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By Teresa Cespedes
LIMA, Nov 24 (Reuters) - Peru’s finance minister on Monday forecast a 2014 budget deficit of around 0.3 percent to 0.4 percent of gross domestic product, revising the previous official forecast for a zero deficit this year followed by a deficit next year.
“Starting this year, not next, Peru is going to have a slight fiscal deficit,” Finance Minister Alonso Segura said on Monday in a speech at a banking event.
The government of President Ollanta Humala is boosting public spending to counter Peru’s worst economic slowdown in five years. Last week, the government lifted its forecast for the 2015 budget deficit after announcing new tax cuts to revive growth.
Peru will finance next year’s budget deficit mainly through new government bonds issued on the local market, Segura said.
He added that Peru might again tap global markets with bonds in the local sol currency. Late last month, Peru sold bonds denominated in soles in international markets for the first time in two years.
Peru’s last annual budget gap was in 2010, when the government registered a deficit equal to 0.2 percent of GDP.
In 2013, Peru’s economy expanded 5.8 percent and the government posted a budget surplus of 0.9 percent of GDP.
Segura has said that economic growth this year, dragged down by weak mining activity and slipping private investments, will likely reach only about 2.8 percent.
Public investments in infrastructure projects and social programs will help get growth back on track, though at the expense of balanced government books in the short term, Segura said. (Reporting By Teresa Cespedes Editing by W Simon and David Gregorio)