Section 11 hereof, Peru
shall not then be under any liability to any Underwriter except as provided in
Section 10 hereof; but, if for any other reason the Securities to be issued
pursuant to this Agreement are not delivered by or on behalf of Peru as provided
herein, Peru shall reimburse the Underwriters through the Representatives for
all out-of-pocket expenses approved in writing by the Underwriters, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of such Securities, but
Peru shall then be under no further liability to any Underwriter except as
provided in Section 10 hereof.
15. Notices
All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by reputable international courier
(postage prepaid) or facsimile transmission (with transmission confirmed), to
the parties hereto as follows:
(a) If to you:
(b) If to Peru:
Ministerio de Economia y Finanzas del Peru
Jr. Junin No. 319
Lima, Peru
Attn:
Telecopier:
Telephone:
16. Binding Effect
This Agreement, including any right to indemnity or contribution
hereunder, shall inure solely to the benefit of and be binding upon Peru, you
and the other indemnified parties, and each of your and their respective
successors and assigns, and no other person or entity shall acquire or have any
right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
17. Severability
If any provision hereof is determined to be invalid, illegal or
unenforceable in any respect, such determination will not affect any other
provision hereof, which will remain in full force and effect so long as the
economic or legal substance of the issuance of Securities and this Agreement,
the Fiscal Agency Agreement contained herein are not affected in any manner
adverse to any party.
18. Consent to Jurisdiction
(a) Peru agrees that any suit, action or proceeding against it or its
properties, assets or revenues with respect to this Agreement (a "Related
Proceeding") shall be brought exclusively in the courts of the State of New York
(the "Specified Courts"). Peru also agrees that any judgment obtained in the
Specified Courts arising out of any Related Proceeding may be enforced or
executed in any other court of competent jurisdiction whatsoever, and any
judgment obtained in any such other court as a result of such enforcement or
execution may be enforced or executed in any such other court of competent
jurisdiction (all such courts other than Specified Courts being called herein
"Other Courts"), by means of a suit on the judgment or in any other manner
provided by law; provided, however, that, in respect of such enforcement or
execution by Peruvian courts of any such judgment ordering any payment by Peru,
such payment is included in the Budget Law corresponding to the fiscal year on
which such payment is to be due (but Peru will use its best efforts to cause
such payment to be included in such Budget Law). Peru hereby irrevocably submits
to the exclusive jurisdiction of the Specified Courts for the purpose of any
Related Proceeding and, solely for the purpose of enforcing or executing any
judgment referred to in the preceding sentence (a "Related Judgment"), of the
Specified Courts and each Other Court.
(b) Peru agrees that service of all writs, process and summonses in any
Related Proceeding or any suit, action or proceeding to enforce or execute any
Related Judgment brought against it in the State of New York may be made upon CT
Corporation, presently located at 111 Eighth Avenue, 13th floor, New York, New
York, as its authorized agent (the "Process Agent"), and Peru irrevocably
appoints the Process Agent as its agent to accept such service of any and all
such writs, process and summonses, and agrees that the failure of the Process
Agent to give any notice to it of any such service of process shall not impair
or affect the validity of such service or of any judgment based thereon. Peru
agrees to maintain at all times an agent with offices in New York to act as its
Process Agent. Nothing herein shall in any way be deemed to limit the ability to
serve any such writs, process or summonses in any other manner permitted by
applicable law.
(c) Peru irrevocably consents to and waives any objection which it may
now or hereafter have to the laying of venue of any Related Proceeding brought
in the Specified Courts or to the laying of venue of any suit, action or
proceeding brought solely for the purpose of enforcing or executing any Related
Judgment in the Specified Courts or Other Courts, and further irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of any Related Proceeding or any such
suit, action or proceeding in any such court.
(d) To the extent that Peru or any of its revenues, assets or
properties shall be entitled, with respect to any Related Proceeding at any time
brought against Peru or any of its revenues, assets or properties, or with
respect to any suit, action or proceeding at any time brought solely for the
purpose of enforcing or executing any Related Judgment in the Specified Courts
or in any jurisdiction in which any Other Court is located, to any immunity from
suit, from the jurisdiction of any such court, from attachment prior to
judgment, from attachment in aid of execution of judgment, from execution of a
judgment or from any other legal or judicial process or remedy, and to the
extent that in any such jurisdiction there shall be attributed such an immunity,
Peru irrevocably agrees not to claim and irrevocably waives such immunity to the
fullest extent permitted by the laws of such jurisdiction (including, without
limitation, the Foreign Sovereign Immunities Act of 1976 of the United States;
provided, however, that Peru hereby reserves the right to plead sovereign
immunity under the United States Foreign Sovereign Immunities Act of 1976 with
respect to actions brought against it under the United States securities laws or
any state securities laws) and consents generally for the purposes of the State
Immunity Act of 1978 of the United Kingdom to the giving of any relief or the
issue of any process in connection with any Related Proceeding or Related
Judgment. In addition, to the extent that Peru or any of its revenues, assets or
properties shall be entitled, in any jurisdiction, to any immunity from setoff,
banker's lien or any similar right or remedy, and to the extent that there shall
be attributed, in any jurisdiction, such an immunity, Peru hereby irrevocably
agrees not to claim and irrevocably waives such immunity to the fullest extent
permitted by the laws of such jurisdiction with respect to any claim, suit,
action, proceeding, right or remedy arising out of or in connection with the
Agreement.
(e) The submission to jurisdiction and the waiver of immunity by Peru
contained herein is for the exclusive benefit of you (and your affiliates
referred to in Section 10 above) and shall not extend to any other persons.
19. Currency
The payment of any amount due hereunder in U.S. dollars or any other
specified currency (the "Relevant Currency") is of the essence. To the fullest
extent permitted by law, the obligation of Peru in respect of any amount due
under this Agreement must, notwithstanding any payment in any other currency
(whether pursuant to a judgment or otherwise), be discharged only to the extent
of the amount in the Relevant Currency that the party entitled to receive such
payment may, in accordance with its normal procedures, purchase with the sum
paid in such other currency (after any premium and costs of exchange on the
business day immediately following the day on which such party receives such
payment). If the amount in the Relevant Currency that may be so purchased for
any reason falls short of the amount originally due, Peru shall pay such
additional amounts, in the Relevant Currency, as may be necessary to compensate
for the shortfall. Any obligation of Peru not discharged by such payment shall,
to the fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
20. Time of Essence
Time is of the essence of this Agreement. As used in this Agreement,
the term "business day" means any day other than a Saturday or a Sunday which is
not a day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
21. Governing Law
This Agreement is governed by and must be interpreted in accordance
with the laws of the State of New York, without regard to principles of
conflicts of law.
22. Counterparts
This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
* * * * * * *
Please indicate your acceptance of the foregoing provisions by signing
in the space provided below for that purpose and returning to us a copy of this
Agreement, whereupon this Agreement and your acceptance shall constitute a
binding agreement between Peru and the Underwriters.
Very truly yours,
THE REPUBLIC OF PERU
By:
-----------------------------------------
Name:
Title:
Accepted on behalf of themselves, and as Representatives of
the Underwriters whose names are set forth on Schedule I
hereto.
By:
-----------------------------------------------
Name:
Title:
SCHEDULE I
[Units/Warrants]
SCHEDULE II
Underwriter Securities
- ----------- ----------
SCHEDULE III
Selling Restrictions
--------------------
Exhibit B
---------
FISCAL AGENCY AGREEMENT
between
REPUBLIC OF PERU
as Issuer
and
[ ]
as Fiscal Agent
Dated as of [ ], 2002
TABLE OF CONTENTS
Page
ARTICLE I
GENERAL
SECTION 1.1. Certain Terms Defined........................................1
SECTION 1.2. New York Time................................................3
ARTICLE II
AGENTS
SECTION 2.1. Appointment of Agents........................................3
ARTICLE III
ISSUE, EXECUTION, FORM AND REGISTRATION OF BONDS
SECTION 3.1. Bonds Issuable in Series.....................................4
SECTION 3.2. Execution and Authentication.................................6
SECTION 3.3. Form, Denomination and Date of Bonds.........................7
SECTION 3.4. Registration, Transfer and Exchange of Bonds.................9
SECTION 3.5. Mutilated, Defaced, Destroyed, Stolen
and Lost Bonds; Cancellation
and Destruction of Bonds....................................10
ARTICLE IV
PAYMENTS
SECTION 4.1. Payments....................................................12
SECTION 4.2. Offices for Payments........................................13
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1. Notice of Event of Default; Acceleration....................14
SECTION 5.2. Limitations on Suits by Holders.............................16
SECTION 5.3. Delivery of Information; Purchase of Bonds by Peru..........16
ARTICLE VI
CONCERNING THE AGENTS
SECTION 6.1. Agents......................................................16
SECTION 6.2. Maintenance of Agents.......................................19
ARTICLE VII
AMENDMENTS
SECTION 7.1. Amendments and Waivers......................................20
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. Officials, Officers, and Directors of
Peru Exempt from Individual Liability.......................24
SECTION 8.2. Provisions of Agreement for the Sole
Benefit of Parties and Bondholders..........................24
SECTION 8.3. Successors and Assigns of Peru Bound by Agreement...........24
SECTION 8.4. Notices and Demands on Peru, Fiscal Agent and Bondholders...24
SECTION 8.5. Payments Due on Non-Business Days...........................25
SECTION 8.6. Governing Law; Consent to Jurisdiction;
Waiver of Immunities........................................25
SECTION 8.7. Separability................................................27
SECTION 8.8. Counterparts................................................27
SECTION 8.9. Effect of Headings..........................................27
EXHIBIT A Form of Global Bond
EXHIBIT B Form of Definitive Bond
EXHIBIT C Form of Reverse of Definitive Bond/Terms
and Conditions of Bonds
EXHIBIT D Form of Authorization
EXHIBIT E Form of Transfer
FISCAL AGENCY AGREEMENT dated as of [ ], 2002, between the Republic of
Peru ("Peru") and [ ] (the "Bank") as fiscal agent, principal paying agent,
transfer agent and registrar.
W I T N E S S E T H:
WHEREAS, Peru has filed with the Securities and Exchange Commission
(the "Commission") a registration statement No. 333-[ ] under Schedule B to the
Securities Act of 1933, as amended, providing for the issuance from time to time
thereunder of debt securities ("Securities"), warrants ("Warrants") and units
("Units"), in an aggregate amount of up to U.S.$500,000,000;
WHEREAS, it is the intention of the parties hereto that this Agreement
shall specify the terms and conditions under which Securities in the form of
Bonds (as defined herein) shall be issued; and in the event Peru determines to
issue Warrants, Units or Securities other than in the form of Bonds, the Fiscal
Agent and Peru may amend this Agreement to give effect thereto, to provide for
the form and provisions of such Warrants, Units or Securities other than in the
form of Bonds or may enter into a separate agreement, as mutually agreed at such
time;
WHEREAS, it is also the intention that each issuance of Bonds (and
other Securities as may be issued and authenticated hereunder) shall be treated
as a separate series of Securities (each a "Series"), and all of the provisions
hereof shall apply with the same force and effect to each such separate Series;
WHEREAS, all things have been, and will be, done as necessary to make
the Securities, when executed and delivered by Peru and authenticated and
delivered as provided in this Agreement, the valid, binding and legal
obligations of Peru, and to constitute hereby a valid Agreement according to its
terms.
NOW, THEREFORE:
In consideration of the premises and the purchases of Securities by the
holders thereof, Peru and the Fiscal Agent mutually covenant and agree for the
equal and proportionate benefit of the respective holders from time to time of
Securities as follows:
ARTICLE I
GENERAL
SECTION 1.1. Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Agreement and of any supplemental agreement hereto
shall have the respective meanings specified in this Section 1.1. The words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision. The terms defined in this Article include the plural as well as the
singular.
"Additional Amounts" shall have the meaning set forth in Section 6 of
the Terms.
"Agreement" means this instrument as amended or supplemented from time
to time as herein provided.
"Authorized Official" means a duly authorized representative of the
Minister of Economy and Finance of Peru.
"Authorized Signatory" means a senior official of the Ministry of
Economy and Finance of Peru.
"Bond" or "Bonds" means any Securities consisting of bonds, notes,
debentures and/or other evidences of indebtedness of Peru authenticated and
delivered under this Agreement.
"Bondholder" means the registered holder of Bonds of one or more Series
acting separately with respect to each such Series of Bonds.
"Business Day" means any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City and Lima, Peru.
"Closing Date" with respect to any Bonds means the date on which such
Bonds will be issued.
"Custodian" means the Person selected with the consent of Peru to act
as custodian of Bonds of any Series for the Depository pursuant to a custody
agreement or any similar successor agreement.
"Depository" means, with respect to the Bonds issued in the form of a
Global Bond, DTC or such other Person as shall be designated as Depository by
Peru unless a successor Depository shall have been appointed pursuant to the
applicable provision of this Agreement, and thereafter "Depository" shall mean
or include each Person who is then a Depository hereunder.
"DTC" means The Depository Trust Company of The City of New York, a New
York corporation.
"Event of Default" means any event or condition specified as such in
Section 4 of the Terms unless otherwise specified by Peru and the Fiscal Agent
in an amendment hereto entered into in connection with an issuance of Bonds or
other Securities.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended.
"External Indebtedness" shall have the meaning set forth in Section
3(c)(i) of the Terms.
"Officer's Certificate" means, as the context requires, a certificate
signed by the appropriate Authorized Official or Officials in the case of Peru.
"Person" means an individual, a corporation, a partnership, a joint
venture, a firm, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or department or
instrumentality thereof.
"Public External Indebtedness" shall have the meaning set forth in
Section 3(c)(ii) of the Terms.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Underwriters" means those Underwriters named from time to time in an
Underwriting Agreement among Peru and the Underwriters named therein relating to
an issuance of Bonds.
SECTION 1.2. New York Time. All times referred to in this Agreement or
the Bonds are local time in The City of New York, United States of America,
except as may otherwise be specified.
ARTICLE II
AGENTS
SECTION 2.1. Appointment of Agents. (a) Peru hereby appoints the Bank,
acting through its office at [ ], as the fiscal agent in respect of the Bonds
upon the terms and subject to the conditions set forth herein and in the Terms
and the Bank hereby accepts such appointment. The Bank, as well as any successor
or successors as such fiscal agent qualified and appointed in accordance with
Section 6.2 hereof, is herein called the "Fiscal Agent." The Fiscal Agent shall
have the powers and authority granted to and conferred upon it herein and in the
Terms, and such further powers and authority, acceptable to it, to act on behalf
of Peru as Peru may hereafter grant to or confer upon it. The Fiscal Agent shall
keep a copy of this Agreement available for inspection during normal business
hours at its office in The City of New York.
(b) Peru hereby appoints the Bank, acting through its office at [ ], as
registrar in respect of the Bonds, upon the terms and subject to the conditions
set forth herein and in the Terms and the Bank hereby accepts such appointment.
The Bank, as well as any successor or successors as such registrar qualified and
appointed in accordance with Section 6.2 hereof, is herein called the
"Registrar." The Registrar shall have the powers and authority granted to and
conferred upon it herein and in the Terms, and such further powers and
authority, acceptable to it, to act on behalf of Peru as Peru may hereafter
grant to or confer upon it.
(c) Peru hereby appoints the Bank, acting through its office at [ ], as
principal paying agent and transfer agent in respect of the Bonds upon the terms
and subject to the conditions set forth herein and in the Terms and the Bank
hereby accepts such appointment. The Bank, as well as any successor or
successors as such principal paying agent qualified and appointed in accordance
with Section 6.2 hereof, is herein called the "Paying Agent." The Paying Agent
shall have the powers and authority granted to and conferred upon it herein and
in the Terms, and such further powers and authority, acceptable to it, to act on
behalf of Peru as Peru may hereafter grant to or confer upon it. The Paying
Agent, the Fiscal Agent and the Registrar are sometimes herein referred to
severally as an "Agent" and, collectively, as the "Agents." The other paying
agents and transfer agents appointed from time to time by Peru as provided
herein and in the Terms are referred to respectively as "paying agents" and
"transfer agents." Peru has initially appointed [ ] (the "Luxembourg Paying
Agent"), as an additional paying agent and transfer agent for the Bonds and the
Fiscal Agent hereby confirms that the Luxembourg Paying Agent accepts such
appointment.
ARTICLE III
ISSUE, EXECUTION, FORM AND REGISTRATION OF BONDS
SECTION 3.1. Bonds Issuable in Series. (a) Peru may issue Bonds in one
or more separate Series from time to time. The aggregate principal amount of the
Bonds of all Series (and other Securities) which may be authenticated and
delivered under this Agreement from and after the date hereof and which may be
outstanding at any time is not limited by this Agreement. The terms of each
Series of Bonds delivered to the Fiscal Agent for authentication on original
issuance pursuant to Section 3.2 of this Agreement shall from time to time be
established by Peru in a certificate (the "Authorization") substantially in the
form set forth in Exhibit D hereto and executed on behalf of Peru, which shall
set forth the following (as applicable):
(i) designation: the specific designation of the Bonds of such Series
(which shall distinguish the Bonds from all other Series);
(ii) aggregate principal amount: any limit on the aggregate principal
amount of the Series of Bonds which may be authenticated and delivered
under this Agreement (except for Bonds authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Bonds
of such Series pursuant to the provisions of this Agreement or of the Bonds
of such Series);
(iii) price: the price or prices (expressed as a percentage of the
aggregate principal amount thereof) at which the Bonds of such Series will
be issued;
(iv) interest rates, etc.: the rate or rates (which may be fixed or
floating) per annum at which the Bonds of such Series shall bear interest,
if any, or the manner in which such rate or rates will be determined
(including any provisions for the increase or decrease of such rate or
rates upon the occurrence of specified events), the date or dates from
which such interest, if any, shall accrue, the interest payment dates on
which such interest shall be payable and the record dates for the
determination of holders of the Bonds of such Series to whom interest is
payable;
(v) payment dates, etc.: the date or dates on which the principal and
premium, if any, of the Bonds of such Series is payable;
(vi) index features, etc.: the manner in which the amount of payments
of principal, premium, if any, or any interest on such Bonds is to be
determined and if such determination is to be made with reference to any
index, formula or other method;
(vii) place of payment, etc.: the place or places where, and the
manner in which the principal of, and premium, if any, and any interest on
the Bonds of such Series are payable;
(viii) form of bonds: the form of Bonds of such Series (global or
certificated and registered or bearer) and in the case of a global bond
(each a "Global Security"), the Depositary for such Global Security;
(ix) guarantee: the guarantor, if any, of Bonds of such Series and the
terms and conditions of such guarantee, including whether such guarantee is
a partial or full guarantee;
(x) sinking fund, etc.: the obligation, if any, of Peru to redeem,
purchase or repay Bonds of such Series pursuant to any sinking fund or
analogous provisions and the price or prices at which, the period or
periods within which, and the terms and conditions upon which Bonds shall
be redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation;
(xi) optional redemption features: the price or prices at which, the
period or periods within which and the terms and conditions upon which
Bonds of such Series may be redeemed, in whole or in part, at the option of
Peru or otherwise;
(xii) repayment features: any provisions that entitle holders of the
Bonds of such Series to early repayment of all or a portion of such Bonds
at their option;
(xiii) currency: the currency or currencies in which the Bonds of such
Series are denominated and in which Peru will make payments;
(xiv) governing law: the law of the jurisdiction governing the Bonds
of such Series;
(xv) denominations: the authorized denominations of the Bonds of such
Series;
(xvi) covenants and events of default: any covenants or agreements of
Peru and events which give rise to the right of a holder of a Bond of such
Series to accelerate the maturity of such Bond other than such covenants,
agreements or events specified herein;
(xvii) conversion or exchange features: any terms and conditions upon
which the holders of the Bonds of such Series shall be able to exchange or
convert such Bonds;
(xviii) listing: the stock exchanges, if any, on which the Bonds of
such Series will be listed; and
(xix) other terms: any other terms of the Bonds of such Series.
