May 1, 2001
The hard times Peru's corporate sector has suffered over the last few years have inevitably left their mark on the country' financial system. The system's principal actors - banks, pension funds and the local stock market - are all under pressure because of economic weakness.
Banks' loan portfolios have deteriorated and forced them to increase provisions. This naturally makes them reluctant to lend more to troubled companies. Private pension funds scramble to hold paper issued by a dwindling number of highly rated borrowers, which in turn diminishes liquidity on the Lima bolsa.
Growing political uncertainty has further hindered hopes of an economic recovery, but the country's b
The financial system has survived a period of great uncertainty almost intact. But liquidity is slipping away from the stock market, depriving the pension funds of investment opportunities.