The Economic System

Chapter I General Principles

Article 58
Private enterprise is free and is practiced within a social, market economy. Under this system, the government guides the country's development and is mainly active in the areas of the promotion of employment. health, education, security, public services, and infrastructure.

Article 59
The government promotes the creation of wealth and guarantees the freedom to work and the freedom of private enterprise, commerce. and industry. Exercising these freedoms must not be harmful to the public's morals, health. or safety. The government provides sectors suffering from inequalities opportunities for advancement and to that end promotes small businesses of all types.

Article 60
The government recognizes economic pluralism. The national economy is based on the coexistence of several forms of ownership and enterprise. Authorized solely by an express law, the government may subsidiarily engage in business activities. directly or indirectly, for reasons of overriding public interest or manifest national benefit. Business activity receives the same legal treatment, whether public or private.  

Article 61
The government promotes and oversees free competition. It fights any practice that would limit it and the abuse of dominant or monopolistic positions. No law or arrangement may authorize or establish monopolies. The press, radio, television, and other means of expression and social communication and, in general, enterprises, goods, and services relating to the freedom of expression and communication, cannot be the object of exclusivity, a monopoly, or hoarding, either directly or indirectly, by the government or private parties.  

Article 62
The freedom to make contracts guarantees that the parties may make valid agreements in accordance with standards in force at the time of the contract. Contractual terms may not be modified by law or any other kind of provision. Conflicts deriving from the contractual relationship may be solved only by arbitration or in the courts, in accordance with the protective mechanisms provided for in the contract or contemplated by law. By means of union contracts which the government has made official for entire industries. the government may provide guarantees and grant security. The latter may not be modified legislatively, without prejudice to the protection provided for in the preceding paragraph.  

Article 63
National and foreign investments are subject to the same terms. The production of goods and services and foreign trade are free. If another country or other countries should adopt protectionist or discriminatory measures detrimental to the national interest, the government may adopt analogous measures to defend that interest. In any contract of the government and public law persons with resident foreigners, the latter will be subject to the nation's laws and jurisdictional organs and surrender any diplomatic claims. Contracts of a financial nature may be excepted from national jurisdiction. The government and other public law persons may submit disputes deriving from contractual relationships to courts set up by virtue of existing treaties. They may also submit them for national or international arbitration in the manner provided by law.  

Article 64
The government guarantees the free possession and use of foreign currency.

Article 65
The government defends the interests of consumers and users. For this purpose, it guarantees the right to information concerning goods and services available to them on the market. In particular, it watches over the people's health and safety.

Chapter II  Concerning the Environment and Natural Resources

Article 66
All natural resources, renewable and nonrenewable, are the nation's patrimony. The government enjoys the sovereign right to their development. Organic laws define the terms for their use and concession to private parties. Such concessions grant real rights to the holders subject to such laws.  

Article 67
The goverriment determines the nation's environmental policy. It promotes the sustainable use of its natural resources.

Article 68
The govemment has an obligation to promote the conservation of biological diversity and protected natural areas.

Article 69
The government promotes the sustainable development of the Amazon Region through proper legislation.

Chapter III  Concerning Property

Article 70
The right to own property is inviolable and guaranteed by the government. It is exercised in keeping with the common good and within the confines of the law. No one may be deprived of his property except for reasons of national security or public need, declared by law and following cash payment of the appraised value, which must include compensation for potential damages. Proceedings have been instituted before the Judicial Branch to challenge the value of property which the government has established in the expropriatory procedure.

Article 71
Concerning property, foreigners, whether individuals or corporations, enjoy the same fights as Peruvians except that they may in no instance invoke special situations or diplomatic protection. However, within a distance of 50 kilometers from the border, foreigners may not acquire or own for any reason mines, land, forests, water, fuel or energy sources, either directly or indirectly, individually or in partnership, under penalty of surrendering that acquired right to the government. The sole exception is the case of public need expressly declared by a supreme decree approved by the Cabinet in accordance with the law.  

Article 72
Solely for reasons of national security, the law may temporarily establish restrictions and specific bans on the acquisition, possession, use, and transfer of certain types of property.

Article 73
Public property is inalienable and imprescriptible. Property for public use may be conceded to private parties in accordance with the law for the purpose of economic development.

Chapter IV  Concerning the Tax and Budget System

Article 74
Taxes are created. modified, or abolished and exemptions are granted solely by law or legislative order in the case of the delegation of powers, except in the case of tariffs and rates, which are regulated by supreme decree. Local governments may create, modify, and eliminate taxes and rates or exempt parties from them within their own jurisdiction and within the limits defined by law. In exercising the power to tax, the government must respect the reserve principles of the law and those governing equality and respect for the basic rights of the individual. No tax may be confiscatory in nature. Emergency decrees may not contain provisions on taxes. Laws governing annual taxes take effect on the first dav of January of the year following their promulgation. Budget laws may not contain provisions on taxes. Any tax provisions set forth in violation of this article are invalid.