The Authorization shall be delivered to the Fiscal Agent and copies
thereof shall be held on file and made available for inspection at the corporate
trust office of the Fiscal Agent in The City of New York, and at the offices of
any paying agents for the Bonds of the Series to which the Authorization
relates.
The Bonds of a Series may be issuable pursuant to Warrants (if so
provided in the Terms of such Bonds) and the Fiscal Agent may act as Warrant
Agent or in any similar capacity in connection therewith. In the event that the
Fiscal Agent is to act as Warrant Agent in connection with an issue of Warrants,
Peru and the Fiscal Agent agree to amend this Agreement in order to provide for
the issuance of such Warrants or to enter into a separate Warrant Agreement, as
mutually agreed at such time.
(b) All Bonds authenticated hereunder shall have the terms and
conditions set forth in the Terms and Conditions of the Bonds (the "Terms")
substantially as set forth in Exhibit C hereto with such interest rate, maturity
date and other terms and conditions as are in addition to, or in substitution
for, the provisions of the Terms as shall be specified in writing to the Fiscal
Agent by delivery of the Authorization. The definitive form of Bonds issued
hereunder shall be prepared by or on behalf of Peru and submitted to the Fiscal
Agent in connection with the consummation of an issuance of Bonds on each
Closing Date and the terms thereof shall control in the event of any
inconsistency with the terms of this Agreement or form of Bonds attached hereto.
SECTION 3.2. Execution and Authentication. (a) Upon the execution and
delivery of this Agreement, or from time to time thereafter, Bonds in an
aggregate principal amount not in excess of the aggregate principal amount
specified in the Bonds of such Series in accordance with the Authorization
thereof may be executed by Peru and delivered to the Fiscal Agent for
authentication. The Fiscal Agent shall manually authenticate and deliver the
Bonds to, or upon the written order of, Peru, without any further action by
Peru. Any Bond that is required to be authenticated by the Fiscal Agent pursuant
to this Section 3.2 may be authenticated by a duly appointed signatory of the
Fiscal Agent. The Fiscal Agent shall at all times act as the sole authenticating
agent for the authentication of the Bonds. No Bond will be entitled to any
benefit under this Agreement or be valid for any purpose, unless it has been
authenticated as provided in this Agreement and there appears on such Bond a
certificate of authentication executed by the Fiscal Agent by manual signature,
and such certificate upon any Bond will be conclusive evidence, and the only
evidence, that such Bond has been duly authenticated and delivered hereunder and
is entitled to the benefit of this Agreement.
(b) The Bonds must be executed on behalf of Peru by an Authorized
Official. Such signature may be the manual or facsimile signature of the present
or any future such Authorized Official. If any Authorized Official of Peru
ceases to be such Authorized Official before the Bond so signed is authenticated
and delivered by the Fiscal Agent or disposed of by Peru, such Bond nevertheless
may be authenticated and delivered or disposed of as though the person who
signed such Bond has not ceased to be such Authorized Official of Peru; and any
Bond may be signed on behalf of Peru by such person as, at the actual date of
the execution of such Bond, is the proper Authorized Official of Peru, even
though at the date of the execution and delivery of this Agreement such person
is not such an Authorized Official. From time to time Peru will furnish the
Agents with a certificate as to the incumbency and specimen signatures of
persons who are then Authorized Officials. Until the Agents receive a subsequent
certificate from Peru, the Agents will be entitled to rely on the last such
certificate delivered to them for purposes of determining the Authorized
Officials.
SECTION 3.3. Form, Denomination and Date of Bonds. (a) Unless otherwise
provided in the applicable Authorization, the Bonds will be issued only in fully
registered form, without interest coupons, substantially in the form of Exhibit
A hereto (the "Global Bonds") or Exhibit B hereto (the "Definitive Bonds"). As
set forth in Sections 3.3(i) and (j), Definitive Bonds may be issued in exchange
for beneficial interests in the Global Bond or Global Bonds. The authorized
denominations of the Bonds of a Series shall be as provided in the Terms. The
Bonds of a Series shall be numbered, lettered, or otherwise distinguished in
such manner or in accordance with such plans as the officers of Peru executing
the same may determine with the approval of the Fiscal Agent.
(b) Any of the Bonds of a Series may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such marks of identification, endorsement, legend
or legends not inconsistent with the provisions of this Agreement or the
Authorization of such Series as may be required to comply with any law or with
any rules or regulations pursuant thereto, or with the rules of any securities
market in which the Bonds are admitted to trading, or to conform to general
usage. All Bonds of a particular Series shall otherwise be substantially
identical except as to denomination and as otherwise provided herein or in the
Authorization of such Series.
(c) Each Bond shall be dated the date of its authentication by the
Fiscal Agent.
(d) The Global Bond will be deposited by the Fiscal Agent with the
Depository or on behalf of the Depository with the Custodian, in either case in
the name of a participant in the Depository.
(e) The Depository for the Global Bond will credit on its book entry
registration and transfer system the respective principal amounts of the Bonds
represented by such Global Bond to the accounts of Persons that have accounts
with such Depository ("Participants"). The accounts to be credited shall be
designated by the Fiscal Agent or Underwriters with respect to such Global Bond.
Ownership of beneficial interests in a Global Bond will be limited to
Participants or Persons that may hold interests through Participants. Ownership
of beneficial interests in a Global Bond will be shown on, and the transfer of
that ownership will be effected only through, records maintained by the
Depository (with respect to interests of Participants) and records of
Participants (with respect to interests of Persons who hold through
Participants). Owners of beneficial interests in a Global Bond (other than
Participants) will not receive written confirmation from the applicable
Depository of their purchase. Each beneficial owner is expected to receive
written confirmation providing details of the transaction, as well as periodic
statements of its holdings, from the Depository (if such beneficial owner is a
Participant) or from the Participant through which such beneficial owner entered
into the transaction (if such beneficial owner is not a Participant). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to own, pledge or transfer beneficial interests in the Global
Bond.
(f) So long as the Depository for the Global Bond, or its nominee, is
the registered owner of such Global Bond, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Bonds
represented by such Global Bond for all purposes under this Agreement. Except as
specified below or in the Terms specific to the Bonds of a Series, owners of
beneficial interests in a Global Bond will not be entitled to have any of the
individual Bonds represented by such Global Bond registered in their names, and
will not receive or be entitled to receive physical delivery of any such Bonds
in definitive form and will not be considered the owners or holders thereof
under such Bonds or this Agreement. Accordingly, each Person owning a beneficial
interest in a Global Bond must rely on the procedures of the Depository for such
Global Bond and, if such Person is not a Participant, on the procedures of the
Participant through which such Person owns its interest, to exercise any rights
of a holder under the Bonds or this Agreement. Peru understands that under
existing industry practices, if Peru requests any action of holders, or an owner
of a beneficial interest in such Global Bond desires to take any action which a
holder is entitled to take under this Agreement, the Depository for such Global
Bond would authorize the Participants holding the relevant interests to take
such action, and such Participants would authorize beneficial owners owning
through such Participants to take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
(g) Payments of principal of and any premium and any interest on Bonds
registered in the name of the Depository or its nominee will be made to the
Depository or its nominee, as the case may be, as the holder of the Global Bond
representing such Bonds. Peru expects that the Depository for a series of Global
Bonds or its nominee, upon receipt of any payment of principal, premium or
interest in respect of a Global Bond will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Bond as shown on the records of such
Depository. Peru also expects that payments by Participants to owners of
beneficial interests in such Global Bond held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name". Such payments will be the responsibility of such Participants.
None of Peru, any paying agent or the Fiscal Agent, in its capacity as registrar
for such Bonds, will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in a
Global Bond or for maintaining, supervising or reviewing any records relating to
such beneficial interests.
(h) A Global Bond may be deposited with such other Depository as Peru
may from time to time designate, and shall bear such legends as may be
appropriate. Any Depository designated pursuant to this Section 3.3 must, at the
time of its designation and at all times while it serves as Depository, be a
clearing agency registered under the Exchange Act and any other applicable
statute or regulation.
(i) If at any time Peru notifies the Depository that it will no longer
be the Depository for the Bonds, or if the Depository notifies Peru that it is
unwilling, unable or no longer qualified to continue acting as the Depositary to
the Bonds, or that it has ceased to be a clearing agency registered under the
Exchange Act at a time when it is required to be so registered, and Peru does
not appoint a successor Depository within 90 days, Peru's election pursuant to
this Section 3.3 that such Bonds be represented by one or more Global Bonds
shall no longer be effective and Peru will execute, and the Fiscal Agent, upon
receipt of an Officer's Certificate of Peru for the authentication and delivery
of Definitive Bonds, and upon receipt of an adequate supply of Definitive Bonds,
will authenticate and deliver, without charge, Definitive Bonds in authorized
denominations in an aggregate principal amount equal to the principal amount of
such Global Bonds in exchange for such Global Bonds.
(j) Peru, at any time and at its sole discretion, may determine to
terminate the book-entry system through the Depository and make Definitive Bonds
available to Bondholders or their nominees. In either such event, Peru hereby
agrees to execute and the Fiscal Agent, upon receipt from Peru of an adequate
supply of Definitive Bonds, will authenticate and deliver, in exchange for such
Global Bond, Definitive Bonds (and if the Fiscal Agent has in its possession
Definitive Bonds previously executed by Peru, the Fiscal Agent will authenticate
and deliver such Bonds), in authorized denominations, in an aggregate principal
amount equal to the principal amount of such Global Bond.
(k) Upon the exchange of the Global Bond or Global Bonds for Definitive
Bonds, the Global Bond or Global Bonds shall be canceled by the Fiscal Agent as
set forth in Section 3.5(c).
(l) Definitive Bonds will only be issued in exchange for interests in a
Global Bond pursuant to Sections 3.3(i) and (j) hereof.
SECTION 3.4. Registration, Transfer and Exchange of Bonds. (a) The
Registrar shall maintain at its corporate trust office in the City of New York a
register of Bonds (the "Register") for the registration of Bonds and the
transfers and exchanges thereof. The Register will show the amount of the Bonds,
the date of issue, all subsequent transfers and changes of ownership in respect
thereof and the names, tax identifying numbers and addresses of the registered
holders of the Bonds. The Register shall also include customary notations,
including, without limitation, whether particular Bonds have been paid or
canceled, and, in the case of mutilated, destroyed, lost or stolen Bonds,
whether such Bonds have been replaced. In the case of the replacement of any of
the Bonds, the Register will include notations of the Bond so replaced, and the
Bond issued in replacement thereof. In the case of the cancellation of any of
the Bonds, the Register will include notations of the Bond so canceled and the
date on which such Bond was canceled. The Registrar shall at all reasonable
times during office hours make the Register available to Peru or any person
authorized by Peru in writing for inspection and for the taking of copies
thereof or extracts therefrom, and at the expense of Peru, the Registrar shall
deliver to such persons, lists of holders of Bonds and their addresses and, in
the case of Peru or a person authorized by Peru only, their holdings of Bonds,
in each case as they may request. The Register shall be in written form in the
English language or in any other form capable of being converted into such form
within a reasonable time.
(b) The holder of any Definitive Bond may transfer the same in whole or
in part (in an amount equal to the authorized denomination or any integral
multiple thereof) by surrendering such Bond at the office of the Fiscal Agent in
The City of New York or at the office of any paying agent, together with an
executed instrument of assignment and transfer substantially in the form of
Exhibit E to this Agreement. In exchange for any Definitive Bond properly
presented for transfer, the Fiscal Agent shall, within three Business Days of
such request if made at the office of the Fiscal Agent in The City of New York
or within ten Business Days if made at the office of a paying agent (other than
the Fiscal Agent), authenticate and deliver at the relevant office to the
transferee or send by first class mail (at the risk of the transferee) to such
address as the transferee may request, a Definitive Bond or Bonds, as the case
may require, for like aggregate principal amount and of such authorized
denomination or denominations as may be requested. The presentation for transfer
of any Definitive Bond shall not be valid unless made at the office of the
Fiscal Agent in The City of New York or at the office of a paying agent by the
registered holder in person, or by a duly authorized attorney-in-fact. Peru
shall ensure that the Fiscal Agent shall be provided with an adequate supply of
Definitive Bonds for authentication and delivery pursuant to the terms of this
Section 3.4.
(c) At the option of the holder, a Definitive Bond or Bonds may at any
time be presented for exchange into an equal aggregate principal amount of
Definitive Bonds in different authorized denominations, but only at the office
of the Fiscal Agent in The City of New York or at the office of a paying agent
(other than the Fiscal Agent) together with a written request for the exchange.
Subject to this Section 3.4 whenever one or more Definitive Bonds shall be
surrendered for exchange for a Definitive Bond or Bonds, the Fiscal Agent shall
authenticate and deliver within three Business Days if such request is made at
the office of the Fiscal Agent in The City of New York, or within ten Business
Days if such request is made at the office of a paying agent, a Definitive Bond
or Bonds for a like aggregate principal amount and of such authorized
denomination or denominations as may be requested. Peru shall ensure that the
Fiscal Agent shall be provided with an adequate supply of Definitive Bonds for
authentication and delivery pursuant to the terms of this Section 3.4.
(d) All new Bonds authenticated by the Fiscal Agent and delivered by
the Fiscal Agent or any transfer agent upon registration of transfer or in
exchange for Bonds of other denominations shall be so dated that neither gain
nor loss of interest shall result from such registration of transfer or
exchange.
(e) All Bonds surrendered for registration of transfer or exchange
shall be delivered to the Registrar. The Registrar shall cancel and destroy all
such Bonds surrendered for registration of transfer or exchange and shall
promptly deliver a certificate of destruction, stating the serial numbers, U.S.
dollar value (or equivalent value in the currency or currencies in which the
Bonds of such series are denominated) and total number of all Bonds destroyed
hereunder, to Peru.
(f) Transfer, registration and exchange of any Bond or Bonds will be
permitted and executed as provided in the Terms and this Section 3.4, and the
costs and expenses of effecting any exchange or registration of transfer will be
borne as provided in the Terms, subject to such reasonable regulations as Peru,
the Registrar and the transfer agents may prescribe.
SECTION 3.5. Mutilated, Defaced, Destroyed, Stolen and Lost Bonds;
Cancellation and Destruction of Bonds. (a) Peru shall execute and deliver to the
Fiscal Agent Bonds in such amounts and at such times as to enable the Fiscal
Agent to fulfill its responsibilities under this Agreement and the Bonds.
(b) The Fiscal Agent is hereby authorized, in accordance with Section 7
of the Terms, to authenticate and deliver or cause to be authenticated and
delivered from time to time Bonds in exchange for or in lieu of Bonds that have
become mutilated or defaced, or destroyed, lost or stolen. Each Bond
authenticated and delivered in exchange for or in lieu of any such Bond will
carry all the rights to principal and interest that were carried by such Bond
before such mutilation or defacement, or destruction, loss or theft.
(c) In the case of a mutilated, defaced, destroyed, lost or stolen
Bond, indemnity satisfactory to the Fiscal Agent and Peru will be required of
the owner of such Bond before a replacement Bond will be issued. All expenses
(including the reasonable legal fees and expenses of Peru and the Fiscal Agent)
associated with obtaining such indemnity and in issuing the new Bond will be
borne by the owner of the mutilated, defaced, destroyed, lost or stolen Bond.
(d) In the case of the replacement of any of the Bonds, the Fiscal
Agent will keep a record of the Bonds so replaced, and the Bonds issued in
replacement thereof. In the case of the cancellation of any of the Bonds
(including upon repayment), the Fiscal Agent will keep a record of the Bonds so
canceled and the date on which such Bonds were canceled.
(e) All Bonds issued upon any transfer or exchange of Bonds shall be
valid obligations of the Republic, evidencing the same debt, and entitled to the
same benefits under this Agreement, as the Bonds surrendered upon such transfer
or exchange.
ARTICLE IV
PAYMENTS
SECTION 4.1. Payments. (a) In order to provide for the payment of the
principal of and interest on the Bonds (including Additional Amounts pursuant to
Section 6 of the Terms) of any Series as such principal or interest will become
due and payable pursuant to the Terms, Peru hereby agrees to pay to the Fiscal
Agent, by 10:00 A.M., New York time, on the Business Day prior to each Payment
Date and the Maturity Date (as defined in the Terms) (or the date on which the
principal of and interest on the Bonds becomes due as a result of the
acceleration of the Bonds pursuant to Section 4 of the Terms), an amount in
immediately available funds in U.S. dollars that (together with any amounts then
held by the Fiscal Agent and available for that purpose) must be sufficient to
pay the entire amount of interest on the Bonds due on such Payment Date
(including any Additional Amounts) or principal of and interest on the Bonds due
on the Maturity Date, as the case may be, in U.S. dollars on such date with
respect to all the Bonds (or all or any portion thereof accelerated pursuant to
Section 4 of the Terms).
Peru shall confirm to the Fiscal Agent by telex not later than 12:00
noon, New York City time, two Business Days before the day payment is due to be
made to the Fiscal Agent that it has issued irrevocable payment instructions for
the transfer of the relevant sum due to the account of the Fiscal Agent, and
Peru hereby authorizes and directs the Fiscal Agent from such funds to make, or
cause to be made, payment of the principal of, and any interest on, as the case
may be, the Bonds as set forth in this Agreement and in the Terms. The Fiscal
Agent shall make amounts received by it available to the Paying Agent and the
Fiscal Agent and the Paying Agent shall hold such funds in trust, for the
benefit of the persons entitled thereto, and apply them to the payment of the
amount then due in respect of the Bonds (including any Additional Amounts) on
such Payment Date or Maturity Date, as the case may be. Neither the Paying Agent
nor any other paying agent shall be required to use its own funds in making any
payment on the Bonds. All sums payable hereunder shall be paid to such account
of the Fiscal Agent and with such bank located in The City of New York. Payments
to holders of Bonds must be made by the Paying Agent in accordance with Section
2 of the Terms.
