Andean Group - December 2007 (ISSN 1741 4466)

Congress approved a budget of N$71.05bn (US$23.68bn) for 2008.

The big increase was in education spending. Another notable provision allows both the interior ministry and the defence ministry to change their budgets over the next three months. The education ministry is trumpeting the fact that the federal government will increase its annual grant to each rural classroom from N$1,500 (US$500) to N$2,250. The government is also saying that it will increase the number of teachers in the public system from 5,000 to 9,418.

Overall, the budget envisages a 15% increase in spending. The assumptions for 2008 are: economic growth of 6.2%; a fiscal deficit of 0.3% of GDP, and a 2% inflation rate.

In the third quarter of 2007, the country ran a fiscal surplus of 2.2% of GDP, up 0.7 of a percentage point on the comparable figure for 2006.

GDP: The government expects the country's GDP to hit US$140bn by 2011, when Garcí­a's administration ends. The government reckons that GDP growth in 2007 will be around 8%. Jorge del Castillo, the prime minister, said that the 2011 figure would be the result of US$100bn in private sector investment and US$30bn in public sector investment. Del Castillo said that by 2011, the poverty rate should have fallen to around 30% of the population. Currently it stands at almost 45%.

Inflation: According to the National Statistics Institute in Lima, consumer prices rose 0.1% in November, compared with 0.3% the month before.