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Peru President Says He’s Willing to Ease Tax Burden on Business

A money changer flags offers to exchange euros and U.S. dollars and to people in passing vehicles on a street in Lima, Oct. 29, 2014.

Peru is willing to reduce taxes on companies that create jobs to help revive the slowing economy, President Ollanta Humala said on Wednesday.

Peru's economic growth has fallen to five-year lows as its mineral exports tumbled on lower global prices and weaker production. Interest rate cuts earlier in 2014 and several other reform packages have failed to jumpstart growth.

Humala also said his government was looking to inject liquidity into the local market and bolster consumer demand to counter the slowdown.

“I want to point out that the government's logic is to reduce the tax burden on companies which generate jobs,” Humala told a small group of foreign media.

Only a month ago, the government ruled out cutting taxes or introducing subsidies to encourage investment, saying they would leave it without the funds needed for long-term projects.

Last Friday, finance minister Alonso Segura was forced to trim his 2014 growth forecast for the fourth time in two months, to 2.8 percent, well below the 5.8 percent reached last year.

Segura told Reuters at the time that a new package of tax and labor reforms would be introduced before the end of the year, but had not yet been approved by the full cabinet.

“We are working on measures to pump liquidity into the market and... remedies that will go straight into the veins of consumers,” Humala said.

Other reforms introduced this year include increased spending on health and security, looser environmental rules and locked-in tax rates for big mining projects, and measures aimed at cutting bureaucracy.

The measures would help growth rebound above five percent in 2015, the president said.

Peru is the world's third biggest copper producer and the fifth biggest gold miner.