(b) At least 10 days prior to the date of payment of the principal of
or interest on the Bonds of a Series, if at such time such payment will be
subject to deduction or withholding for or on account of any tax, assessment or
other governmental charge, Peru shall furnish the Fiscal Agent, the Paying Agent
and each other paying agent with a certificate of an Authorized Signatory of
Peru instructing the Fiscal Agent, the Paying Agent and each other paying agent
whether such payment will be made without deduction or withholding for or on
account of any tax, assessment or other governmental charge. In the absence of
any such certificate the Fiscal Agent may assume that no such deduction or
withholding will be required. If any such deduction or withholding will be
required, then such certificate must specify, by country, the amount, if any,
required to be withheld on such payment to holders of such Bonds and that Peru
will pay or cause to be paid to the Fiscal Agent (or, if applicable, directly to
the Payment Agent or another paying agent or agents) Additional Amounts, if any,
required by the Terms to be paid. Peru agrees to indemnify the Fiscal Agent, the
Paying Agent and each other paying agent for, and to hold them harmless against,
any loss, liability or expense reasonably incurred without gross negligence or
bad faith on their part arising out of or in connection with actions taken or
omitted by them in reliance on any certificate furnished pursuant hereto.
(c) All Bonds delivered to the Fiscal Agent (or any other Agent
appointed by Peru pursuant to Section 2 hereof) for payment or registration of
transfer or exchange as provided herein or in the Bonds shall be marked
"canceled" and, in the case of any other such Agent, forwarded to the Fiscal
Agent. All canceled Bonds shall be destroyed by the Fiscal Agent or such other
person as may be jointly designated by Peru and the Fiscal Agent, which shall
thereupon furnish certificates of such destruction, stating the serial numbers,
U.S. dollar value and total number of all Bonds destroyed hereunder, to Peru.
(d) Anything in this Section 4.1 to the contrary notwithstanding, Peru
may at any time, for the purpose of obtaining a satisfaction and discharge of
this Agreement or for any other reason, pay or cause to be paid to the Fiscal
Agent all sums held in trust by Peru or any paying agent hereunder, as required
by this Section 4.1, such sums to be held by the Fiscal Agent upon the trusts
herein contained.
SECTION 4.2. Offices for Payments. So long as any of the Bonds remain
Outstanding, Peru will maintain in the City of New York the following: (a) an
office or agency where the Bonds may be presented for payment, (b) an office or
agency where the Bonds may be presented for exchange, transfer and registration
of transfer as provided in this Agreement and (c) an office or agency where
notices and demands to or upon Peru in respect of the Bonds or of this Agreement
may be served. Peru hereby initially designates [ ] as the office or agency for
each such purpose and where the Register will be maintained. In case Peru shall
fail to maintain any such office or agency or shall fail to give such notice of
the location or of any change in the location thereof, presentations and demands
may be made and notices may be served at the office of the Fiscal Agent. In
addition, so long as any Series of the Bonds is listed on the Luxembourg Stock
Exchange and the Luxembourg Stock Exchange so requires, Peru will maintain a
paying agent with respect to such Series in Luxembourg. Peru will give to the
Fiscal Agent written notice of the location of any such office or agency and of
any change of location thereof.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.1. Notice of Event of Default; Acceleration. (a) Each of the
following events will constitute an "Event of Default" with respect to any
Series of Bonds:
(i) if Peru fails to pay interest or principal on the Bonds of that
Series when due and such failure continues for a period of 30 days; or
(ii) if Peru does not perform any other obligation under any Bond of
that Series and such failure is incapable of remedy or is not remedied
within 60 days after written notice has been given to Peru by the Fiscal
Agent; or
(iii) if Peru fails to make any payment in respect of:
(A) External Indebtedness outstanding as of February 21, 2002; or
(B) Public External Indebtedness;
in an aggregate principal amount in excess of U.S.$25,000,000 (or
its equivalent in any other currency) when due, and such failure
continues beyond the applicable grace period; or
(iv) if any event or condition occurs that results in the acceleration
of the maturity of:
(A) External Indebtedness outstanding as of February 21, 2002; or
(B) Public External Indebtedness;
in an aggregate principal amount in excess of U.S.$25,000,000 (or
its equivalent in any other currency); or
(v) if Peru declares a general suspension on or moratorium with
respect to the payment of principal or interest on all or a portion of its
External Indebtedness; or
(vi) if (A) Peru contests the validity of, or its obligations under,
any Bond of that Series or, to the extent adversely affecting such Bonds,
this Agreement, (B) Peru denies any of its obligations under any Bond of
that Series or, to the extent adversely affecting such Bonds, this
Agreement, or (C) any constitutional provision, treaty, law, regulation,
decree, or other official pronouncement of Peru, or any final decision by
any court in Peru having jurisdiction, renders it unlawful for Peru to pay
any amount due on any Bonds of that Series or to perform any of its
obligations under any Bonds of that Series or, to the extent adversely
affecting such Bonds, this Agreement; or
(vii) if any writ, execution, attachment or similar process is levied
against all or any substantial part of the assets of Peru in connection
with any judgment for the payment of money exceeding U.S.$25,000,000 (or
its equivalent in any other currencies), and Peru fails to satisfy or
discharge such judgment, or adequately bond, contest in good faith or
receive a stay of execution or continuance in respect of such judgment,
within a period of 120 days; or
(viii) if Peru fails to maintain its membership in, and its
eligibility to use the general resources of, the International Monetary
Fund.
(b) Upon the occurrence and during the continuance of an Event of
Default.
(A) in the case of any Event of Default described in clause (ii),
(iii), (iv), (vi), (vii) or (viii), the holders of at least 25% in
aggregate principal amount of all Bonds of the relevant Series (other
than Bonds held by Peru) then Outstanding may by written demand given
to Peru (with a copy to the Fiscal Agent) declare the Bonds of that
Series held by it to be immediately due and payable; or
(B) in the case of any Event of Default described in clauses (i)
or (v), each holder of Bonds of that Series may by written demand
given to Peru (with a copy to the Fiscal Agent) declare the Bonds of
that Series held by it to be immediately due and payable;
and upon such declaration the principal amount of Bonds of that Series and the
accrued interest on such Bonds will become immediately due and payable upon the
date that such written notice is received at the office of the Fiscal Agent,
unless prior to such date all Events of Default in respect of all Bonds of such
Series have been cured. The right to give such acceleration notice will
terminate if the event giving rise to such right has been cured before such
right is exercised. Holders of Bonds of such Series holding in the aggregate at
least 66 2/3% in principal amount of the then Outstanding Bonds of that Series
may waive any existing defaults, and rescind or annul any notice of
acceleration, on behalf of all Bondholders, if (i) following the declaration of
such Bonds due and payable immediately, Peru has deposited with the Fiscal Agent
an amount sufficient to pay all overdue installments of principal, interest and
Additional Amounts in respect of such Bonds as well as the reasonable fees and
compensation of the Fiscal Agent; and (ii) all other Events of Default have been
remedied. In the event of a declaration of acceleration because of an Event of
Default set forth in clause (iii) or (iv) above, such declaration of
acceleration shall be automatically rescinded and annulled if the event
triggering such Event of Default pursuant to such clause (iii) or (iv) shall be
remedied, cured or waived by the holders of the relevant indebtedness, within 60
days after such event.
(c) Upon the occurrence of an Event of Default under Section 5.1(a),
Peru shall give written notice promptly after becoming aware thereof to the
holder of each Bond (with a copy to the Fiscal Agent). Within 15 days after
becoming aware of the occurrence of an event which with the giving of notice or
lapse of time or both would, unless remedied, cured or waived, become an Event
of Default under clause (iii) or (iv) of Section 5.1(a), Peru shall give written
notice thereof to the holder of each Bond (with a copy to the Fiscal Agent). Any
notice required to be given pursuant to this Section 5.1(c) to each holder of a
Bond may be given by Peru directly to the Fiscal Agent, provided that Peru will
cause the Fiscal Agent promptly to give notice of each Event of Default
specified in such notice to the holders of Bonds.
SECTION 5.2. Delivery of Information; Purchase of Bonds by Peru. (a) So
long as any Bonds are Outstanding, Peru shall provide the Fiscal Agent: (i)
within 90 days after the last day of each calendar year and, in addition, within
15 days of any request by the Fiscal Agent, a certificate of an Authorized
Signatory, or such other official of Peru as may be appropriate, stating to such
official's knowledge, as of a date which shall not be more than five days before
the date of the certificate, whether an Event of Default or an event that, with
the giving of notice or lapse of time or both, would become such an Event of
Default with respect to the Bonds, exists on the date of such certificate and,
if such an Event of Default or an event that, with the giving of notice or lapse
of time or both, would become such an Event of Default exists, setting forth the
details thereof and the action which Peru is taking or proposes to take with
respect thereto; and (ii) upon any official of Peru becoming aware of the
existence of an Event of Default with respect to one or more Series of Bonds, or
the occurrence of any event that, with the giving of notice or lapse of time or
both, would become such an Event of Default, a certificate of an Authorized
Official, setting forth the details thereof and the action that Peru is taking
or proposes to take with respect thereto.
(b) Peru may at any time purchase or acquire any of the Bonds in any
manner and at any price in the open market or in privately negotiated
transactions. All Bonds which are purchased or acquired by or on behalf of Peru
may, at its discretion, be held, resold or surrendered to the Fiscal Agent for
cancellation, but any Bond so purchased by Peru may not be re-issued or resold
except in compliance with the Securities Act and other applicable law.
ARTICLE VI
CONCERNING THE AGENTS
SECTION 6.1. Agents. Each of the Agents and Peru accepts, and the rights of
the holders from time to time of any Series of Bonds will be subject to, the
obligations set forth in this Agreement and in the Terms, including without
limitation:
(a) Each of the Agents is entitled to the compensation to be agreed
upon with Peru for all services rendered by it, and Peru shall promptly pay such
compensation and shall reimburse each of the Agents for reasonable and
documented out-of-pocket expenses incurred by it in connection with the services
rendered by it under this Agreement. Peru shall also indemnify each of the
Agents and each other paying agent and transfer agent for, and shall hold them
harmless against, any loss, liability, cost, claim, action, demand or expense
(including the reasonable costs and expenses of defending against any claim of
liability) incurred without gross negligence, bad faith or willful misconduct on
their part arising out of or in connection with their acting as such Agent or a
paying agent or transfer agent hereunder, as the case may be, or performing any
other duties pursuant to the terms and conditions hereof or of the Bonds of any
Series. The obligations of Peru under this subsection (a) survive the payment of
the Bonds of any Series and the resignation or removal of such Agent, paying
agent or transfer agent, as the case may be, and the termination of this
Agreement.
Peru shall indemnify the Agents and other paying agents and transfer
agents promptly upon receipt by Peru of a demand therefore supported by
reasonable evidence of such loss, liability, cost, claim, action, demand or
expense. Each of the Agents, paying agent and transfer agent shall indemnify and
hold harmless Peru against all losses, liabilities, costs, claims, actions,
demands or expenses (including the costs and expenses of defending against any
claim or liability) arising out of or relating to the gross negligence, bad
faith or willful misconduct of such Agent, paying agent or transfer agent, as
the case may be, or its respective directors, officers, employees or agents. In
no case shall an indemnifying party be liable under this indemnity with respect
to any claim against an indemnified party unless such indemnifying party shall
have been given notice by the indemnified party, as provided in Section 8.4
hereof, of the written assertion of a claim against such indemnified party or of
any other action commenced against such indemnified party, promptly after such
indemnified party shall have received any such written assertion or notice of
commencement of action. An indemnified party shall not settle any claim for
which it may be entitled to indemnity hereunder without the prior written
consent of the indemnifying party, and such consent shall not be unreasonably
withheld.
(b) In acting under this Agreement and in connection with the Bonds of
any Series, each of the Agents and each other paying agent and transfer agent is
acting solely as agent of Peru and does not assume any responsibility for the
correction of the recitals in the Bonds of any Series (except for the
correctness of the statement in the certificate of authentication thereon) or
any obligation towards or relationship of agency or trust for or with any of the
owners or holders of the Bonds of any Series except that all funds held by such
Agent or any paying agent for the payment of the principal of, interest on and
any Additional Amounts in respect of a Series of Bonds will, subject to
subsection (f) below, be held in trust by such Agent or such paying agent, as
the case may be, and applied as set forth herein and in the Terms. All money
paid to the Fiscal Agent or the Paying Agent under Section 4.1(a) of this
Agreement shall be held by it in a segregated account separate from the other
assets of the Fiscal Agent or the Paying Agent, as the case may be, and held on
a fiduciary basis for the benefit of the registered holders of Bonds of a Series
to be applied by the Paying Agent to payments due on such Bonds at the time and
in the manner provided for in this Agreement and the Terms.
(c) Each of the Agents and each other paying agent and transfer agent
may consult with counsel (who shall be licensed to practice law in the State of
New York, provided that such counsel may rely, as to any matters of Peruvian
law, on the opinion of Peruvian counsel satisfactory to such counsel and such
Agent), and any reasonable advice or written opinion of such counsel shall
constitute full and complete authorization and protection, and no liability will
be incurred by it, in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in accordance with such advice or
opinion.
(d) Each of the Agents and each other paying agent and transfer agent
will be protected and will incur no liability for or in respect of any action
reasonably taken or omitted to be taken or thing suffered by it in reliance upon
any Bond of any Series, notice, direction, consent, certificate, affidavit,
statement or other paper or document reasonably believed by it in good faith to
be genuine and to have been presented or signed by the proper party or parties.
(e) Each of the Agents and each other paying agent and transfer agent,
and each of their officers, directors and employees, in its individual capacity
or any other capacity, may become the owner of, or acquire any interest in, any
Bonds or other obligations of Peru with the same rights that it would have had
if it were not such Agent or such other paying agent or transfer agent or an
officer, director or employee thereof, as the case may be, and may engage or be
interested in any financial or other transaction with Peru and may act on, or as
depository, trustee or agent for, any committee or body of holders of Bonds of
any Series or other obligations of Peru, as freely as if it were not such Agent
or such other paying agent or transfer agent or an officer, director or employee
thereof, as the case may be.
(f) All moneys paid by or on behalf of Peru to the Paying Agent or any
other paying agent for the payment of any amount due under a Bond of any Series
that remain unclaimed at the end of two years after such amount has become due
and payable will be repaid to Peru unless otherwise required by applicable law,
and the holders of such Bonds will thereafter look only to Peru for any payment
to which such holders may be entitled. Upon such repayment, all liability of the
Paying Agent and any other paying agent with respect thereto will cease,
without, however, limiting in any way the obligation of Peru in respect of the
amount so repaid.
(g) Any recitals contained in this Agreement and in the Terms (except
in the certificate of authentication of a duly authorized officer or a duly
appointed signatory of the Fiscal Agent) will be taken as the statements of
Peru, and the Agents and each other paying agent and transfer agent assume no
responsibility for the correctness of the same. None of the Agents nor any other
paying agent or transfer agent makes any representation as to the validity or
sufficiency of this Agreement or the Terms. None of the Agents nor any other
paying agent or transfer agent is accountable for the use or application by Peru
of the proceeds of any Bonds authenticated and delivered by or on behalf of the
Fiscal Agent in conformity with the provisions of this Agreement.
(h) The Agents and each other paying agent and transfer agent shall
perform such duties and only such duties as are specifically set forth in this
Agreement and in the Terms, and no implied duties or obligations will be read
into this Agreement or the Terms against the Agents or any such other paying
agent or transfer agent. None of the Agents is under any obligation to take any
action hereunder that may tend to involve it in any expense or liability, the
payment of which within a reasonable time is not, in its reasonable opinion,
assured to it, and shall promptly give notice to Peru of such a decision not to
take action.
(i) Except as otherwise specifically provided in this Agreement or in
the Terms, any order, certificate, notice, request, direction or other
communication from Peru made or given under any provision of this Agreement will
be sufficient if signed by an Authorized Official. From time to time Peru will
furnish the Agents with a certificate as to the incumbency and specimen
signatures of persons who are then Authorized Officials. Until the Agents
receive a subsequent certificate from Peru, the Agents and each other paying
agent and transfer agent are entitled to rely on the last such certificate
delivered to them for purposes of determining the Authorized Officials.
(j) Except as specifically provided in this Agreement or in the Terms,
none of the Agents has any duty or responsibility in case of any default by Peru
in the performance of its obligations (including, without limiting the
generality of the foregoing, any duty or responsibility to accelerate all or any
of the Bonds of any Series or to initiate or to attempt to initiate any
proceedings at law or otherwise or to make any demand for the payment thereof
upon Peru).
SECTION 6.2. Maintenance of Agents. (a) Peru agrees that, so long as any of
the Bonds of any Series are outstanding, or until moneys for the payment of all
of the principal of, interest on and any Additional Amounts in respect of all
Outstanding Bonds are made available at the offices of the Paying Agent or, as
to moneys remaining unclaimed, are returned to Peru as provided in Section
6.1(f), whichever occurs earlier, there will at all times be a fiscal agent in
respect of the Bonds, agents for the payment of the principal of, interest on
and any Additional Amounts in respect of the Bonds and a registrar for transfer
and exchange of the Bonds in accordance with Sections 2 and 7 of the Terms. Peru
shall keep the Agents advised of the names and locations of all paying and
transfer agents; provided that, unless Peru otherwise notifies the Agents in
writing, such paying and transfer agents will consist only of those set forth in
Section 2 of the Terms. The Fiscal Agent shall arrange with all such paying and
transfer agents for the payment, from funds furnished by Peru to the Fiscal
Agent pursuant to this Agreement.
(b) Each of the Agents may at any time resign by giving written notice
of its resignation to Peru specifying the date on which its resignation will
become effective, subject to the conditions set forth below; provided that such
date must be at least 90 days after the receipt of such notice by Peru unless
Peru agrees to accept shorter notice. Upon receiving such notice of resignation,
Peru shall promptly appoint a successor to such Agent by written instrument in
duplicate signed on behalf of Peru, one copy of which must be delivered to the
resigning Agent and one copy to the successor Agent. Such resignation will
become effective only upon the acceptance of appointment by the successor to
such Agent as provided in Section 6.2(d). Peru may, at any time and for any
reason upon at least 30 days' written notice to that effect (provided that no
such notice shall expire less than 10 days before or 10 days after the first day
of any interest period or the Maturity Date) remove any Agent and appoint a
successor Agent by written instrument in duplicate signed on behalf of Peru, one
copy of which must be delivered to the Agent being removed and one copy to the
successor Agent. Any removal of an Agent and any appointment of a successor
Agent will become effective upon acceptance of appointment by the successor to
such Agent as provided in Section 6.2(d). Upon resignation or removal, such
Agent will be entitled to the payment by Peru of its compensation for the
services rendered under this Agreement and to the reimbursement of all
reasonable out-of-pocket expenses incurred in connection with the services
rendered by it hereunder.
(c) In case at any time any of the Agents resigns, or is removed, or
becomes incapable of acting, or is adjudged a bankrupt or insolvent, or files a
voluntary petition in bankruptcy, or makes an assignment for the benefit of its
creditors, or consents to the appointment of a receiver of all or any
substantial part of its property, or admits in writing its inability to pay or
meet its debts as they mature, or any court enters an order approving any
petition filed by or against it under the provisions of any applicable
bankruptcy or insolvency law or appointing a receiver of it or of all or any
substantial part of its property, or if any public officer takes charge or
control of it or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, Peru must appoint a successor to such Agent by an
instrument in writing. If a successor to such Agent is appointed and such
successor accepts the appointment, the Agent so superseded will cease to be such
Agent hereunder. If, after 90 days, no successor to such Agent is so appointed,
or if so appointed, the successor has not accepted its appointment as
hereinafter provided, any holder of a Bond of any Series, on behalf of itself
and all others similarly situated, or such Agent may petition any court of
competent jurisdiction for the appointment of a successor to such Agent.
