Peru's path to recovery: a plan for economic stabilization and growth
For the past fifteen years Peru has suffered a profound and lasting economic crisis that threatens the stability of the country's fragile democratic system. Economic mismanagement has led to plummeting per capita income, accelerating inflation - an annualized rate of nearly 3,000 percent by 1989 - and widespread social upheaval. This study by experts in the United States and Latin America offers a coherent proposal for economic stabilization and structural adjustment to restore economic growth--but growth with equity--to this distressed country.The contributors provide background analysis and thorough diagnosis of Peru's economic problems. They explain how inconsistent populist policies and the ensuing economic crisis have caused the standard of living to deteriorate dramatically, paving the way for significant expansion of social violence, political instability, and isolation from the international financial community.Peru's Path to Recovery offers an adjustment program that is sound but also is complemented by a social support program to assist the poor - those who have suffered the most from previous disadjustment. This combination makes the program both equitable and politically sustainable. With the inauguration of Alberto Fujimori, Peru has the opportunity to embrace a new economic strategy to stabilize the economy, curtail the extreme poverty, and reduce the massive unemployment and underemployment. Such a course will not be easy: patterns of government, business, and social behavior will have to change. But through such changes Peru can hope to become a stable, thriving country once more.
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In the Aftermath of Hyperinflation 299
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achieve activities adjustment administration agricultural allocation arrears average balance of payments Bolivia budget capital Central Bank commercial banks consumption costs country's creditors crisis debt service depreciation devaluation distortions dollars domestic credit economic policy effect efficient eliminate expenditures exports external financing fiscal deficit fiscal revenues foreign debt foreign exchange foreign exchange market foreign trade funds government's growth hyperinflation implemented imports income increase inflationary initial institutions International Monetary Fund international reserves labor force loans long-term macroeconomic macroeconomic policy medium-term ment million monetary base monetary policy multilateral needs nominal percent of GDP Peru Peru's Peruvian population private sector problems production projects proposed public investment public sector quasi-fiscal real exchange rate real interest rates real wages reduced reform relative prices require restrictions short-term Social Emergency Program stabilization program strategy structure subsidies sustained tariff tax revenues tion trade liberalization workers World Bank