LIMA/WASHINGTON (Reuters) - Peru has become the latest commodity exporter to seek financing help from the World Bank amid fiscal and currency pressures brought on by collapsing prices for metals, oil and other raw materials.
Peruvian government sources and a World Bank official said on Wednesday that talks were underway for two new credit lines that will bolster Lima's available government resources.
Amounts for the three-year loan facilities could not be disclosed as the arrangements have not yet been sent to the World Bank board for approval, the bank official said.
Peru has no immediate plans to draw on the credit lines, and they will be kept in reserve.
"They are contingent credit lines whose objective is to have resources immediately available for any eventual needs," a government source in Lima told Reuters. "We don't expect to use these resources in the near term. Nor do they substitute traditional financing through bond issuances or other debt instruments such as loans from multilateral institutions for financing projects."
The World Bank also is engaged in loan discussions with Africa's two biggest oil exporters, Nigeria and Angola, and the Caspian Sea crude producer Azerbaijan.
The collapse of oil and commodities prices and demand brought on by China's massive growth slowdown has widened budget deficits of many oil and mineral exporters and caused capital outflows that have pressured currencies.
With foreign currency reserves still above crisis levels, several of these countries have opted not to seek rescue loans from the International Monetary Fund, choosing instead to explore financing available through World Bank programs aimed at supporting institutional and market-based reforms.
One of the credit lines under discussion with Peru is aimed at "strengthening fiscal management amid the regional economic downturn," while the other would support "reforms to boost human capital and productivity," the World Bank official said.
Known as Deferred Drawdown Options, the credit lines can add to Peru's existing total of $1.5 billion in contingent credit lines already arranged with multilateral institutions.
The government source said that the credit lines "are part of a prudent asset and liability management strategy that recognizes that when faced with adverse market conditions or possible financial needs due to natural disasters, it's best to have credit lines available."
Peru's economy has slowed sharply from growth rates that topped 6 percent during a decade-long mining boom fueled by high prices for its key copper and gold exports and strong demand from China's manufacturing sector. The budget deficit is set to widen to about 3 percent of gross domestic product in 2016 as forecasts for an growth rebound are routinely ratcheted down.
Earlier on Wednesday, an IMF fact-finding team sent to Baku urged Azerbaijan to boost reforms and diversify its economy to better withstand the plunge in global crude prices that have triggered a sharp fall in the manat currency.
Additional reporting by Lesley Wroughton in Washington and Mitra Taj in Lima; Writing by David Lawder; Editing by Chizu Nomiyama and Marguerita Choy