Peruvian Government modifies minimum interest rate allowed for national and foreign currency loans

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29 March 2023

A new Peruvian Legislative Decree modifies the minimum interest rate allowed for loans in local and foreign currency, given that LIBOR rates will no longer be published.
The Decree will be effective as of 1 January 2024.

Peruvian Legislative Decree 1545, published on 15 March 2020, expressly establishes that all loans will accrue a minimum interest rate, even if the parties had agreed to a lower interest rate or had agreed the loan would not accrue any interest.

Background

Formerly, the Peruvian Income Tax Law established that the interest rate on Peruvian currency loans could not be lower than the monthly average active market rate in local currency (TAMN, per Spanish initials), published by the Banking Authority; and, for loans on foreign currency, the interest rate could not be lower than the average six-month rate published by the London Inter-Bank Offered Rate (LIBOR) for the last semester of the previous year.

Taking these restrictions into account and given that the LIBOR will no longer be published, the Executive enacted Legislative Decree 1545.

Legislative Decree 1545

The new Legislative Decree requires the interest rate on loans to meet these requirements:

For loans on national currency, the interest cannot be lower than the monthly average active market rate in local currency (TAMN, per Spanish initials) published by the Banking Authority, multiplied by an adjustment factor of 0.42.

For loans on foreign currency, the interest cannot be lower than the monthly average active market rate in foreign currency (TAMEX, per Spanish initials) published by the Banking Authority, multiplied by an adjustment factor of 0.65.The

Decree authorizes the Ministry of Economics to update the referred adjustment factors, which must be greater than 0 and less than or equal to 1.

The Legislative Decree will take effect as of 1 January 2024.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young Asesores Empresariales S.C.R.L, Lima

Roberto Cores | roberto.cores@pe.ey.com

Ramón Bueno-Tizón | ramon.bueno-tizon@pe.ey.com

Ingrid Zevallos | ingrid.zevallos@pe.ey.com

Claudia Miranda | claudia.miranda@pe.ey.com

Krizia Hurtado | krizia.hurtado@pe.ey.com

Ernst & Young LLP (United States), Latin American Business Center, New York

Lucas Moreno | lucas.moreno1@ey.com