Peru’s economy, a beacon of resilience through years of political chaos, is now staring down a crisis of its own making. On October 21, 2025, the nation’s Fiscal Council, an independent financial watchdog, sounded the alarm: Congress’s reckless spending could unravel decades of stability.
Since 2021, lawmakers have passed 229 bills that strain public finances triple the average since 2006. With 352 more bills pending, Peru’s economic “crown jewel” is at risk.
Alonso Segura, former finance minister and council head, didn’t mince words. “These bills are budget-busters,” he said at a press conference unveiling a dire fiscal report.
Ten proposals alone could cost 25 billion soles ($7.35 billion) annually, potentially pushing the 2025 fiscal deficit to 5.5% of GDP more than double the government’s 2.2% goal. Last year’s 3.5% deficit, the worst since 1992 outside the pandemic, already stretched resources thin.
Political Turmoil Fuels Fiscal Chaos
Peru’s political rollercoaster marked by the recent ousting of President Dina Boluarte and the rise of President Jose Jeri until July 2026 hasn’t helped.
But the real danger lies in Congress’s spending frenzy. The council warns public debt could climb to 40% of GDP in a decade, up from 32% now, as expenses outstrip income.
“Our stability is Peru’s greatest strength, and it’s in peril,” said council member Diego Macera, a central bank director.
The nation, projecting 3.5% growth in 2025 after 3.3% last year, faces a make-or-break moment.
What’s Driving the Surge?
The 229 laws since 2021 include public wage hikes and costly new programs, with the 352 pending bills doubling down on populist promises.
Segura warned that approving them could spark a debt crisis, scaring off investors and jacking up borrowing costs. “These expenses don’t fit our budget,” he said, urging vetoes and tighter controls.
The council’s analysis, grounded in economic forecasts, paints a grim picture: without restraint, Peru’s growth could stall, and its reputation for fiscal prudence could crumble. With elections looming, lawmakers seem more focused on votes than viability.
Peru’s Resilient Past
Peru has long defied political storms, from coups to protests, thanks to careful financial management. Foreign investors have flocked to its stability, but this legislative overreach threatens to change that. A ballooning deficit could signal trouble, pushing Peru toward economic uncertainty.
The Fiscal Council, created to protect public funds, is shouting its loudest warning yet. Its independence gives credibility, but Congress holds the reins and the checkbook.
Urgent Calls for Restraint
Segura demanded cross-party action to curb spending. “We need long-term thinking, not short-term populism,” he said.
Experts suggest tax reforms and leaner budgets to balance the books. President Jeri’s new administration faces a tough road, needing to wrangle Congress into line while public pressure mounts.
Early signs show Jeri pushing for fiscal discipline, but lawmakers’ resistance could drag out the crisis. Peruvians, fed up with uncertainty, are rallying online for smarter policies.
Saving the Crown Jewel
Peru’s economic success story hangs in the balance. The Fiscal Council’s warning is a clarion call: stop the spending spree, or lose what’s made Peru shine.
As debt creeps up and deficits loom, Congress must choose prudence or peril. With the world watching, the nation’s next moves will decide if its crown jewel sparkles or fades.
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