Peru Weighs Fiscal Stimulus as Oil Nears US$90 a Barrel

PERU · ECONOMY

Elmer Cuba says only Peru and Uruguay in the region have the fiscal strength to spend against the shocks.

Peru is weighing fiscal stimulus to protect growth from costlier oil and rising global interest rates, Finance Minister Elmer Cuba said. On Wednesday, 7 October, he told a Peruvian-Japanese business council that fiscal policy “will have to be expansionary.”

For US investors, the shift means more state spending in a copper economy that hosts NYSE-listed Southern Copper’s Tía María project. It comes as the US 10-year Treasury yield stood at 5.28% on Wednesday, against 4.14% a year earlier.

What Cuba Told Business Leaders

Cuba heads the Ministry of Economy and Finance under President Keiko Fujimori of the conservative Fuerza Popular party. He spoke to the Consejo Empresarial Peruano Japonés, a council of Peruvian and Japanese firms, the ministry said.

“Fiscal policy cannot be neutral: it will have to be expansionary,” Cuba said, so that the economy does not lose momentum. He said the ministry is weighing measures against the external shocks, alongside steps already under way for El Niño.

He said sectors outside mining and other raw materials face two global blows on top of El Niño. One is the worldwide jump in oil and diesel prices, and the other is central banks raising interest rates.

Cuba said the government will choose public works that are close to completion and can have the fastest impact. “The watchword is to be counter-cyclical, but with a strong sense of urgency to revive activity,” he said.

He argued that Peru’s solid finances make the effort possible, and that only Peru and Uruguay in the region can afford it. He gave no figure for the size or cost of the fiscal stimulus.

Oil and Interest Rates Behind the Shift

West Texas Intermediate, the US crude benchmark, traded at US$89.44 a barrel on Tuesday, 6 October, central bank data show. That is about 45% more than the US$61.69 of a year earlier.

Peru’s central bank held its benchmark rate at 4.25% on Wednesday and flagged volatile oil prices and Middle East tensions as risks. Annual inflation rose to 4.5% in September from 4.4% in August, above the bank’s 1% to 3% target range.

In the United States, the 10-year Treasury yield closed Wednesday at 5.28%, Treasury Department data show. Higher US yields tend to lift borrowing costs for emerging-market governments and companies, Peru’s included.

A US$64 Billion Mining Pipeline

Cuba said Peru has 66 mining projects worth US$64 billion in its portfolio. Eight are under construction, with planned investment of about US$7.1 billion.

The ministry named Tía María plus replacement projects at the Ferrobamba, Antamina, Inmaculada and San Rafael operations. Replacement projects are meant to keep existing mines producing as older reserves run down.

Tía María belongs to Southern Copper, which trades on the New York Stock Exchange and is 88.9% owned by Grupo México. Its latest quarterly filing says the project in the southern Arequipa region was 42% complete on 30 June.

The company expects Tía María to start in the second half of 2027, with capacity for 120,000 tonnes of cathodes a year. Copper traded at about US$6.58 a pound in London on 6 October, up from US$4.81 a year earlier, central bank data show.

US$34 Billion in Concessions

Cuba said the government expects 89 public-private partnership and asset projects worth about US$34.4 billion in 2026–2030. Such concessions let private firms build or run roads, ports and utilities under long-term contracts.

He said the executive is pushing reforms to speed up private investment and expects to relaunch a national competitiveness plan. He named tourism, financial services and real estate as untapped niches for investors.

What It Means for You

For holders of Peruvian government bonds, extra spending could widen the deficit and raise borrowing needs. Cuba told Congress’s budget committee on Monday, 5 October, that the deficit was near 1% of GDP through August, El Comercio reported.

He said that left room below the 2026 ceiling of 1.8% of GDP. For Southern Copper shareholders, Tía María now features in the minister’s own pitch to foreign investors.

For US exporters and contractors, faster public works and a large concession pipeline may bring more bidding chances. Higher fuel prices also show up in Peru’s inflation, which shapes the central bank’s next rate moves.

What Is Not Known

The ministry did not say how large the fiscal stimulus will be, how it will be funded or when it starts. It also did not list the public works it plans to speed up.

It is not clear whether the measures need approval from Congress, or whether the 1.8% deficit ceiling will change. Cuba did not name the central banks whose rate rises he had in mind.

What Comes Next

Cuba defended a separate S/8.228 billion (about US$2.4 billion) supplementary budget before Congress on Monday, 5 October. Any new measures would come on top of that request, converted here at the central bank rate of S/3.44 per US dollar.

Peru’s central bank meets next on 12 November to review its policy rate, the state news agency Andina reported. The minister’s remarks do not mean new spending has been approved.

Frequently Asked Questions

Who is Elmer Cuba?

Elmer Cuba is Peru’s minister of economy and finance under President Keiko Fujimori. He oversees the national budget and public debt.

What did Peru’s finance minister announce?

He said on 7 October that fiscal policy will have to be expansionary to offset costlier oil and rising global interest rates. He gave no size, cost or start date for the measures.

Why does Peru’s fiscal stimulus matter to US investors?

Peru is a major copper exporter and hosts projects of NYSE-listed Southern Copper. More spending can support growth but may also widen the deficit, which bond investors watch.

What is the Tía María project?

Tía María is a Southern Copper copper project in Peru’s Arequipa region, built to produce 120,000 tonnes of copper cathodes a year. The company expects it to start operating in the second half of 2027.

How big is Peru’s mining pipeline?

The finance ministry counts 66 mining projects worth US$64 billion. Eight are under construction, with about US$7.1 billion of planned investment.

Sources: Ministry of Economy and Finance of Peru; Central Reserve Bank of Peru, WTI oil price; Central Reserve Bank of Peru, copper price; Central Reserve Bank of Peru, exchange rate; US Department of the Treasury, daily yield curve; Southern Copper, Form 10-Q; Andina, MEF remarks; Andina, central bank decision; El Comercio (all accessed 8 October 2026).