PERU SAYS IT INTENDS TO DEEPEN DEBT STANCE
President Alan Garcia said he sought to
deepen Peru's hard-line foreign debt stance, possibly by
limiting repayments to the World Bank.
    In a televised address tonight, he criticised the World
Bank for making Peru make larger debt payments than the amount
the bank is willing to make in new loans. "We will deepen our
policy on the foreign debt," he said.
    Peru has limited foreign debt repayments to 10 pct of
export earnings, effectively suspending most remittances due
foreign private banks and many governments. It has generally
been current for most of Garcia's 20 months in office on
payments to the World Bank and the Inter-American Development
Bank.
    But tonight Garcia said: "We have met our aim of limiting
the payment of the debt and will limit it also even though
organisations like the World Bank have credits which oblige us
to buy a certain type of machinery and to build certain types
of public works and not others, and to pay much more in dollars
than that which they are willing to newly lend us."
    The Economy Ministry said last year it owed the World Bank
about 520 mln dlrs in loans out of the country's 14 billion dlr
debt.
    Garcia said his government had been a model for Latin
America because Peru had enjoyed growth in gross domestic
product (GDP) last year of nine pct while taking its hard line
on debt. He said GDP would grow by at least six pct this year.
    He announced an immediate 40 pct rise in the minimum wage
to 1,260 intis per month, benefiting the 1.3 mln minimum-wage
workers out of a total labour force of 6.7 mln.
    Salaries will go up this month by 30 pct for civil servants
and 27 pct for those workers earning above the minimum wage but
not covered by collective bargaining agreements.
    He also said the price of petrol, frozen since August 1,
1985, would increase by 20 pct from the current 17.5 intis per
U.S. Gallon and remain at the new level for the rest of the
year. He did not say when this increase would be effective.
    Taxes on petrol are the government's leading revenue
earner, traditionally accounting for about one-third of taxes.
Sales taxes on autos, liquour and cigarettes would also go up,
he said, without specifying the amount.
    Garcia announced the government would encourage Peruvians
to repatriate their savings deposited abroad by paying a 15 pct
premium above the market exchange rate.
    The inti's official buy-sell rate against the dollar is
14.85/92 and the free rate is about 21.70/80.
    To encourage private investment, he said the government
would set up a special fund with which it would match every two
intis of private investment with one inti from the government.
    He also said his dismissal of Peruvian Air Force Commander
Lieutenant General Luis Abram Cavarellino yesterday
strengthened the democratic authority of his government.
 REUTER
