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Peru eyes financing, but Fed credit 'unlikely'

Peru eyes financing, but Fed credit 'unlikely'

Peru could seek financing from multilateral lenders to maintain growth in 2009 despite the economic crisis, but will probably not land credit from the U.S. Federal Reserve or China's central bank, Finance Minister Luis Valdivieso said Thursday.
The Andean nation also will lobby Asian and Middle Eastern countries to purchase 30-year government bonds to extend the length of its average debt obligations, Valdivieso told foreign reporters. He did not say how much debt Peru hopes to issue.
Valdivieso said Peru, like Chile, has requested U.S. dollar liquidity aid similar to the $30 billion in currency swap lines that the Fed granted Brazil, Mexico, Singapore and South Korea in October.
But such a deal is "unlikely," he added, because "we are small countries." Talks with China "are more advanced," but also not likely to bear fruit.
Valdivieso said Peru is maintaining open lines of credit with multilateral lenders such as the International Monetary Fund and the Inter-American Development Bank as a precaution against the deepening global credit crunch.
But he added that the nation is in better position to withstand the economic downturn than before, after reaping the benefits of high commodity prices during seven straight years of growth. Peru holds $32 billion in U.S. dollar reserves, according to the minister, compared with $30 billion in public debt.
"Before, we were net debtors," Valdivieso said. "For basically the first time in Peru's modern history, we could pay off all our internal and external debt and we'd have money left over."
Peru's government is aiming for 6 percent GDP growth in 2009, down from an estimated 9.1 to 9.3 percent last year.