(d) Any successor Agent appointed hereunder shall execute and deliver
to its predecessor and to Peru an instrument accepting such appointment
hereunder, and thereupon such successor Agent, without any further act, deed, or
conveyance will become vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as such Agent hereunder, and such predecessor, upon payment of
its compensation and out-of-pocket expenses then unpaid, shall pay over to such
successor Agent all moneys (including interest accrued with respect to such
amounts) or other property at the time held by it under this Agreement.
(e) Any corporation or bank into which any Agent may be merged or
converted, or with which any Agent is consolidated, or any corporation or bank
resulting from any merger, conversion or consolidation to which the Agent is a
party, or any corporation or bank to which such Agent sells or otherwise
transfers all or substantially all of its assets and business, or any
corporation or bank succeeding to the corporate trust business of such Agent
will be the successor to such Agent hereunder, without the execution or filing
of any document or any further act on the part of the parties hereto.
ARTICLE VII
AMENDMENTS
SECTION 7.1. Amendments and Waivers. (a) Request for Written Consents;
Calling of Meeting; Notice and Quorum. Peru may at any time ask for written
consents from or call a meeting of holders of the Bonds of any Series at any
time and from time to time to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement or the Bonds of that Series to be made, given or taken by holders
of Bonds or to modify, amend or supplement the Terms or this Agreement as
hereinafter provided. Any such meeting shall be held at such time and at such
place as Peru shall determine and as shall be specified in a notice of such a
meeting that shall be furnished to the holders of the Bonds of that Series at
least 30 days and not more than 60 days prior to the date fixed for the meeting.
In addition, the Fiscal Agent may at any time and from time to time call a
meeting of holders of the Bonds of that Series for any such purpose, to be held
at such time and at such place as the Fiscal Agent shall determine, after
consultation with Peru, and as shall be specified in a notice of such meeting
that shall be furnished to the holders of the Bonds of that Series at least 30
days and no more than 60 days prior to the date fixed for the meeting. In case
at any time the holders of at least 10% in aggregate principal amount of the
Outstanding Bonds (as defined in Section 7.1(d)) shall have requested the Fiscal
Agent to call a meeting of the holders of Bonds of a Series for any such
purpose, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, the Fiscal Agent shall call such meeting,
to be held at such time and at such place as the Fiscal Agent shall determine,
after consultation with Peru, for such purposes by giving notice thereof. Such
notice shall be given at least 30 days and not more than 60 days prior to the
meeting. Notice of every meeting of holders of the Bonds of a Series shall set
forth in general terms the action proposed to be taken at such meeting.
To be entitled to vote at any meeting of holders of the Bonds of a
Series, a person shall be a holder of Outstanding Bonds of that Series or a
person duly appointed by an instrument in writing as proxy for such a holder.
The persons entitled to vote a majority in principal amount of the Outstanding
Bonds of that Series shall constitute a quorum. In the absence of a quorum, a
meeting shall be adjourned for a period of at least 20 days. At the reconvening
of any meeting adjourned for a lack of a quorum, the persons entitled to vote
25% in principal amount of the Outstanding Bonds of that Series shall constitute
the quorum for the taking of any action set forth in the notice of the original
meeting. Notice of the reconvening of any meeting may be given only once, but
must be given at least 10 and not more than 15 days prior to the meeting. At any
meeting where there is a quorum present, holders of at least 66 2/3% in
principal amount of the Bonds of the relevant Series represented and voting at
the meeting may approve the modification or amendment of, or a waiver of
compliance for, any provision of such Bonds except for specified matters
requiring the consent of each bondholder as set forth above. Modifications,
amendments or waivers made at such a meeting will be binding on all current and
future bondholders.
The Fiscal Agent, after consultation with Peru, may make such
reasonable and customary regulations consistent herewith as it shall deem
advisable for any meeting of holders of the Bonds of any Series with respect to
the proof of the appointment of proxies in respect of holders of Bonds of that
Series, the record date for determining the registered owners of Bonds of that
Series who are entitled to vote at such meeting (which date shall be designated
by the Fiscal Agent and set forth in the notice calling such meeting hereinabove
referred to and which shall be not less than 15 nor more than 60 days prior to
such meeting; provided that nothing in this paragraph shall be construed to
render ineffective any action taken by holders of the requisite principal amount
of Outstanding Bonds of that Series on the date such action is taken), the
adjournment and chairmanship of such meeting, the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate.
(b) Voting and Consents. (i) At any meeting of holders of the Bonds of
any Series duly called and held as specified above, upon the affirmative vote,
in person or by proxy thereunto duly authorized in writing, of the holders of at
least 66 2/3% in aggregate principal amount of the Bonds of that Series then
Outstanding represented at such meeting, or (ii) with the written consent of the
holders of at least 66 2/3% in aggregate principal amount of the Bonds of that
Series then Outstanding, Peru and the Fiscal Agent may modify, amend or
supplement the Terms or this Agreement in any way, and the holders of such Bonds
may make, take or give any request, demand, authorization, direction, notice,
consent, waiver (including waiver of future compliance or past default) or other
action given or taken by holders of such Bonds; provided, however, that no such
action, modification, amendment or supplement, however effected, shall apply,
without the written consent of the holder of each Bond of the Series affected
thereby, to the Bonds of that Series owned or held by such holder with respect
to the following matters: (A) change the due date for the payment of the
principal of, or any installment of interest on, the Bonds of that Series; (B)
reduce the principal amount of or interest on the Bonds of that Series, or the
portion of such principal amount which is payable upon acceleration of the
maturity of the Bonds of that Series or the interest rate thereon; (C) change
the obligation of Peru to pay Additional Amounts as provided in the Terms; (D)
change the currency in which payment of interest or principal in respect of the
Bonds of that Series is payable; or (E) impair the right to institute suit for
the enforcement of any payment in respect of the Bonds of that Series. In
addition, no such action, modification, amendment or supplement may, without the
written consents of all holders of Bonds of that Series, reduce the above-stated
percentage of the principal amount of Outstanding Bonds of that Series the vote
or consent of the holders of which is necessary to modify, amend or supplement
this Agreement or the terms and conditions of such Bonds or to make, take or
give any request, demand, authorization, direction, notice, consent, waiver or
other action provided hereby or thereby to be made, taken or given. In addition,
and notwithstanding the foregoing, at any meeting of holders of Bonds of any
Series duly called and held as specified above, upon the affirmative vote, in
person or by proxy hereunto duly authorized in writing, of the holders of at
least 66 2/3% in aggregate principal amount of the Bonds of that Series then
Outstanding, or by written consent of the holders of at least 66 2/3% in
aggregate principal amount of the Bonds of that Series then Outstanding, holders
of such Bonds may rescind or annul a declaration of the acceleration of the
principal amount thereof. Notwithstanding the foregoing, Peru, with the
agreement of the holder of any particular Bond of that Series, may amend any
provision of such Bond and any such amendment shall not affect the rights and
obligations of Peru or of a holder under any other Bond.
Peru and the Fiscal Agent may, without the vote or consent of any
holder of Bonds of any Series, amend this Agreement or the Terms for the purpose
of (i) adding to the covenants of Peru for the benefit of the holders of Bonds,
or (ii) surrendering any right or power conferred upon Peru in respect of this
Agreement or the Terms, or (iii) providing security or collateral for the Bonds
of any Series, or (iv) curing any ambiguity in any provision, or curing,
correcting or supplementing any defective provision contained herein or in the
Bonds of any Series in a manner which does not adversely affect the interest of
any holder of such Bonds, or (v) effecting any amendment of this Agreement
(including, to the extent necessary, to provide for the issuance and
authentication of other Bonds and of Warrants) or of the Terms which Peru and
the Fiscal Agent mutually deem necessary or desirable so long as any such
amendment does not, and will not, adversely affect the rights or interests of
any Bond holder of that Series.
It shall not be necessary for the vote or consent of the holders of the
Bonds of a Series to approve the particular form of any proposed modification,
amendment, supplement, request, demand, authorization, direction, notice,
consent, waiver or other action, but it shall be sufficient if such vote or
consent shall approve the substance thereof.
The Fiscal Agent may request an opinion of counsel in connection with
any amendment or supplement entered into hereunder.
(c) Binding Nature of Amendments, Notices, Notations, etc. Any
instrument given by or on behalf of any holder of a Bond of any Series in
connection with any consent to or vote for any such modification, amendment,
supplement, request, demand, authorization, direction, notice, consent, waiver
or other action shall be irrevocable once given and shall be conclusive and
binding on all subsequent holders of such Bond or any Bond issued directly or
indirectly in exchange or substitution therefor or in lieu thereof. Any such
modification, amendment, supplement, request, demand, authorization, direction,
notice, consent, waiver or other action taken, made or given in accordance with
Section 7.1 hereof shall be conclusive and binding on all holders of the Bonds
of that Series, whether or not they have given such consent or cast such vote or
were present at any meeting, and whether or not notation of such modification,
amendment, supplement, request, demand, authorization, direction, notice,
consent, waiver or other action is made upon such Bonds. Notice of any
modification or amendment of, supplement to, or request, demand, authorization,
direction, notice, consent, waiver or other action with respect to such Bonds or
this Agreement (other than for purposes of curing any ambiguity or of curing,
correcting or supplementing any defective provision hereof or thereof) shall be
given to such holder of the Bonds affected thereby, in all cases as provided in
the Terms.
Bonds authenticated and delivered after the effectiveness of any such
modification, amendment, supplement, request, demand, authorization, direction,
notice, consent, waiver or other action may bear a notation in the form approved
by the Fiscal Agent and Peru as to any matter provided for in such modification,
amendment, supplement, request, demand, authorization, direction, notice,
consent, waiver or other action. New Bonds modified to conform, in the opinion
of the Fiscal Agent and Peru, to any such modification, amendment, supplement,
request, demand, authorization, direction, notice, consent, waiver or other
action taken, made or given in accordance with Section 7.1 hereof may be
prepared by Peru, authenticated by the Fiscal Agent and delivered in exchange
for Outstanding Bonds.
(d) "Outstanding" Defined. For purposes of the provisions of this
Agreement and the Bonds, any Bond authenticated and delivered pursuant to this
Agreement shall, as of any date of determination, be deemed to be "Outstanding,"
except:
(1) Bonds theretofore canceled by the Fiscal Agent or delivered to the
Fiscal Agent for cancellation;
(2) Bonds which have become due and payable at maturity or otherwise,
and with respect to which, in each case, monies sufficient to pay the
principal thereof and any interest thereon shall have been paid or duly
provided for; and
(3) Bonds in lieu of or in substitution for which other Bonds shall
have been authenticated and delivered pursuant to this Agreement.
provided, however, that in determining whether the holders of the requisite
principal amount of Outstanding Bonds of a Series are present at a meeting of
holders of Bonds of that Series for quorum purposes or have consented to or
voted in favor of any request, demand, authorization, direction, notice,
consent, waiver, amendment, modification or supplement hereunder, Bonds of that
Series owned by Peru must be disregarded and deemed not to be Outstanding; but
in determining whether the Fiscal Agent shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, waiver,
amendment, modification or supplement, only Bonds that the Fiscal Agent knows to
be so owned will be so disregarded.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. Officials, Officers, and Directors of Peru Exempt from
Individual Liability. No recourse under or upon any obligation, covenant or
agreement contained in this Agreement, or in any Bond, or because of any
indebtedness evidenced thereby, shall be had against any official, officer or
government employee of Peru or of any successor of any thereof, either directly
or through Peru or any successor, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the Bonds by the holders thereof and as part
of the consideration for the issue of the Bonds.
SECTION 8.2. Provisions of this Agreement for the Sole Benefit of Parties
and Bondholders. Nothing in this Agreement or in the Bonds, expressed or
implied, shall give or be construed to give to any person, firm or corporation,
other than the parties hereto and their successors and the holders of the Bonds,
any legal or equitable right, remedy or claim under this Agreement or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and their successors and of the
holders of the Bonds.
SECTION 8.3. Successors and Assigns of Peru Bound by this Agreement. All
the covenants, stipulations, promises and agreements in this Agreement contained
by or on behalf of Peru shall bind its successors and assigns, whether so
expressed or not.
SECTION 8.4. Notices and Demands on Peru, Fiscal Agent and Bondholders. (a)
All notices under this Agreement must be sent by facsimile transmission (in such
case confirmed by courier) or by courier, postage prepaid, addressed to the
following entities hereto as follows:
Address
The Republic of Peru: Ministerio de Economia y Finanzas
Jr. Junin, 319
Lima 1
Peru
Attention: Fernando Lituma
Telephone: (51-1) 427-3930
Telecopier: (51-1) 426-8500
The Fiscal Agent: [Address]
Attention: [ ]
Telephone: [ ]
Telecopier: [ ]
or at any other address of which any of the foregoing may have notified the
others in writing. Any such notice will be effective on receipt. The Fiscal
Agent shall deliver a copy of any notice received on behalf of Peru in
connection with this Agreement or any Series of Bonds (excluding notices given
regarding the transfer or exchange of Bonds) to Peru in accordance with the
terms of this Section 8.4(a). All communications hereunder must be in the
English language.
If the Fiscal Agent shall receive any notice or demand addressed to
Peru by the holder of a Bond, the Fiscal Agent shall promptly forward such
notice or demand to Peru.
(b) Where this Agreement provides for notice to holders, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if
given in accordance with Section 11 of the Terms. Where this Agreement provides
for notice in any manner, such notice may be waived in writing by the person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by holders
shall be filed with the Fiscal Agent, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
SECTION 8.5. Payments Due on Non-Business Days. In any case where the
Payment Date shall not be a Business Day (or, in the case of a Luxembourg Paying
Agent, is a day in which banks in Luxembourg are required or authorized by law
to close), then payment of principal or interest (including Additional Amounts)
may be made on the next succeeding Business Day (or, in the case of a Luxembourg
Paying Agent, the next succeeding day in which banks in Luxembourg are not
required or authorized by law to close). Any payment made on a date other than
the Payment Date as set forth in the Bonds pursuant to this Section 8.5 shall
have the same force and effect as if made on the Payment Date, and no interest
shall accrue for the period from and after such Payment Date.
SECTION 8.6. Governing Law; Consent to Jurisdiction; Waiver of Immunities.
(a) This Agreement is governed by and must be interpreted in accordance with the
laws of the State of New York, except that all matters governing authorization
and execution of this Agreement by Peru are governed by the laws of Peru.
(b) In connection with any suit, action or proceeding against it or its
properties assets or revenues arising out of or relating to the Agreement or the
Bonds (a "Related Proceeding"), Peru agrees (i) to submit to the exclusive
jurisdiction of any New York State or U.S. Federal court sitting in New York
City, and any appellate court thereof (the "Specified Courts"); (ii) that all
claims in respect of such Related Proceeding may be heard and determined in such
Specified Courts; (iii) that any judgment obtained in the Specified Courts
arising out of any Related Proceeding may be enforced or executed in any other
court of competent jurisdiction whatsoever; and (iv) that any judgment obtained
in any such other court as a result of such enforcement or execution may be
enforced or executed in any such other court of competent jurisdiction (all such
courts other than Specified Courts being called herein "Other Courts"), by means
of a suit on the judgment or in any other manner provided by law, provided that
in order to enforce or execute any such judgment ordering any payment by Peru,
Peruvian courts will require that such payments be included in the Budget Law
corresponding to the fiscal year on which such payment is to be due (but Peru
will use its best efforts to cause such payment to be included in such Budget
Law).
(c) Peru agrees that CT Corporation, presently located at 111 Eighth
Avenue, 13th floor, New York, New York, will act as its process agent (the
"Process Agent") and that Peru will maintain at all times an agent with offices
in New York to act as its Process Agent. The Process Agent will receive on
behalf of Peru and its property all writs, process and summonses in any Related
Proceeding or any suit, action or proceeding to enforce or execute any judgment
referred to in Section 8.6(b) above (a "Related Judgment") brought against it in
such Specified Courts. Failure of the Process Agent to give any notice to it of
any such service of process shall not impair or affect the validity of such
service or of any judgment based thereon. Nothing in the Agreement or the Terms
shall in any way be deemed to limit the ability to serve any such writs, process
or summonses in any other manner permitted by applicable law.
(d) Peru irrevocably consents to and waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any Related Proceeding brought in the Specified Courts or to the
laying of venue of any suit, action or proceeding brought solely for the purpose
of enforcing or executing any Related Judgment in the Specified Courts or Other
Courts, and further irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of any Related
Proceeding or any such suit, action or proceeding in any such court.
(e) To the extent that Peru or any of its revenues, assets or
properties may be entitled to any sovereign or other immunity under any law,
Peru agrees not to claim and to waive such immunity to the fullest extent
permitted by the laws of such jurisdiction. This waiver covers Peru's sovereign
immunity and immunity from prejudgment attachment, post-judgment attachment and
attachment in aid, but does not extend to the attachment of revenues, assets and
property of Peru located in Peru unless permitted under Peruvian law.
Additionally, in accordance with Peruvian law currently in effect, Peru's waiver
of immunity will not extend to property that is (i) used by a diplomatic or
consular mission of Peru; (ii) of a military character and under the control of
a military authority or defense agency of Peru; (iii) public property; (iv)
shares of Peruvian public sector entities or shares of Peruvian private sector
entities owned or controlled by Peru or by a Peruvian public sector entity, or
revenues collected from the sale of such shares, to the extent such shares or
revenues are exempt by Peruvian law from attachment or execution; or (v) funds
deposited in Peru's accounts held in the Peruvian financial system.
Peru, however, reserves the right to plead sovereign immunity under the
U.S. Foreign Sovereign Immunities Act of 1976 (the "Immunities Act") with
respect to actions brought against it under U.S. federal securities laws or any
state securities law. Without an effective waiver of immunity by Peru with
respect to such actions, it would be impossible to obtain a U.S. judgment in
such an action against Peru unless a court were to determine that Peru is not
entitled under the Immunities Act to sovereign immunity with respect to such
action. In addition, execution upon property of Peru located in the United
States to enforce a judgment obtained under the Immunities Act may not be
possible except in the limited circumstances specified in the Immunities Act.
Even if a U.S. judgment could be obtained against Peru in any such
action, it may not be possible to enforce in Peru a judgment based on such a
U.S. judgment.
Peru also consents generally for the purposes of the State Immunity Act
of 1978 of the United Kingdom to the giving of any relief or the issue of any
process in connection with any Related Proceeding or Related Judgment.
SECTION 8.7. Separability. If any provision in this Agreement or in the
Terms is invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby.
SECTION 8.8. Counterparts. This Agreement may be signed in any number of
counterparts (which may include counterparts delivered by telecopier), with the
same effect as if the signatures thereto and hereto were upon the same
instrument. Such counterparts together constitute but one and the same
instrument.
