Peru

Peru’s development from the turn of the millennium to 2016 was impressive: the country went from being almost a failed state to become a model for democratic stabilisation with an impressive rate of economic growth. Peru had also made remarkable progress on reducing poverty, with the proportion of Peruvians living below the national poverty line falling from nearly 50 per cent in 2006 to about 20 per cent in 2019.

Due, however, to its politically fragile situation in the past few years and to the COVID-19 crisis, Peru has suffered severe setbacks: in 2020, the poverty rate climbed rapidly to about 30 per cent. Cities in particular, where about two thirds of the country’s poor people live, have experienced a significant rise in poverty, with the urban poverty rate doubling within just one year to almost 26 per cent.

As a result of the COVID-19 crisis, Peru’s economic development has also suffered a setback. Whilst Peru’s economic development was positive throughout the decades preceding the COVID-19 pandemic, with economic growth averaging 4.8 per cent, in 2020 the Peruvian economy shrank by 11.5 per cent.

There are still considerable social and regional differences in Peru. Large numbers of people are often still excluded from the positive developments that have taken place. Moreover, the state’s weak presence and capacity in remote regions is a key challenge for the country’s sustainable development.

German development cooperation with Peru

Signing of the Climate Partnership with Peru in November 2022

Peru and Germany have a long history of successful cooperation. In 2022, Germany pledged 529 million euros in new funds to the Peruvian government, with 498 million euros of this sum being allocated to Financial Cooperation and 31 million euros to Technical Cooperation. In view of Peru’s economic strength, the commitments are primarily in the form of low-interest loans.

Development cooperation between Germany and Peru is aligned with the 2030 Agenda and focuses on the following three core areas:

Conserving nature and natural resources, protecting life on Earth
Climate and energy, just transition
Peaceful and inclusive societies

Symbolic image: bridge in Hanoi, Vietnam

In addition, Germany is also providing development assistance by supporting various regional and sectoral projects in a number of different areas, including mining and illicit financial flows. Moreover, Germany is promoting various collaborative initiatives with private executing agencies, political foundations and businesses. In triangular cooperation initiatives, Peru is able to pass on its experience from German-Peruvian cooperation to other developing countries.

Within the German government, activities are closely coordinated with the Federal Ministry for Economic Affairs and Climate Action, the Federal Foreign Office and the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection, which are also extensively involved in Peru within the framework of the International Climate Initiative (IKI).

COVID-19 assistance

Peru is one of those countries that have been particularly hard hit by the COVID-19 pandemic, in terms of both case numbers and death rates. The BMZ has been providing Peru with both short- and medium- and long-term support to help the country deal with the pandemic and its consequences. This includes, for example, the deployment of the German Epidemic Preparedness Team (External link) (SEEG) in Peru. The team advised on developing laboratory capacity, provided training for dealing with COVID-19, and supplied tests and personal protective equipment.

Germany has given support to micro and small enterprises in the form of emergency relief loans. The BMZ has also supported Peru in coping with the social and economic impacts of the pandemic in the medium term, in particular through climate-friendly investments.

The focus of German activities to conserve Peru’s natural resources is on managing protected areas, forest conservation, promoting sustainable forest management, natural resource management, and environmental policy and standards.

In Peru, climate change mitigation is just as relevant as adaptation. The aim of German development cooperation is to facilitate climate policy reforms through strategic cross-sectoral cooperation. One way to achieve this is by supporting integrated climate-smart water resources management.

Justice Palace in Lima, seat of the highest court in Peru

The modernisation of administrative structures in Peru has not kept pace with the country’s rapid economic development. Despite the process of democratisation and the numerous reforms that have been under way since 2002, Peruvian government institutions are still hampered by inefficiency and a lack of acceptance by the population. Germany is assisting the government of Peru in its efforts to fundamentally modernise the state and to develop the capacity of its institutions.