- Country and Sector Background
Despite the sustained growth and declining fiscal deficits of the last years, Peru's Human Development Outcomes continue to be lagging. In the last decade, Peru has enjoyed a period of sustained growth and manageable and declining fiscal deficits. Poverty indicators have also improved. However, progress in basic human development outcomes - such as the stunting rate and the reading and mathematics attainment of children- continues to be lagging. Given the demonstrated links between investments in early childhood, cognitive development and socioeconomic performance in the adult life, tackling the problem of malnutrition, is essential to unleash skills formation and productivity to sustain recent economic growth, poverty reduction and promote more equality of opportunities.
A. Country and sector issues
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Government efforts in the next two years will likely be directed to mitigating the negative impact of external conditions and addressing latent social conflict, in the context of subnational and national elections. Frustrations due to unmet expectations, higher food prices, and tensions over natural resource management in the context of the decentralization process have already resulted in social unrest and incipient conflict in some regions. This fragile situation could be exacerbated if the deceleration of economic activity resulting from the global financial crisis persists much longer. Elections for sub-national authorities (Regional Presidents and Majors) scheduled in late 2010 will be followed by presidential elections in April, 2011.