SECTION 8.9. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
REPUBLIC OF PERU
as Issuer
By:
---------------------------------------
Name: Fernando Lituma
Title: Director General Public Credit
[ ]
as Fiscal Agent
By:
---------------------------------------
Name:
Title:
EXHIBIT A
[FORM OF GLOBAL BOND]
[Insert legends relating to limitations on the transferability in such form as
may be required by the Depository]
COMMON CODE: CUSIP:
ISIN:
GLOBAL BOND
THE REPUBLIC OF PERU
____-Denominated Global Bonds due ____
This Global Bond is in respect of an issue of ____-Denominated Global
Bonds due ____ (the "Bonds") of the Republic of Peru ("Peru"), limited to an
aggregate principal amount of ______________ [United States dollars]
([U.S.$]____________) [other currency] and issued pursuant to a Fiscal Agency
Agreement (the "Fiscal Agency Agreement") dated as of [ ], 2002, between Peru
and [ ], as Fiscal Agent, Principal Paying Agent and Registrar (the "Fiscal
Agent," "Paying Agent" and "Registrar"). Unless the context otherwise requires,
the terms used herein shall have the meanings specified in the Fiscal Agency
Agreement and the Terms and Conditions of the Bonds attached hereto (the
"Terms").
Peru, for value received, hereby promises to pay to Cede & Co., or
registered assigns, on ____________ upon surrender hereof, the principal sum of
______________________________ [United States dollars] ([U.S.$]____________)
[other currency] on __________, and to pay interest at the rate of [[ ]% per
annum] [to be determined in accordance with the provisions hereinafter set
forth] from the date hereof on said principal amount in accordance with the
Terms until such principal amount is paid or made available for payment, such
interest to be paid [semiannually] [specify other frequency] in arrears on each
Payment Date, commencing on the Payment Date on [ ]. The interest payable on any
such Payment Date will, subject to certain conditions set forth in the Terms, be
paid to the person in whose name this Global Bond is registered on the 15th day
preceding such Payment Date, whether or not such day is a Business Day. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the person in whose name this Global Bond is registered on such date
and may either be paid to the person in whose name this Global Bond is
registered at the close of business on a subsequent record date for the payment
of such defaulted interest to be fixed by Peru or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which this Global Bond may be listed. The Terms, except as otherwise
provided herein, shall be binding on Peru and the holder hereof as if fully set
forth herein.
[Insert floating interest rate provisions, if applicable]
[The statements set forth in the legend, if any, set forth above are an
integral part of the terms of this Global Bond and by acceptance hereof each
holder of this Global Bond agrees to be subject to and bound by the terms and
provisions set forth in such legend.]
This Global Bond will not be valid or become obligatory for any purpose
until the certificate of authentication hereon has been manually signed by or on
behalf of the Fiscal Agent.
This Global Bond is governed by and must be interpreted in accordance
with the laws of the State of New York, except that all matters governing
authorization and execution of this Global Bond by Peru are governed by the laws
of Peru.
IN WITNESS WHEREOF, THE REPUBLIC OF PERU has caused this Global Bond to
be duly executed.
THE REPUBLIC OF PERU
By:
-----------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Global Bonds described in the within-mentioned
Fiscal Agency Agreement.
as Fiscal Agent
By:
-----------------------
Authorized Signatory
EXHIBIT B
[FORM OF DEFINITIVE BOND]
COMMON CODE: CUSIP:
ISIN:
DEFINITIVE BOND
THE REPUBLIC OF PERU
____-Denominated Global Bonds due ____
This Definitive Bond is in respect of an issue of ____-Denominated
Global Bonds due ____ (the "Bonds") of the Republic of Peru ("Peru"), limited to
an aggregate principal amount of ______________ [United States dollars]
([U.S.$]____________) [other currency] and issued pursuant to a Fiscal Agency
Agreement (the "Fiscal Agency Agreement") dated as of [ ], 2002, between Peru
and [ ], as Fiscal Agent, Principal Paying Agent and Registrar (the "Fiscal
Agent," "Paying Agent" and "Registrar"). Unless the context otherwise requires,
the terms used herein shall have the meanings specified in the Fiscal Agency
Agreement and the Terms and Conditions of the Bonds attached hereto (the
"Terms").
Peru, for value received, hereby promises to pay to ____________, or
registered assigns, on ____________ upon surrender hereof, the principal sum of
___________________________ [United States dollars] ([U.S.$]____________) [other
currency], on __________, and to pay interest at the rate of [[ ]% per annum]
[to be determined in accordance with the provisions hereinafter set forth] from
the date hereof on said principal amount in accordance with the Terms until such
principal amount is paid or made available for payment, such interest to be paid
[semiannually] [specify other frequency] in arrears on each Payment Date,
commencing on the Payment Date on [ ]. The interest payable on any such Payment
Date will, subject to certain conditions set forth in the Terms, be paid to the
person in whose name this Definitive Bond is registered on the 15th day
preceding such Payment Date, whether or not such day is a Business Day. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the person in whose name this Definitive Bond is registered on such
date and may either be paid to the person in whose name this Definitive Bond is
registered at the close of business on a subsequent record date for the payment
of such defaulted interest to be fixed by Peru or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which this Definitive Bond may be listed.
[Insert floating interest rate provisions if applicable]
Reference is made to the further provisions set forth under the Terms.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
[The statements set forth in the legend, if any, set forth above are an
integral part of the terms of this Definitive Bond and by acceptance hereof each
holder of this Definitive Bond agrees to be subject to and bound by the terms
and provisions set forth in such legend.]
This Definitive Bond will not be valid or become obligatory for any
purpose until the certificate of authentication hereon has been manually signed
by or on behalf of the Fiscal Agent.
This Definitive Bond is governed by and must be interpreted in
accordance with the laws of the State of New York, except that all matters
governing authorization and execution of this Definitive Bond by Peru are
governed by the laws of Peru.
IN WITNESS WHEREOF, THE REPUBLIC OF PERU has caused this Definitive
Bond to be duly executed.
THE REPUBLIC OF PERU
By:
-----------------------
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Definitive Bonds described in the within-mentioned
Fiscal Agency Agreement.
--------------------------,
as Fiscal Agent
By
------------------------
Authorized Signatory
EXHIBIT C
[FORM OF REVERSE OF DEFINITIVE BOND]
FORM OF TERMS AND CONDITIONS
1. General. This Bond is one of a duly authorized issue of series of debt
securities of the Republic of Peru ("Peru"), designated as its [title of
securities] (the "Bonds"), limited to the aggregate principal amount of [U.S.$]
[other currency] __________ (except as otherwise provided in Section 12 below)
issued pursuant to a Fiscal Agency Agreement (the "Fiscal Agency Agreement")
dated as of [ ], 2002, between Peru and [ ], the Fiscal Agent, Principal Paying
Agent and Registrar (the "Fiscal Agent," "Paying Agent" and the "Registrar"
(collectively, the "Agents"), which terms include its successors and assigns as
such Fiscal Agent, Paying Agent and Registrar). Capitalized terms used but not
defined herein shall have the meanings given to them in the Fiscal Agency
Agreement. [References herein to "U.S.$," "$," "U.S. dollars" or "dollars" are
to United States dollars.]
(a) The holders of the Bonds will be entitled to the benefits of, be
bound by, and be deemed to have notice of, all the provisions of the Fiscal
Agency Agreement. Copies of the Fiscal Agency Agreement are on file and may be
inspected during normal business hours on any weekday (Saturdays, Sundays and
public holidays excepted) at the principal office of the Fiscal Agent in New
York and at the offices of the Registrar and the paying agents referred to
below.
(b) The Bonds are issuable in fully registered form, without coupons.
The Bonds are issuable in [the] authorized denomination[s] of [currency/U.S.$]
______ [and [any integral multiple thereof] [integral multiples of
[currency/U.S.$] _____ above that amount]]. The Bonds, and transfer thereof,
must be registered as provided in Section 7 below and in the Fiscal Agency
Agreement. A person in whose name a Bond is registered may (to the fullest
extent permitted by law) be treated at all times, by all persons and for all
purposes as the absolute owner of such Bond regardless of any notice of
ownership, theft or loss or of any writing thereon.
(c) The Bonds will mature on [ ] (the "Maturity Date").
(d) As used herein, the following terms have the meanings set forth
below:
"Business Day" means any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City and Lima, Peru [If the Bonds are
denominated in a currency other than U.S. dollars, insert: and in [name of
financial center of the country in whose currency the securities are
denominated] or a day on which banking institutions in [name of non-U.S.
financial center] are not carrying out transactions in [name of non-U.S.
currency]].
"Payment Date" means [ ] and [ ] of each year, commencing [ ] and
ending on [ ]; provided that if any such day is not a Business Day, then the
applicable Payment Date shall be the next following Business Day.
2. Payments and Paying Agents. (a) Principal of and interest on the Bonds
will be payable in U.S. dollars. Principal of each Bond and interest payable on
the Maturity Date will be payable in U.S. dollars in immediately available funds
to the person in whose name such Bond is registered on the Maturity Date, upon
presentation and surrender of the Bond at the corporate trust office of the
Fiscal Agent in The City of New York or, subject to applicable laws and
regulations, at the office of any paying agent. Interest on each Bond (other
than interest payable on the Maturity Date) will be payable to the person in
whose name such Bond is registered at the close of business on the Record Date
(as defined below) for the relevant Payment Date. Peru will make payments of
principal and interest on the Bonds by providing the Fiscal Agent the amount of
such payment, in U.S. dollars in immediately available funds, on or before the
Payment Date, and directing the Fiscal Agent to make a wire transfer of such
amount in U.S. dollars to DTC or its nominee as the registered owner of the
Bonds, which will receive the funds for distribution to the beneficial owners of
the Bonds; provided that Peru may, subject to applicable laws and regulations,
make payments of principal and interest on the Bonds by mailing, or directing
the Fiscal Agent to mail, from funds made available by Peru for such purpose, a
check to the person entitled thereto, on or before the due date for the payment
at the address that appears on the security register maintained by the Fiscal
Agent on the applicable record date. The Record Date with respect to any Payment
Date will be the 15th day prior to such date (each such day, a "Record Date"),
whether or not such day is a Business Day.
None of Peru, the Fiscal Agent or any paying agent will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Bonds or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
(b) In the event that the maturity of the Bonds is accelerated in
accordance with Section 4 below, holders of the Bonds will be permitted to
elect, by providing notice to Peru, with a copy to the Fiscal Agent, on the date
of acceleration or on any date thereafter prior to payment, to receive the
amount payable in respect of the Bonds at such time in the currency of Peru.
(c) Any payment of principal or interest required to be made on a
Payment Date that is not a Business Day (or, in the case of a Luxembourg Paying
Agent, is a day on which banks in Luxembourg are required or authorized by law
to close) need not be made on such day, but may be made on the next succeeding
Business Day (or, in the case of a Luxembourg Paying Agent, is a day on which
banks in Luxembourg are required or authorized by law to close) with the same
force and effect as if made on such Payment Date, and no interest will accrue
with respect to such payment for the period from and after such Payment Date.
(d) So long as any of the Bonds are outstanding, Peru shall maintain a
paying agent and a transfer agent in a western European city for payment on and
transfers of the Bonds (which will be Luxembourg, so long as the Bonds are
listed on the Luxembourg Stock Exchange and the rules of such Exchange so
require), a Registrar having a specified office in The City of New York and a
paying agent having a specified office in The City of New York. Peru has
initially appointed [ ] as paying agent and transfer agent for the Bonds and [ ]
as Registrar and Paying Agent. Subject to the foregoing, Peru shall have the
right at any time to terminate any such appointment and to appoint any other
paying agents or transfer agents in such other places as it may deem appropriate
upon notice in accordance with Section 11 below.
(e) Pending payment of principal or interest on the Bonds that becomes
due, the Fiscal Agent shall hold in trust, for the benefit of the beneficial
owners of the Bonds, the amounts transferred by Peru to the Fiscal Agent for
such purpose. Any moneys held by the Fiscal Agent in respect of the Bonds and
remaining unclaimed for two years after such amounts shall have become due and
payable must be returned by the Fiscal Agent to Peru and the holders of such
Bonds shall thereafter look only to Peru for any payment to which such holders
may be entitled. The Bonds will become void unless presented for payment within
five years after the Maturity Date (or such shorter period as shall be
prescribed by applicable law).
(f) All notifications, opinions, determinations, certificates,
calculations, quotations and decisions given, expressed, made or obtained for
the purposes of the provisions hereof (in the absence of willful default, bad
faith or manifest error) will be binding on Peru, the Fiscal Agent, the
Registrar, the Paying Agent, each other paying agent and all holders of Bonds.
3. Status and Negative Pledge. (a) The Bonds will be direct, general,
unconditional, unsubordinated and unsecured obligations of Peru. Peru has
pledged its full faith and credit for the due and punctual payment of all
amounts due in respect of the Bonds. The Bonds will rank pari passu, without any
preference among themselves, with all other existing and future unsecured and
unsubordinated obligations of Peru relating to External Indebtedness.
(b) So long as any of the Bonds remain outstanding, Peru shall not
create or permit to subsist any Security Interest in the whole or any part of
its present or future revenues or assets to secure Public External Indebtedness
of Peru, unless the Bonds are secured equally and ratably with such Public
External Indebtedness; provided, however, that Peru may create or permit to
subsist:
(i) Security Interests created prior to February 7, 2002;
(ii) Security Interests securing Public External Indebtedness incurred
in connection with a Project Financing, provided that the Security Interest
is solely in assets or revenues of the project for which the Project
Financing was incurred;
(iii) Security Interests securing Public External Indebtedness
incurred or assumed by Peru to finance or refinance the acquisition of the
assets in which such Security Interest has been created or permitted to
subsist and any Security Interests existing on such assets at the time of
their acquisition;
(iv) Security Interests securing Public External Indebtedness arising
in the ordinary course to finance export, import or other trade
transactions, which Public External Indebtedness matures (after giving
effect to all renewals and refinancing thereof) not more than one year
after the date on which such Public External Indebtedness was originally
incurred;
(v) Security Interests securing Public External Indebtedness which,
together with all other Public External Indebtedness secured by Security
Interests (excluding Public External Indebtedness secured by other
permitted Security Interests), does not exceed U.S.$25,000,000 principal
amount (or its equivalent in other currencies) in the aggregate;
(vi) Security Interests arising by operation of a currently existing
law in connection with Public External Indebtedness, including without
limitation any right of set-off with respect to demand or time deposits
maintained with financial institutions and bankers' liens with respect to
property held by financial institutions (in each case deposited with or
delivered to such financial institutions in the ordinary course of the
depositor's activities);
(vii) Security Interests created in connection with the transactions
contemplated by Peru's 1996 financing plan dated June 5, 1996, and its
implementing documentation, including Security Interests to secure
obligations under the collateralized bonds issued under the 1996 financing
plan (the Fixed Rate Bonds due 2027 ("Par Bonds"), the Floating Rate Bonds
due 2027 ("Discount Bonds") and the Front-Loaded Interest Reduction Bonds
due 2017 ("FLIRBs")) and any Security Interest securing obligations of Peru
outstanding as of June 5, 1996, to the extent required to be equally and
ratably secured with any such bonds;
(viii) Security Interests issued upon surrender or cancellation of the
Par Bonds, the Discount Bonds or the FLIRBs, or the principal amount of any
Public External Indebtedness outstanding as of June 5, 1996, in each case,
to the extent such Security Interest is created to secure Public External
Indebtedness on a basis comparable to the Par Bonds, the Discount Bonds and
the FLIRBs;
(ix) Security Interests on shares of, or other assets of, any present
or former Peruvian public sector entity created or granted by Peru in
connection with, or in anticipation of, the privatization of such entity;
and
(x) any renewal or extension of any Security Interest stated above.
(c) The following terms shall have the meanings specified below:
(i) "External Indebtedness" means obligations of, or guaranteed
(whether by contract, statute or otherwise) by, Peru for borrowed money or
evidenced by bonds, debentures, notes or similar instruments denominated or
payable, or which, at the option of the holder thereof, may be payable, in
a currency other than the currency of Peru or by reference to a currency
other than the currency of Peru (other than any such obligations originally
issued or incurred within Peru).
(ii) "Public External Indebtedness" means any External Indebtedness
that (i) is in the form of, or represented by, bonds, notes or other
securities that are, or were intended at the time of issuance to be,
quoted, listed or traded on any securities exchange or other securities
market (including without limiting the generality of the foregoing,
securities for resale pursuant to Rule 144A under the Securities Act (or
any successor law or regulation of similar effect)) and (ii) has an
original maturity of more than one year or are combined with a commitment
so that the original maturity of one year or less may be extended at the
option of Peru to a period in excess of one year.
(iii) "Project Financing" means any financing of all or part of the
costs of the acquisition, construction or development of any project if the
person or persons providing such financing expressly agree to limit their
recourse to the project financed and the revenues derived from such project
as the principal source of repayment for the moneys advanced.
(iv) "Security Interest" means any security interest, including
without limitation, any lien, pledge, mortgage, deed of trust or charge, or
any encumbrance or preferential arrangement that has the practical effect
of constituting a security interest.
(d) The obligations of Peru set forth in Section 5.3(a) of the Fiscal
Agency Agreement are hereby incorporated by reference and made a part of, as
though set forth in, this Bond for the benefit of (and shall be directly
enforceable by) the holder of this Bond.
4. Events of Default. (a) Each of the following events will constitute an
"Event of Default" under the Bonds:
(i) if Peru fails to pay interest or principal on the Bonds when due
and such failure continues for a period of 30 days; or
(ii) if Peru does not perform any other obligation under any Bond and
such failure is incapable of remedy or is not remedied within 60 days after
written notice has been given to Peru by the Fiscal Agent; or
(iii) if Peru fails to make any payment in respect of:
(A) External Indebtedness outstanding as of February 21, 2002; or
(B) Public External Indebtedness; in an aggregate principal
amount in excess of U.S.$25,000,000 (or its equivalent in any other
currency) when due, and such failure continues beyond the applicable
grace period; or
(iv) if any event or condition occurs that results in the acceleration
of the maturity of:
(A) External Indebtedness outstanding as of February 21, 2002; or
(B) Public External Indebtedness;
in an aggregate principal amount in excess of U.S.$25,000,000 (or
its equivalent in any other currency); or
(v) if Peru declares a general suspension on or moratorium with
respect to the payment of principal of or interest on all or a portion of
its External Indebtedness; or
(vi) if (A) Peru contests the validity of, or its obligations under,
any Bond or, to the extent adversely affecting the Bonds, the Fiscal Agency
Agreement, (B) Peru denies any of its obligations under any Bond or, to the
extent adversely affecting the Bonds, the Fiscal Agency Agreement, or (C)
any constitutional provision, treaty, law, regulation, decree, or other
official pronouncement of Peru, or any final decision by any court in Peru
having jurisdiction, renders it unlawful for Peru to pay any amount due on
the Bonds or to perform any of its obligations under any Bond or, to the
extent adversely affecting the Bonds, the Fiscal Agency Agreement; or
(vii) if any writ, execution, attachment or similar process is levied
against all or any substantial part of the assets of Peru in connection
with any judgment for the payment of money exceeding U.S.$25,000,000 (or
its equivalent in any other currencies), and Peru fails to satisfy or
discharge such judgment, or adequately bond, contest in good faith or
receive a stay of execution or continuance in respect of such judgment,
within a period of 120 days; or
(viii) if Peru fails to maintain its membership in, and its
eligibility to use the general resources of, the International Monetary
Fund.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(A) in the case of any Event of Default described in clause (ii),
(iii), (iv), (vi), (vii) or (viii), the holders of at least 25% in
aggregate principal amount of all Bonds (other than Bonds held by
Peru) then Outstanding may by written demand given to Peru (with a
copy to the Fiscal Agent) declare the Bonds held by it to be
immediately due and payable; or
(B) in the case of any Event of Default described in clauses (i)
or (v), each holder of Bonds may by written demand given to Peru (with
a copy to the Fiscal Agent) declare the Bonds held by it to be
immediately due and payable;
and upon such declaration the principal amount of such Bonds and the accrued
interest on such Bonds will become immediately due and payable upon the date
that such written notice is received at the office of the Fiscal Agent, unless
prior to such date all Events of Default in respect of all Bonds have been
cured. The right to give such acceleration notice will terminate if the event
giving rise to such right has been cured before such right is exercised. Holders
of Bonds holding in the aggregate at least 66 2/3% in principal amount of the
then Outstanding Bonds may waive any existing defaults, and rescind or annul any
notice of acceleration, on behalf of all bondholders, if (i) following the
declaration of the Bonds due and payable immediately, Peru has deposited with
the Fiscal Agent an amount sufficient to pay all overdue installments of
principal, interest and Additional Amounts in respect of the Bonds as well as
the reasonable fees and compensation of the Fiscal Agent; and (ii) all other
Events of Default have been remedied. In the event of a declaration of
acceleration because of an Event of Default set forth in clause (iii) or (iv)
above, such declaration of acceleration shall be automatically rescinded and
annulled if the event triggering such Event of Default pursuant to such clause
(iii) or (iv) shall be remedied, cured or waived by the holders of the relevant
indebtedness, within 60 days after such event.
(c) Upon the occurrence of an Event of Default under Section 4(a), Peru
shall give written notice promptly after becoming aware thereof to the holder of
each Bond (with a copy to the Fiscal Agent). Within 15 days after becoming aware
of the occurrence of an event which with the giving of notice or lapse of time
or both would, unless remedied, cured or waived, become an Event of Default
under clause (iii) or (iv) of Section 4(a), Peru shall give written notice
thereof to the holder of each Bond (with a copy to the Fiscal Agent). Any notice
required to be given pursuant to this Section 4(c) to each holder of a Bond may
be given by Peru directly to the Fiscal Agent, provided that Peru will cause the
Fiscal Agent promptly to give notice of each Event of Default specified in such
notice to the holders of Bonds.
5. Purchase of the Bonds by Peru. Peru may at any time purchase or acquire
any of the Bonds in any manner and at any price. Bonds that are purchased or
acquired by Peru may, at Peru's discretion, be held, resold or surrendered to
the Fiscal Agent for cancellation, but any Bond so purchased by Peru may not be
re-issued or resold except in compliance with the Securities Act and other
applicable law.
6. Additional Amounts. (a) The payment by Peru of principal of or interest
on the Bonds will be made without withholding or deduction for or on account of
any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied by Peru, any political subdivision thereof or
any taxing authority in Peru. If Peru is required by law to make any such
withholding or deduction, it will pay such additional amounts ("Additional
Amounts") as may be necessary in order to ensure that the net amounts receivable
by the holders of Bonds after such withholding or deduction shall equal the
amount that would have been receivable in respect of the Bonds in the absence of
such withholding or deduction; except that no such additional amounts shall be
payable with respect to any Bond to or on behalf of a holder who is liable for
taxes or duties in respect of such Bond (i) by reason of such holder having some
connection with Peru other than the mere holding of such Bond or the receipt of
principal of or interest on any Bond; (ii) by reason of the failure to comply
with any reasonable certification, identification or other reporting requirement
concerning the nationality, residence, identity or connection with Peru, or any
political subdivision or taxing authority thereof or therein, of the holder of a
Bond or any interest therein or rights in respect thereof, if compliance is
required by Peru, or any political subdivision or taxing authority thereof or
therein, pursuant to applicable law or to any international treaty in effect, as
a precondition to exemption from such deduction or withholding; or (iii) by
reason of the failure of such holder to present such holder's Bond for payment
within 30 days after the principal of or interest on any Bond is first made
available to payment to the holder.
(b) Whenever in this Bond there is mentioned, in any context, the
payment of the principal of or interest on any Bond, such mention shall be
deemed to include mention of the payment of Additional Amounts to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof and express mention of the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not
made.
(c) No Additional Amounts shall be payable in respect of any Bond to a
holder that is a fiduciary or partnership or other than the sole beneficial
owner of such Bond, to the extent the beneficiary or settlor with respect to
such fiduciary or a member of such partnership or a beneficial owner would not
have been entitled to receive payment of the Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder of such Bond.
7. Replacement, Exchange and Transfer. (a) If any Bond becomes mutilated or
is defaced, destroyed, lost or stolen, the Fiscal Agent shall authenticate and
deliver a new Bond, on such terms as Peru and the Fiscal Agent may require, in
exchange and substitution for the mutilated or defaced Bond or in lieu of and in
substitution for the destroyed, lost or stolen Bond. In every case of
mutilation, defacement, destruction, loss or theft, the applicant for a
substitute Bond must furnish to Peru and the Fiscal Agent such indemnity as Peru
and the Fiscal Agent may require and evidence to their satisfaction of the
destruction, loss or theft of such Bond and of the ownership thereof. In every
case of mutilation or defacement of a Bond, the holder must surrender to the
Fiscal Agent the Bond so mutilated or defaced. In addition, prior to the
issuance of any substitute Bond, Peru may require the payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including the fees and
expenses of the Fiscal Agent) connected therewith. If any Bond that has matured
or is about to mature becomes mutilated or defaced or is apparently destroyed,
lost or stolen, Peru may pay or authorize payment of such Bond without issuing a
substitute Bond.
(b) Upon the terms and subject to the conditions set forth in the
Fiscal Agency Agreement, a Bond or Bonds may be exchanged for a Bond or Bonds of
equal aggregate principal amount in such same or different authorized
denominations as may be requested by the holder, by surrender of such Bond or
Bonds at the office of the Registrar, or at the office of any transfer agent,
together with a written request for the exchange. Any registration of transfer
or exchange shall be effected upon Peru being satisfied with the documents of
title and identity of the person making the request and subject to such
reasonable regulations as Peru may from time to time agree with the Fiscal
Agent.
(c) Upon the terms and subject to the conditions set forth in the
Fiscal Agency Agreement, a Bond may be transferred in whole or in part by the
holder or holders surrendering the Bond for registration of transfer at the
office of the Registrar in The City of New York or at the office of any transfer
agent, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to Peru and the Registrar or any such transfer agent, as the
case may be, duly executed by the holder or holders thereof or its
attorney-in-fact or attorneys-in-fact duly authorized in writing.
(d) No service charge will be imposed upon the holder of a Bond in
connection with exchanges for Bonds of a different denomination or for
registration of transfers thereof, but Peru and the Fiscal Agent may charge the
party requesting any registration of transfer, exchange or registration of Bonds
a sum sufficient to reimburse it for any stamp or other tax or other
governmental charge required to be paid in connection with such transfer,
exchange or registration.
8. Amendments and Waivers. (a) Section 7.1 of the Fiscal Agency Agreement,
which Section is hereby incorporated mutatis mutandi by reference herein,
provides, among other things, that, (i) with the consent of the holders of at
least 66 2/3% in aggregate principal amount of the Bonds then Outstanding
present at a meeting duly called pursuant thereto or (ii) by written consent of
the holders of at least 66 2/3% in aggregate principal amount of the Bonds then
Outstanding, Peru and the Fiscal Agent may modify, amend or supplement the terms
of the Bonds or the Fiscal Agency Agreement, in any way, and the holders of
Bonds may make, take or give any request, demand, authorization, direction,
notice, consent, waiver (including waiver of future compliance or past default)
or other action provided by the Fiscal Agency Agreement or the Bonds to be made,
given or taken by holders of the Bonds; provided, however, that no such action,
modification, amendment or supplement, however effected, shall apply, without
the written consent of the holder of each Bond affected thereby, to the Bonds
owned or held by such holder with respect to the following matters: (A) change
the due date for the payment of the principal of, or any installment of interest
on, the Bonds; (B) reduce the principal amount of or interest on the Bonds, or
the portion of such principal amount which is payable upon acceleration of the
maturity of the Bonds or the interest rate thereon; (C) change the obligation of
Peru to pay Additional Amounts as described under Section 6(a) hereof; (D)
change the currency in which payment of interest or principal in respect of the
Bonds is payable; or (E) impair the right to institute suit for the enforcement
of any payment in respect of the Bonds. In addition, no such action,
modification, amendment or supplement may, without the written consent of all
holders of Bonds, reduce the above-stated percentage of the principal amount of
Outstanding Bonds the vote or consent of the holders of which is necessary to
modify, amend or supplement the Fiscal Agency Agreement or the terms and
conditions of the Bonds or to make, take or give any request, demand,
authorization, direction, notice, consent, waiver or other action provided
hereby or thereby to be made, taken or given, or reduce the percentage in
principal amount of Outstanding Bonds that constitute the quorum required at any
meeting of holders of the Bonds at which a resolution is adopted. In addition,
and notwithstanding the foregoing, at any meeting of holders of the Bonds duly
called and held as provided herein and in the Fiscal Agency Agreement, upon the
affirmative vote, in person or by proxy thereunto duly authorized in writing, of
the holders of not less than 66 2/3% in aggregate principal amount of the Bonds
then Outstanding, or by written consent of the holders of not less than 66 2/3%
in aggregate principal amount of the Bonds then Outstanding, holders of Bonds
may rescind or annul a declaration of the acceleration of the principal amount
thereof.
(b) Peru and the Fiscal Agent may, without the vote or consent of any
holder of Bonds, amend the Fiscal Agency Agreement or the Bonds for the purpose
of (a) adding to the covenants of Peru for the benefit of the holders of Bonds,
or (b) surrendering any right or power conferred upon Peru in respect of the
Fiscal Agency Agreement or the Bonds, or (c) providing security or collateral
for the Bonds, or (d) curing any ambiguity in any provision, or curing,
correcting or supplementing any defective provision contained herein or in the
Fiscal Agency Agreement in a manner which does not adversely affect the interest
of any Bond holder, or (e) effecting any amendment of the Fiscal Agency
Agreement (including, to the extent necessary to provide for the issuance of
other Bonds and of Warrants) or the Bonds which Peru and the Fiscal Agent
mutually deem necessary or desirable so long as any such amendment does not, and
will not, adversely affect the rights or interests of any Bond holder.
(c) It shall not be necessary for the vote or consent of the holders of
Bonds to approve the particular form of any proposed modification, amendment,
supplement, request, demand, authorization, direction, notice, consent, waiver
or other action, but it shall be sufficient if such vote or consent shall
approve the substance thereof. Any such modification, amendment, supplement,
request, demand, authorization, direction, notice, consent, waiver or other
action taken, made or given in accordance with Section 8(a) hereof shall be
conclusive and binding on all holders of Bonds, whether or not they have given
such consent or cast such vote, or were present at any meeting and whether or
not notation of such modification, amendment, supplement, request, demand,
authorization, direction, notice, consent, waiver or other action is made upon
the Bonds.
(d) Any notice of meeting of holders of Bonds shall set forth the time
and place of such meeting and in general terms the action proposed to be taken
at such meeting, and shall be given to each holder as provided in Section 11
hereof.
9. Governing Law. This Bond is governed by and must be interpreted in
accordance with the laws of the State of New York [other jurisdiction], except
that all matters governing authorization and execution of the Bonds by Peru are
governed by the laws of Peru.
10. Jurisdiction. (a) In the Fiscal Agency Agreement, Peru has agreed that
in connection with any suit, action or proceeding against it or its properties,
assets or revenues arising out of or relating to the Fiscal Agency Agreement or
the Bonds (a "Related Proceeding"), Peru shall submit to the exclusive
jurisdiction of any New York State or U.S. federal court sitting in New York
City, and any appellate court thereof (the "Specified Courts"). Peru has also
agreed that (i) all claims in respect of such Related Proceeding may be heard
and determined in such Specified Courts; (ii) any judgment obtained in the
Specified Courts arising out of any Related Proceeding may be enforced or
executed in any other court of competent jurisdiction whatsoever; and (iii) any
judgment obtained in any such other court as a result of such enforcement or
execution may be enforced or executed in any such other court of competent
jurisdiction (all such courts other than Specified Courts being called herein
"Other Courts"), by means of a suit on the judgment or in any other manner
provided by law; provided that in order to enforce or execute any such judgment
ordering any payment by Peru, Peruvian courts will require that such payments be
included in the Budget Law corresponding to the fiscal year on which such
payment is to be due (but Peru will use its best efforts to cause such payment
to be included in such Budget Law). Peru has irrevocably submitted to the
exclusive jurisdiction of the Specified Courts solely for the purpose of any
Related Proceeding and, for enforcing or executing any judgment arising in
connection with a Related Proceeding as described above (a "Related Judgment"),
of the Specified Courts and each Other Court.
(b) Peru has agreed that CT Corporation, presently located at 111
Eighth Avenue, 13th floor, New York, New York, will act as its process agent
(the "Process Agent") and that Peru will maintain at all times an agent with
offices in New York to act as its Process Agent. The Process Agent will receive
on behalf of Peru and its property all writs, process and summonses in any
Related Proceeding or any suit, action or proceeding to enforce or execute any
Related Judgment brought against it in such Specified Courts. Failure of the
Process Agent to give any notice to Peru of any such service of process shall
not impair or affect the validity of such service or of any judgment based
thereon. Nothing in the Fiscal Agency Agreement or herein shall in any way be
deemed to limit the ability to serve any such writs, process or summonses in any
other manner permitted by applicable law.
(c) Peru has irrevocably consented to and waived, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue in any Related Proceeding brought in the Specified Courts or to the
laying of venue of any suit, action or proceeding brought solely for the purpose
of enforcing or executing any Related Judgment in the Specified Courts or Other
Courts, and has further irrevocably waived, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of any Related
Proceeding in a Specified Court or any such suit, action or proceeding to
enforce or execute a Related Judgment in any Other Court.
(d) To the extent that Peru or any of its revenues, assets or
properties may be entitled to any sovereign or other immunity from jurisdiction
or any other legal process under any law, Peru has agreed not to claim and to
waive such immunity to the fullest extent permitted by the laws of such
jurisdiction. This waiver covers Peru's sovereign immunity and immunity from
prejudgment attachment, post-judgment attachment and attachment in aid of
execution, but does not extend to the attachment of revenues, assets and
property of Peru located in Peru unless permitted under Peruvian law.
Additionally, in accordance with Peruvian law currently in effect, Peru's waiver
of immunity does not extend to property that is (i) used by a diplomatic or
consular mission of Peru; (ii) of a military character and under the control of
a military authority or defense agency of Peru; (iii) public property; (iv)
shares of Peruvian public sector entities or shares of Peruvian private sector
entities owned or controlled by Peru or by a Peruvian public sector entity, or
revenues collected from the sale of such shares, to the extent such shares or
revenues are exempt by Peruvian law from attachment or execution; or (v) funds
deposited in Peru's accounts held in the Peruvian financial system.
Peru, however, has reserved the right to plead sovereign immunity under
the U.S. Foreign Sovereign Immunities Act of 1976 (the "Immunities Act") with
respect to actions brought against it under U.S. federal securities laws or any
state securities law. Without an effective waiver of immunity by Peru with
respect to such actions, it would be impossible to obtain a U.S. judgment in
such an action against Peru unless a court were to determine that Peru is not
entitled under the Immunities Act to sovereign immunity with respect to such
action. In addition, execution upon property of Peru located in the United
States to enforce a judgment obtained under the Immunities Act may not be
possible except in the limited circumstances specified in the Immunities Act.
Even if a U.S. judgment could be obtained against Peru in any such
action, it may not be possible to enforce in Peru a judgment based on such a
U.S. judgment.
Peru has also consented generally for the purposes of the State
Immunity Act of 1978 of the United Kingdom to the giving of any relief or the
issue of any process in connection with any Related Proceeding or Related
Judgment.
11. Notices. Notices will be mailed to holders of Bonds at their registered
addresses and will be deemed to have been given on the date of such mailing. All
notices to holders of the Bonds will be published, if and so long as the Bonds
are listed on the Luxembourg Stock Exchange and the rules of such exchange so
require, in a daily newspaper of general circulation in Luxembourg. It is
expected that such publication will be made in the Luxemburger Wort. If
publication as aforesaid is not practicable, notice will be validly given if
made in accordance with the rules of the Luxembourg Stock Exchange.
12. Further Issues. Peru may, from time to time, without the consent of the
holders of the Bonds, create and issue additional Bonds having the same terms
and conditions as the Bonds, except for the issue date, issue price and the
amount of the first payment of interest, which additional Bonds may be
consolidated and form a single series with the outstanding Bonds.
FISCAL AGENT, PAYING AGENTS, TRANSFER AGENTS AND REGISTRAR
Fiscal Agent
[ADDRESS]
Principal Paying Agent, Transfer Agent and Registrar
[ADDRESS]
Paying Agents and Transfer Agents
[ADDRESS] [ADDRESS]
Paying Agent and Transfer Agent in Luxembourg
[ADDRESS]
Listing Agent
[ADDRESS]
EXHIBIT D
AUTHORIZATION
I, [ ], [title] of the Republic of Peru ("Peru"), pursuant to
Section 3.1 of the Fiscal Agency Agreement dated as of [ ], 2002 (the "Fiscal
Agency Agreement") between Peru and [ ], as fiscal agent (the "Fiscal Agent"),
certify that there is hereby established a Series of Bonds to be delivered under
the Fiscal Agency Agreement, which Series of Bonds shall have the terms set
forth in the form of Bond attached hereto as Annex A and described in the
Prospectus Supplement dated [ ] (the "Prospectus Supplement"), pertaining to the
[title of securities] (the "Bonds") and the related Prospectus dated [ ], 2002,
pertaining to Securities and Warrants of Peru (the "Prospectus"), which
Prospectus Supplement and Prospectus are attached hereto as Annex B, which terms
shall include the following:
[Insert terms of Bonds, as applicable]
Aggregate Principal Amount: [ ]
Issue Price: [ ]
Issue Date: [ ]
Maturity Date: [ ]
Specified Currency: [ ]
Authorized Denominations: [ ]
Form: [ ]
Interest Rate: [ ]
Interest Payment Dates: [ ]
Regular Record Dates: [ ]
Guarantor: [ ]
Form of Guarantee: [ ]
Optional Early Redemption: ____ Yes ____ No
Optional Early Repayment: ____ Yes ____ No
Indexed Note: ____ Yes ____ No
Foreign Currency Note: ____ Yes ____ No
Underwriters: [ ]
Purchase Price: [ ]
Method of Payment: [ ]
Listing: [ ]
Securities Offered:
CUSIP: [ ]
ISIN: [ ]
Common Code: [ ]
Fiscal Agent, Principal Paying
Agent, Transfer Agent, Registrar
and Authenticating Agent: [ ]
Luxembourg Paying and Transfer
Agent: [ ]
Further Issues: [ ]
Governing Law: [ ]
[Other terms:] [ ]
Capitalized terms not otherwise defined herein are used as defined in
the Fiscal Agency Agreement.
This Authorization shall be governed by, and construed in accordance
with, the law of the State of New York.
IN WITNESS WHEREOF, I have executed this Certificate as of the
[ ] day of [ ], 200[ ].
---------------------------
Name:
Title:
EXHIBIT E
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby transfers to
(PRINT NAME AND ADDRESS OF TRANSFEREE)
[U.S.$]_______ principal amount of this Bond, and all rights with respect
thereto, and irrevocably constitutes and appoints __________________ as attorney
to transfer this Bond on the books kept for registration thereof, with full
power of substitution.
Dated
------------------------------ ---------------------------
Certifying Signature
Signed
--------------------
Note:
(i) The signature on this transfer form must correspond to the
name as it appears on the face of this Bond.
(ii) A representative of the Bondholder should state the capacity
in which he or she signs (e.g., executor).
(iii) The signature of the person effecting the transfer shall
conform to any list of duly authorized specimen signatures
supplied by the registered holder or shall be certified by a
recognized bank, notary public or in such other manner as the
Paying Agent, acting in its capacity as transfer agent or the
Fiscal Agent, acting in its capacity as registrar, may require.
Exhibit E
---------
[Letterhead of the General Office of Legal Counseling
of the Ministry of Economy and Finance]
LEGAL OPINION
Lima, November 7, 2002
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington. D.C. 20549
Dear Sirs:
In my capacity as Chief of the General Office of Legal Counseling of
the Ministry of Economy and Finance of the Republic of Peru (the "Republic" or
"Peru") and in connection with the Registration Statement under Schedule B of
the United States Securities Act of 1933, as amended, filed on November 7, 2002
with the Securities and Exchange Commission (the "Registration Statement"),
pursuant to which the Republic proposes to issue and sell from time to time up
to U.S.$500,000,000 of its debt securities (the "Debt Securities"), warrants
("Warrants") ,or units ("Units"), I have reviewed the following documents:
i) the Registration Statement;
ii) the form of Fiscal Agency Agreement filed as an exhibit to
Registration Statement defined term;
iii) the form of the Debt Securities included as an exhibit to the
Fiscal Agency Agreement, and;
iv) all relevant provisions of the Constitution of the Republic and
all relevant laws and orders of Peru including but not limited to
the following (copies and translations of which are attached as
exhibits hereto);
1. the Politic Constitution of the Republic of Peru of 1993, in
particular the Article 75(degree), and
2. the Annual Indebtedness Law of the Public Sector for the
Fiscal Year 2002, Law N(degree)27575; and
3. all such documents, instruments and rules as I have deemed
necessary as a basis for the opinion hereinafter expressed.
It is my opinion that under and with respect to the present laws of
Peru, the Debt Securities, the Warrants and the Units, when executed and
delivered by Peru and authenticated pursuant to the Fiscal Agency Agreement or
the Warrant Agreement, as the case may be, and delivered to and paid for by the
purchasers as contemplated by the Registration Statement, such Debt Securities,
such Warrants and such Units will constitute valid and legally binding
obligations of Peru, provided that each specific issue of Debt Securities,
Warrants or Units to be made by Peru will require the prior promulgation of a
Supreme Decree issued by the President and the Economy and Finance Minister in
accordance with the laws listed in subparagraph (iv).
I hereby consent to the filing of this opinion with the Registration
Statement and the use of the name of the Chief of the General Office of Legal
Counseling of the Ministry of Economy and Finance of Peru, under the caption
"Validity of the Securities" in the prospectus constituting a part of the
Registration Statement and in any prospectus supplement relating thereto. In
giving such consent, I do not thereby admit that I am an expert with respect to
any part of the Registration Statement, including this exhibit, within the
meaning of the term "expert" as used in the Securities Act of 1933, as amended,
or the rules end regulations of the Securities and Exchange Commission issued
thereunder.
Very truly yours,
/s/ ROCIO DEL PILAR MONTERO LAZO
- ------------------------------------
ROCIO DEL PILAR MONTERO LAZO
Chief of the General Office of
Legal Counseling of
the Ministry of Economy
and Finance of Peru
HILTON TRASLATIONS S.A.
TRADUCCIONES OFICIALES Y NO OFICIALES
Psje. Acuna 127 - Ofic. 803 Lima ()Cdra. 2 Miroquesada)
20040-5812/02
EL PERUANO OFFICIAL GAZETTE
LEGAL REGULATIONS
Page 232437
THE DIRECTOR GENERAL OF CREDIT DELEGATED WITH THE CONTRACTING
OF LEGAL AND FINANCIAL ADVISORY SERVICES FOR THE
ISSUE OF OBLIGATIONS ON THE INTERNATIONAL MARKET
MINISTERIAL RESOLUTION
N(0) 442-2002-EF/75
Lima, October 31, 2002
WHEREAS:
The Eleventh Supplementary and Temporary Provision of Law N(0) 27575,
Public Sector Indebtedness Law for the Fiscal Year 2002, establishes that in
order to facilitate the contracting of services linked to the processes
necessary for effecting issues of external obligations, among other operations,
the Ministry for the Economy and Finance is exempted from the provisions set
forth in the Single Ordered Text of the State Acquisitions and Contracting Law
approved by Supreme Decree N(0) 012-2001-PCM and the Regulations therefor,
approved by Supreme Decree N(0) 013-2001-PCM, it being authorized to enter into
contracts directly;
Within the framework of the provisions of Law N(0) 27575, amended the
jurisdiction of the State of New York in the United States of America, a
lawyers' office operating in Peru, as well as a financial advisor in the city of
New York, same which shall provide specialized services in the next
international issue of obligations made by the Republic of Peru, it being
indispensable that they possess wide experience in the issue of sovereign bonds
in the New York financial market;
Cleary Gottlieb Steen & Hamilton of New York and Estudio Rodrigo Elias
& Medrano, a Peruvian law office, besides having wide experience in
international obligations issues, provided highly specialized services to the
Republic of Peru in the international issue of sovereign bonds authorized by
Supreme Decree N(0) 021-2001-EF, and thus their contracting is appropriate;
Within the framework of the Mandate Letter signed with the Andean
Development Corporation (Corporacion Andina de Fomento - CAF) approved by
Supreme Decree N(0) 125-2002-EF, the Peruvian Government and the said
corporation have agreed the contracting of Credit Suisse First Boston and JP
Morgan Chase as advisors for Peru in the next international issue of sovereign
bonds, these banks having been selected for their wide experience and the
proposals for structuring which they submitted;
Also, in the preparation of the next issue of sovereign bonds on the
New York financial market it is necessary to initiate proceedings before the
administrative authorities thereof, same which required the signing of
documentation;
In accordance with the provisions of Legislative Decree N(0) 560, the
Executive Power Law, and Legislative Decree n(0) 183, the Organic Law of the
Ministry for the Economy and Finance;
IT IS HEREBY RESOLVED:
Article 1: Delegate to the Director General of Public Credit
representation of the Ministry for the Economy and Finance in order to enter
into the contracts to be signed with Cleary Gottlieb, Steen & Hamilton of New
York, Estudio Rodrigo Elias & Medrano, a Peruvian law office, Credit Suisse
First Boston of New York and JP Morgan Chase of New York, same which shall
provide international legal and financial advisory services for the next issue
of bligations in the international karket; and so that he may signed all the
documents required in the preparations of the said international issue;
The said contracts shall be effected pursuant to the budgeted
provisions of the Ministry for the Economy and Finance for the 2002 Fiscal Year.
Article 2: Authorize the issue of any legal opinions required in order
to initiate the procedures referred to in the introductory considerations
heading this Resolution.
File, notify and publish.
JAVIER SILVA RUETE
Minister for the Economy and Finance
HILTON TRANSLATIONS S.A.
TRADUCCIONES OFICIALES Y NO OFICIALES
Psje. Acufla 127 - Ofic. 803 Lima (Cdi.a. 2 Alii-oqitesada)
Telfs.: 427-2300 - 426-1646 Fax; 428-9770
" El Peruano" - Legal Notices
Wednesday, December 6, 2001
LAW 27676
THE PRESIDENT OF THE REPUBLIC
WHEREAS,
Congress has passed the following law:
Congress has passed the following law:
LAW OF THE PUBLIC SECTOR'S INDEBTEDNESS
FOR FISCAL YEAR 2002
Article 1: Purpose of the Law
1.1 This Law determines the ceilings, conditions and requirements for
External and Internal Indebtedness Transactions which may be decided or
guaranteed by the Central Government for the public sector during the
2002 fiscal year.
1.2 External Indebtedness is any financing operation which is subject to
reimbursement, including credit line guaranties, and allocations
contracted for the purchase of goods and services and in support of the
Balance of Payment, in excess of one year, agreed upon with individuals
or legal entities not domiciled in the country.
1.3 Internal Indebtedness is any transaction subject to reimbursement,
including line of credit guaranties, and allocations, contracted for
the purchase of goods and services and in support of the Balance of
Payment, in excess of one year, agreed upon with individuals or legal
entities domiciled in the country.
1.4 For the purposes of this Law, references made to Indebtedness will
imply External and Internal Indebtedness.
1.5 This Law also regulates fees paid and contributions made to
international financial organizations to which Peru belongs.
TITLE 1
GENERAL PROVISIONS
Article 2: Approval and amendments to Indebtedness Transactions
2.1 Indebtedness transactions included in this Law are approved by Supreme
Decree, with the favorable vote of Cabinet, countersigned by the
Minister of the Economy and Finance and by the Minister of the relevant
portfolio.
2.2 Amendments to Indebtedness Transactions approved within the cope of
this Law and previous legislation, will be authorized by Supreme
Decree, with the favorable vote of Cabinet, countersigned by the
Minister of the Economy and Finance and by the Minister of the relevant
portfolio.
2.3 Amendments made with regard to the period pertaining to the use,
reallocation or recomposition of expenses of changes in the entity or
organization responsible for the project's execution, where the
procedures are not contained in the respective Loan Agreements, will be
approved by Supreme Decree, with the favorable vote of Cabinet,
countersigned by the Minister of the Economy and Finance and by the
Minister of the relevant portfolio.
Article 3: Line of Credit Approval
3.1 Any lines of credit agreed to or guaranteed by the Central Government
during the 2002 fiscal period, will be approved by Supreme Decree, with
the, favorable vote of Cabinet, countersigned by the Minister of the
Economy and Finance.
3.2 The Minister of the Economy and Finance will allocate the funds
deriving from the Credit Lines, prior compliance with the provisions
contained in Article 6 of this Law.
Article 4: Financial Conditions of Indebtedness Transactions
The Ministry of the Economy and Finance will make sure that in the indebtedness
referred to in this Law, priority is given to concessions.
Article 5: State's Financial Agent and Loan Agreement Negotiations
5.1 Through the Public Debt Bureau, the Ministry of the Economy and Finance
will act as a Financial Agent in all Indebtedness transactions agreed
to or guaranteed by the Central Government, although the financial
agent may be changed through ministerial resolution from the Ministry
of the Economy and Finance with the favorable opinion of the Public
Debt Bureau,
5.2 All Loan Agreement negotiations related to Indebtedness transactions
will be carried out by the State's Financial Agent or official
appointed through Resolution of the Ministry of the Economy and
Finance. Anyone with opposing interests will not be able to participate
in the Indebtedness process.
Article 6: Requirement for approval of Indebtedness transactions agreed to or
guaranteed by Government
Indebtedness transactions agreed to or guaranteed by the Central Government must
be previously approved, with the following requirements:
a) Submission of application made by the Minister for the portfolio to
which the entity or organization responsible for the project is
related, together with a favorable technical and economic report.
In the case of local governments, the application must be made by the
person responsible for the unit, accompanied by a report showing
approval of the Board of the ministry related to the project, whenever
relevant.
b) Feasibility study in the case of an investment project.
c) Draft loan agreement.
The entity or organization responsible for the project will be responsible for
ensuring compliance with Requirements a) and b) of this article.
Article 7: Requirements for organizing financed public biddings
Entities needing to organize public biddings for the execution of a project
involving Indebtedness, must meet the following requirements:
a) Submission of application by the Minister of the portfolio to which
the entity or organization responsible for the project belongs,
together with the respective feasibility study and a favorable
technical and economic report substantiated in the said study.
In the case of local governments, the application must be made by the
person responsible for the unit, accompanied by a report showing
approval of the Municipal Council, together with the respective
feasibility study and a favorable technical and economic report
substantiated in the said study and the favorable opinion of the
ministry related to the project.
b) Resolution by the Ministry of the Economy and Finance approving the
financial terms under which the public bidding would be held, which
may only be issued once compliance with the provisions of the
preceding point have been accomplished.
Article 8: Reimbursement Reconciliation
8.1 Entities or organizations charged with the administration of
Indebtedness transactions are obliged to semi-annually reconcile with
the Public Debt Bureau of the Ministry of the Economy and Finance, any
disbursements received between June 30 and December 31 of the 2002
fiscal period, deriving from such transactions.
8.2 Such reconciliation must be made by July 31 of the 2002 fiscal period,
and January 31 of the 2003 fiscal period, at the most, under liability
of the respective entity or organization.
Article 9: Quarterly information on debt balances
Any Public Sector entity having engaged in Indebtedness operations, including
those not having received the guarantee of the Central Government, shall inform
the Public Debt Bureau of the Ministry of the Economy and Finance regarding the
balances owed at the close of each calendar quarter, within fifteen (15) days
subsequent thereto.
Article 10: Debt service
Payment of debt service operations:
a) The Central Government does it through the Public Debt Bureau of the
Ministry of the Economy and Finance, for which effect any Applications
financed other than by Ordinary Resources must transfer to the
Ministry of the Economy and Finance the financial resources to provide
such service, in accordance with the terms of the respective Loan
Agreements and/or the Transfer of Resources Contracts, in due case.
b) Entities not forming a part of the Central Government and performing
Indebtedness operations guarantee are obligated to pay for the
servicing of such operations directly under the responsibility of
their boards or equivalent organ, in accordance with the terms of the
Loan Agreements and current regulations. They must also send to the
Public Debt Bureau at the Ministry of the Economy and Finance,
information on the service effected within the eight (8) days
following such execution.
Article 11: Management commission
The Ministry of the Economy and Finance is authorized to charge an annual
management commission equal to 0. 1 % on the total of the balance owed for
Indebtedness operations arranged by the Central Government subject matter of a
resources transfer agreement, unless the final destination of such resources is
for the Central Government, Temporary Councils for Regional Administration or
Local Governments.
Article 12: Renegotiation of the public debt
12.1 Operations for renegotiating the Public Debt shall be approved by supreme
decree with the favorable vote of Cabinet countersigned by the Minister
of the Economy and Finance.
12.2 The corresponding information shall be sent to the Congress of the
Republic Budget and General Accounts Commission of the Republic within
forty-five (45) business days following the signing of each operation.
Article 13: Custody of documentation
The custody of the original contracts for Indebtedness operations agreed by or
guaranteed by the Central Government and renegotiations of the Public Debt shall
be the responsibility of the Public Debt Bureau of the Ministry of the Economy
and Finance.
Article 14: Risk coverage operations
14.1 The Public Debt Bureau of the Ministry of the Economy and Finance is
authorized to enter into risk coverage operations, including those
relating to the exchange rate and the interest rate for the Central
Government Debt. Risk coverage operations shall be approved by a
Ministerial Resolution of the Ministry of the Economy and Finance.
14.2 The corresponding information shall be sent to the Congress of the
Republic Budget and General Accounts Commission of the Republic within
forty-five (45) business days following the signing of each operation.
Article 15: Contributions, etc. to multilateral credit organisms
The Ministry of the Economy and Finance, through the Public Debt Bureau makes
contributions, signing of shares, donations and the respective payments to
multilateral credit organisms.
TITLE II
MAXIMUM AUTHORIZED AMOUNTS OF
EXTERNALINDEBTEDNESS
Article 16: Central Government
The Central Government is authorized to agree to or guarantee External
Indebtedness operations for up to an amount equivalent to US$2,000,000,000.00
(TWO THOUSAND MILLION US DOLLARS) for the following:
a) Investment of a productive nature supporting the production of goods
and the provision of services for up to US$ 200,000,000.00.
b) Social sectors up to US$ 275,000,000.00
c) National Defense up to US$ 25,000,000.00
d) Balance of payments support up to 1,500,000,000.00
TITLE Ill
MAXIMUM AUTHORIZED AMOUNTS OF
INTERNALINDEBTEDNESS
Article 17: Central Government
The Central Government is authorized to agree to or guarantee Internal
Indebtedness operations for up to an amount not exceeding S/. 2,300,000,000.00
(TWO THOUSAND THREE HUNDRED MILLION NUEVOS SOLES) which includes the issue of
bonds for up to S/.2,000,000,000.00 (TWO THOUSAND MILLION NUEVOS SOLES).
SUPPLEMENTARY PROVISIONS
TEMPORARY PROVISIONS
One: The Ministry of the Economy and Finance is authorized, through the Public
Debt Bureau, to enter into with private sector companies . agreements for the
reprogramming of debts proceeding from guarantees by the Republic or a state
company, included in the agreements made by the Peruvian State with external
creditors which have not been deposited in accordance with the provisions of
Supreme Decree No. 175-83EFC, published on May 15, 1983 and Supreme Decree No.
260-86-EF, published on August 8, 1986; the said Ministry is also authorized to
obtain the legal advice necessary for such effect.
The said reprogramming agreements shall be approved by a supreme decree
countersigned by the Minister of the Economy and Finance.
Two: The State companies included in the private investment promotion process in
accordance with Legislative Decree No. 674, its amendments and other regulations
which by the express agreement of the Private Investment Promotion Committee -
COPRI, are subject to the private activity regime, as well as companies which
have been transferred to the Private Sector where the State holds shares, must
send to the Public Debt Bureau of the Ministry of the Economy and Finance and to
the Congress of the Republic Budget and General Accounts Commission of the
Republic, information on the Indebtedness operations carried out within eight
(8) days subsequent to the perfectioning thereof.
Three: The assumption of the debts of State companies subject to the private
investment promotion process referred to in Legislative Decree No.674, the
amendments thereof and other regulatory measures shall be approved at the
proposal of the Private Investment Promotion Commission COPRI, subsequent to
favorable report by the Public Debt Bureau and the General Juridical Advisory
Office of the Ministry of the Economy and Finance, and the National Financing
Fund of State Business Activity FONAFE- by supreme decree countersigned by the
Minister of the Economy and Finance.
Four: Of application are the provisions set forth in Article 33 of Supreme
Decree No. 070-92-PCM, published on July 17, 1992, which has been amended by
Article 1 of Supreme Decree No. 033-93-PCM, published on May 15, 1993, in the
sense that expenses imputable, directly or indirectly to the private investment
promotion process, include obligations assumed by the State in order to help
privatized companies.
Likewise, the provisions set forth in the previous paragraph shall apply in the
case of concession processes effected within the framework of the Sole Ordered
Text for Regulations Ranking as Law and Regulating the Granting of Concessions
to the Private Sector of Public Infrastructure Works and Public Services,
approved by Supreme Decree No. 059-96-PCM, published on December 27, 1996.
Five: During the effect period of this Law, the use of resources originating in
the process regulated by Legislative Decree No. 675 and its amendments shall be
increased, so that they may also be used by the Ministry of the Economy and
Finance to serve Foreign Public Debt.
Six: The Ministry of the Economy and Finance is hereby empowered to carry out
conversion of Foreign Debt into sectors, environmental protection and relief to
what causes extreme poverty as well as conversion of Foreign Debt to Investment.
Bilateral considerations applicable to these transactions as well as
transactions which are not likely to be taken into account within the respective
scope, will be approved by Supreme Decree, countersigned by the Minister of the
Economy and Finance.
Within a term of forty-five (45) days, the Ministry of the Economy and Finance
will submit a report on such transactions to Congress of the Republic General
Budget and Accounts Commission of the Republic.
Seven: Transactions pertaining to the Indebtedness of Decentralized Entities and
State Corporations not bearing a guaranty from the Central Government will be
approved by resolutions expressly adopted to that effect by their Boards of
Directors or equivalent bodies, prior authorization by Supreme Resolution,
countersigned by the Minister of the Economy and Finance and by the minister of
the corresponding portfolio.
Once Indebtedness transactions are made, they must be reported to the Public
Debt Bureau, the Ministry of the Economy and Finance, within fifteen (15) days
subsequent to the perfectioning thereof.
Eight: Indebtedness transactions carried out by the local governments not
bearing guaranty by the Central Government will be governed by the provisions of
the third paragraph in Article 75 of the Peruvian Political Constitution,
express note of which will be inserted in the corresponding agreement.
Nine: The Central Government is hereby authorized to guarantee Indebtedness
transactions to finance local government development and community service
investments, which as a whole, will not exceed US$100,000,000 (One hundred
million US Dollars), out of the amount approved in Item b) in Article 16 of this
Law.
Ten: The Ministry of the Economy and Finance is hereby authorized to apply the
provisions of Legislative Decree 844 with respect to the debt of public
corporations under liquidation excluded from the process for the Private
Investment Promotion process regulated by Legislative Decree 674 and amendments,
which may have been assumed by the State.
Eleven: In order to facilitate the hiring of the services related to the
processes required for carry out risk hedge transactions as well as for the
issuing of domestic and foreign obligations, the Ministry of the Economy and
Finance is exempted from the prescriptions of the Sole Ordered Text of the
Government Purchasing and Contracting Law, approved by Supreme Decree
012-2001-PCM, and the Regulations thereof, approved by Supreme Decree
013-2001-PCM, published on February 13, 2001, authorizing it to directly hire
such services.
Within twenty-five (25) days from the date when such contracts were entered
into, the Ministry of the Economy and Finance must submit the corresponding
information to the General Budget and Accounts Commission of Congress.
Twelve: The additional subscription of the authorized capital of the
Inter-American Investment Corporation - IIC is hereby approved, within the
framework of the general increase of the corporation's funds, approved by the
General Governors' Assembly by Resolution ClYAG-5199, with the Executive Branch
of government, on behalf of the Peruvian State being authorized to subscribe
additional shares amounting to US$5,520,000 (Five million five hundred and
twenty thousand US Dollars).
Thirteen: The Fifth Replenishment of Funds of the International Farming
Development Fund - FIDA is hereby approved, as set out in Resolution 119/XXIV of
the Governors' Board, with Peru being responsible for a contribution of
US$200,000.00 (Two hundred thousand US Dollars).
FINAL PROVISIONS
Sole Provision: This Law comes into force on January 1, 2002.
Let it be reported to the President of the Republic for decreeing.
Lima, November 29, 2001.
Carlos Ferrero
President of Congress
Henry Pease Garcia
First Vice-President of Congress
TO THE CONSTITUTIONAL PRESIDENT OF THE REPUBLIC
Let it be published and complied with.
Issued at Government House, on December 4, 2001
Alejandro Toledo
Constitutional President of the Republic
Pedro Pablo Kuczynski
Minister of the Economy and Finance
TITLE Ill
ECONOMIC REGIME
CHAPTERI
GENERAL PRINCIPLES
Article 58: Private initiate is free. It is exercised within a market economy.
Under this regime, the State guides the development of the country, and acts
mainly in the areas for the promotion of employment, health, education,
security, public services and infrastructure.
Article 59: The State encourages the creation of wealth and guarantees freedom
of work and freedom of company, trade and industry. The exercise of these
freedoms must not be damaging to morality, health or public safety. The State
provides opportunities for improvement to any sectors suffering from inequality;
thus, it promotes small enterprise in all its modalities.
Article 60: The State recognizes economic plurality. The national economy is
sustained by the coexistence of different types of ownership and enterprise.
Only authorized by express law, the State may perform on a public
interest or manifest national convenience.
Business activity, whether public or not, receives the same legal
treatment.
Article 61: The State facilitates and invigilates free competition. It combats
any practice limiting this and the abuse of dominant or monopolistic positions.
No law or agreement may authorize or establish monopolies.
The press, radio, television and other means of expression and social
communication, and generally, companies, goods and services connected with the
freedom of expression and communication may not be the object of exclusiveness,
monopoly, or hoarding, whether directly or indirectly, by the State or private
individuals.
Article 62: Freedom to contract guarantees that the parties may enter into valid
agreements according to the regulations in force at the time of the contract.
Contractual terms may not be altered by laws or other provisions of any kind.
Disputes arising from the contractual relationship may only be resolved by
arbitration or in the courts, under the forth in the contract or contemplated by
law.
By contract or law, the State may establish guarantees and grant
securities. These may not be legally modified without prejudice to the
protection referred to in the preceding paragraph.
Article 63: National and foreign investment are subject to the same conditions.
The production of goods and services and foreign trade are free. If another
country or countries adopt(s) protectionist or discriminatory measures damaging
to the national interest, the State may in defense thereof, adopt similar
measures.
In any contract entered into by the State and public law persons with
domiciled foreigners must be recorded their subjection to the laws and
jurisdictional organs of the Republic and their waiver of any diplomatic claims.
Contracts of a financial nature may be exempted from national jurisdiction.
The State and other public law persons may submit controversies
deriving from the contractual relationship to tribunals constituted pursuant to
existing treaties. They may a1S.o submit them to national or international
arbitration, or as established by law.
Article 64: The State guarantees the free holding and disposal of foreign
currency.
Article 65: The State defends the interests of consumers and users. For such
effect, it guarantees the right to information on the goods and services at its
disposal in the market. It also oversees in particular the health and security
of the people.
CHAPTER II
ENVIRONMENT AND NATURAL RESOURCES
Article 66: Natural resources, both renewable and non-renewable, are the
property of the Nation. The State is sovereign as to their use.
The conditions for their use and granting to private individuals are
determined by organic law. Any such concession grants to the holder a real
right, subject to the said legal regulation.
Article 67: The State determines national environment policy. It promotes the
sustainable use of its natural resources.
Article 68: The State is obligated to promote the conservation of biological
diversity and the natural areas protected.
Article 69: The State promoted the sustainable development of the Amazon region
with appropriate legislation.
CHAPTER III
OWNERSHIP
Article 70: The right of ownership is inviolable. The State guarantees this. It
is exercised in harmony with the common good and within the limits of the law.
No one may be deprived of his or her property except exclusively for reasons of
national security or public need, declared by law, and after the payment in cash
of fair indemnification including compensation for any possible prejudice.
Action may be brought before the Judiciary in order to contest the property
value set by the State in the expropriation procedure.
Article 71: With respect to property, foreigners, whether natural persons or
legal entities, have the same rights as Peruvians, without in any case, being
able to claim exceptions or diplomatic protection.
However, within fifty kilometers of the national boundaries, foreigners
may not acquire or possess under any title whatsoever, mines, land, woods,
waters, fuel or energy sources, either directly or indirectly, individually or
in company, under penalty of losing, to the State, the right thus acquired.
Excepted is the case of public necessity expressly declared in a supreme decree
approved by the Council of Ministers pursuant to law.
Article 72: The law may, only by reasons of national security, temporally
establish specific restrictions and prohibitions for the acquisition,
possession, exploitation and transfer of given property.
Article 73: Property in the public domain is unalienable and imprescriptible.
Property of public use may be granted to private individuals in accordance with
the law for its economic use.
CHAPTER IV
TAX AND BUDGET REGIME
Article 74: Taxes are created, amended or repealed, or exemptions are
established, exclusively by law or legislative decree in the event of the
delegation of powers, except for tariffs and rates, which are regulated by
supreme decree.
Local governments may create, amend or rates, or make exemptions,
within their jurisdictions with the limits established by law. The State, when
exercising its taxation powers, must respect the legal reserves principles, the
principles of equality and respect for the fundamental rights of the person. No
tax may have a confiscatory effect.
Emergency decrees may not contain tax matters. The laws concerning
annual taxes govern as from January first of the year following their
promulgation. Budget laws may not contain regulations on tax matters.
Tax regulations passed in violation of the provisions hereof shall not
be of effect.
Article 75: The State only guarantees the payment of the public debt entered
into by constitutional governments in accordance with the Constitution and the
law.
The State's domestic and foreign debt operations must be approved
according to the law.
Municipalities may enter into credit operations charged to their own
resources and property without requiring legal authorization.
Article 76: Works and the acquisition of supplies with the use of public funds
and resources must be obligatorily executed'. by contract and public bidding, as
must also the acquisition or alienation of property.
The contracting of services and projects whose importance and worth
indicated by the Budget Law shall be public contest. The law establishes the
procedure, exceptions and the respective responsibilities.
Article 77: The State's economic and financial management is governed by the
budget annually approved by Congress. The structure of the public sector budget
contains two sections: central government and decentralized bodies.
Thee budget assign public resources on a fair basis. Their programming
and execution respond to the criteria of efficiency, basic social needs and
decentralization.
Each respective area, pursuant to law, will receive a fair share of the
income tax received through the exploitation of natural resources, as its canon.
Article 78: The President of the Republic sends to Congress the Budget Law draft
within a period ending on August 30, each year.
On the same date, he also sends the debt and financial equilibrium
bills
The budget draft must be truly in balance.
Loans form the Central Reserve Bank or Banco de la Nacion are not
accounted as fiscal income.
Permanent expenditure may not be covered by loans.
The budget may not be approved without an entry for servicing the
Article 79: The representatives to Congress are not entitled to create or
increase public expenditure, except with reference to their budget.
The Congress may not approve tributes with predetermined purposes,
except at the request of the Executive Power.
In all other cases, the tax laws referring to benefits or exemptions
required the prior report of the Ministry for the Economy and Finance.
Only by an express law, approved by two thirds of the members of
Congress, may special taxation treatment for a given area of the country be
selectable and temporarily established.
Article 80: The Minister for the Economy and Finance submits the claim to the
Congress in Plenary. Each Minister shall defend the expenses for his sector. The
President of the Supreme Court, the Attorney General and the President of the
National Elections Board shall defend the corresponding demands of each
institution.
If the original signed Budget Law is not sent to the Executive by
November thirtieth, the Draft of the Executive Power will come into force, same
which is promulgated by Legislative Decree.
Supplementary credits, payments and entry transfers shall be processed
through Congress as determined by the Budget Law. During the recess of
Parliament they will be processed by the Permanent Commission. In order to them
be approved, they require the votes of three fifths of the legal number of
members.
Article 81: The General Account of the Republic, accompanied by the Comptroller
General's Office Audit Report is sent by the President of the Republic to the
Congress within a period terminating at the latest on November fifteenth of the
year following the execution of the budget.
The General Account is examined and determined by a review commission within the
ninety days following its submission. Congress shall issue its verdict within
thirty days. If Congress does not issue a verdict within the period indicated,
the report of the Review Commission shall be sent to the Executive Power so that
the Executive Power may promulgate a legislative decree containing the General
Account.
Article 82: The Comptroller General's Office of the Republic is a public law
decentralized entity with autonomy pursuant to its organic law. It is the senior
organ of the National Control System, It supervises the legality of the
execution of the State Budget, public debt operations and the acts of
institutions subject to control.
The Comptroller General is appointed by Congress on the proposal of the
Executive for seven years. He may be removed by Congress for serious offense.
CHAPTER V
CURRENCY AND BANKING
Article 83: The law determines the monetary system of the Republic. The issue of
bills and coins is the exclusive power of the State. This is exercised ' through
the Central Reserve Bank of Peru.
Article 84: The Central Bank is a public law artificial person. It is autonomous
within the framework of its Organic Law.
The purpose of the Central Bank is to preserve monetary stability. Its
functions are: to regulate the currency and credit in the financial system,
manage the international reserves under its charge, and the other functions
indicated by its organic law.
The Bank informs the country, with exactitude and periodically,
regarding the state of the national finances under the responsibility of its
Board.
The Bank is prohibited from granting financing to the Treasury, except
for the purchase in the secondary market of securities issued by the Public
Treasury, within the limits indicated by its Organic Law.
Article 85: The Bank may carry out operations and make credit agreements in
order to cover temporary imbalances in the position of international reserves.
It requires authorization by law when the amount of such operations or
agreements exceeds the limit indicated by the Public Sector Budget with the
obligation to report to Congress.
Article 86: The Bank is governed by a Board of seven members. The Executive
Power appoints four, among them the Chairman. Congress ratifies the Chairman and
appoints the other three, with an absolute majority of the legal number of its
members.
All Bank members are appointed for the constitutional period
corresponding to the President of the Republic. They do not represent any
particular entity or private interest. Congress may remove them for serious
offenses. In the event of a removal, the new directors shall complete the
corresponding constitutional period.
Article 87: The State encourages and guarantees saving. The law establishes the
obligations and limits of companies receiving savings from the public, as well
as the mode and scope of such guarantee.
The Superintendency of Banking and Insurance exercises control over
banking and insurance companies, and others receiving deposits from the public
and others which, carrying out similar or related operations, are determined by
law.
The law establishes the organization and functional autonomy of the
Superintendency of Banking and Insurance.
The Executive appoints the Superintendent of Banking and Insurance for
the period corresponding to its constitutional period. This is ratified by
Congress.
CHAPTER VI
AGRARIAN REGIME AND PEASANT AND NATIVE COMMUNITIES
Article 88: The State preferentially supports agrarian development. It
guarantees land property rights, both private or communal, or any other form of
association. The law may fix the limits and extension of the land according to
the peculiarities of each area.
Abandoned land, as provided by law, passes into the ownership of the
State for subsequent sale.
Article 89: The Peasant and Native Communities are of legal existence and legal
persons.
They are autonomous in their organization, communal work and in the use and free
disposal of their land as well as with respect to economic and administrative
matters, within the framework ownership of their land is imprescriptible, except
in the case of abandonment set forth in the previous article.
The State respects the cultural identity of Peasant and Native
Communities.
Exhibit F
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[LETTERHEAD OF CLEARY, GOTTLIEB, STEEN & HAMILTON]
Writer's Direct Dial: (212) 225-2982
E-Mail: ccorrales@cgsh.com
November 7, 2002
The Republic of Peru
Ministry of Economy and Finance
Jr. Junin, 319
Lima 1
Peru
Ladies and Gentlemen:
We have acted as special United States counsel to the Republic of Peru
(the "Republic") in connection with the preparation and filing by the Republic
with the Securities and Exchange Commission (the "Commission") under Schedule B
of the Securities Act of 1933, as amended (the "Securities Act"), of a
registration statement filed on the date hereof (the "Registration Statement")
and the form of Fiscal Agency Agreement filed as an exhibit thereto (the "Fiscal
Agency Agreement"), pursuant to which the Republic proposes to issue and sell
from time to time up to $500,000,000 aggregate principal amount of its debt
securities (the "Debt Securities"), warrants and/or units. Capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Registration Statement.
We have examined and relied on the originals or copies, certified or
otherwise identified to our satisfaction, of such instruments and other
documents, and we have made such investigations of law, as we have deemed
appropriate, as a basis for the opinion expressed below.
Based on the foregoing and subject to the further assumptions
and qualifications set forth below, it is our opinion that when (i) the Fiscal
Agency Agreement under which the Debt Securities are issued has been duly
authorized by the Republic and duly executed and delivered by the parties
thereto; (ii) an Authorization Certificate, substantially in the form filed as
an exhibit to the Fiscal Agency Agreement, establishing the terms of a series of
the Debt Securities has been duly authorized by the Republic and duly executed
and delivered by the Republic in accordance with the Fiscal Agency Agreement;
and (iii) the Debt Securities, in substantially the form set forth as an exhibit
to the Fiscal Agency Agreement and annexed to the Authorization Certificate,
have been duly authorized by the Republic and duly executed and authenticated in
accordance with the Fiscal Agency Agreement, and duly delivered and paid for by
the purchasers thereof, such Debt Securities will constitute valid, binding and
enforceable obligations of the Republic, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, to general
principles of equity and to possible judicial action giving effect to foreign
governmental actions or foreign laws affecting creditors' rights.
In giving the foregoing opinion, we have assumed that (a) the Republic
and each other party to the Fiscal Agency Agreement will at the time it is
executed satisfy those legal requirements that are applicable to it to the
extent necessary to make such agreement or obligation enforceable against it
(except that no such assumption is made as to the Republic regarding matters of
the federal law of the United States of America or the law of the State of New
York), (b) any terms of the Debt Securities that are not contained in the forms
thereof set forth as an exhibit to the Fiscal Agency Agreement will comply with
applicable law and will be valid, binding and enforceable, and (c) the interest
rate on the Debt Securities will not exceed the maximum rate permitted by
applicable law. In addition, we note that the enforceability in the United
States of the waiver by the Republic of its immunities from court jurisdiction
and from legal process, as set forth in the Fiscal Agency Agreement and the Debt
Securities, is subject to the limitations imposed by the United States Foreign
Sovereign Immunities Act of 1976.
The foregoing opinion is limited to the federal law of the United
States of America and the law of the State of New York. In particular, to the
extent that the law of Peru is relevant to the opinions expressed above, we
have, without making any independent investigation, assumed the correctness of,
and our opinion is subject to any qualifications, assumptions and exceptions set
forth in, the opinion of the Chief of the General Office of Legal Counseling at
the Ministry of Economy and Finance of the Republic, dated the date hereof and
included as Exhibit E to the Registration Statement filed as of the date hereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement filed on the date hereof and to the references to us
under the heading "Validity of the Securities" in the prospectus included in the
Registration Statement filed on the date hereof. In giving such consent, we do
not thereby admit that we are experts with respect to any part of the
Registration Statement, including this exhibit, within the meaning of the term
"expert" as used in the Securities Act, or the rules and regulations of the
Commission issued thereunder.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By: /s/ Carmen A. Corrales
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Carmen A. Corrales, a Partner