Article 75
The government may guarantee payment of the public debt only when contracted by constitutional governments in accordance with the Constitution and the law. The government's domestic and foreign debt operations are approved in accordance with the law. Municipalities may engage in credit operations entailing their own resources and assets without any need for legal authorization.  

Article 76
Projects and the purchasing of supplies paid for out of public funds or resources must be based on contracts and put out for public bidding, as must the acquisition or disposal of assets. Contracting for services and projects whose size and amount are specified in the budget is done by public bidding. The law outlines procedures, exceptions, and responsibilities.  

Article 77
The economic and financial administration of the government is governed by the budget passed by Congress annually. The structure of the public sector's budget contains two sections: the Central Government and decentralized agencies. The budget allocates public resources fairly. Their programming and implementation respond to criteria of efficiency, basic social needs, and decentralization. The respective districts will, in accordance with the law, receive a suitable share of the income tax collected for the development of natural resources in each zone, as a tax.  

Article 78
The President will send the proposed budget to Congress by 30 August of each year. On that same date, he will also send the debt and financial balancing bills. The proposed budget must be effectively balanced. Loans from the Central Bank of the Republic or the National Bank are not entered on the books as fiscal revenue. Permanent expenditures may not be covered by small loans. The budget may not be passed without allocation being made for payment on the public debt.  

Article 79
Congressional representatives have no power to initiate or increase public spending except with respect to their budget. Congress cannot approve taxes for predetermined purposes except at the request of the Executive Branch. In all other cases, tax laws concerning benefits or exemptions require previous notification of the Ministry of Economy and Finance. Only by an express law passed by two-thirds of the members of Congress can special tax treatment be extended on a selective and temporary basis to a specific area of the country.  

Article 80
The Ministry of Economy and Finance defends the revenue proposals before the full session of Congress. Every minister defends the spending proposals for his ministry. The Chief Justice of the Supreme Court. the Prosecutor General, and the Chairman of the National Election Board defend the proposals for their individual institutions. If the signed Budget Law is not sent on to the Executive Branch by 30 November, the proposed budget goes into effect, promulgated by legislative decree. Additional credits, financing, and transfers of items are handled by Congress like the Budget Law. During the congressional recess, they are handled by the Standing Committee. Their approval requires the votes of three-fifths of the legal number of members.  

Article 81
The General Account, accompanied by the Office of Comptroller General auditor's report, is presented by the President to Congress by 15 November of the year following that of the execution of the budget. The General Account is examined by and reported upon by a reviewing committee within 90 days of its presentation. Congress votes on passage within 30 days. If Congress fails to vote within that period of time. the ruling of the reviewing committee is sent on to the Executive Branch so that it may promulgate a legislative decree containing the General Account.  

Article 82
The Office of Comptroller General is a decentralized entity granted autonomy by law. It is the highest instance of the national comptrolling system. It is responsible for overseeing the execution of the national budget, the management of the public debt, and the activities of institutions that are subjected to the Comptroller. The Comptroller General is appointed by Congress for seven years on the recommendation of the Executive Branch. He may be removed by Congress for serious misconduct.  

Chapter V Concerning Money and Banking

Article 83
The law determines the nation's monetary system. The issuance of bills and coins is the exclusive power of the government, exercised through the Central Reserve Bank of Peru.

Article 84
The Central Bank is a corporation governed by public law. It enjoys autonomy within the framework of its Charter. The purpose of the Central Bank is to preserve monetary stability. Its functions are to regulate the currency and credit of the financial system, administer the international reserves for which it is responsible, and perform other functions specified by its Charter. The Bank informs the country periodically and precisely as to the state of the nation's finances under the responsibility of its Board of Directors. The Bank may not grant financing to the public Treasury except for the purchase on the secondary market of securities issued by the Treasury within the limits set forth by its Charter.  

Article 85
The Bank may engage in credit operations and agreements in order to cover temporary imbalances in the position of international reserves. It requires legal authorization when the amount of such operations or agreements exceeds the limit set by the budget of the public sector and must report to Congress.  

Article 86
The Bank is governed by a Board of Directors having seven members, of which the Executive Branch appoints four, including the Bank president. Congress confirms the latter and appoints the-remaining three by an absolute majority of the legal number of its members. All members of the Bank's Board of Directors are appointed for the same constitutional term being ser-~ed by the nation's President. They represent no particular entity or interest. Congress may remove them for serious breach of conduct. In the case of such removal. the new directors serve out the remainder of the constitutional term.  

Article 87
The government promotes and guarantees saving. The law sets the obligations of and limitations on enterprises that take in the people's savings, as well as the mode and scope of the guarantee. The Office of Superintendent of Banking and Insurance oversees banking. insurance. and other companies that take in deposits from the public. as well as any others which, because they engage in related and similar operations, are stipulated by law. The law establishes the organization and functional autonomy of the Office of Superintendent of Banking and Insurance. The Executive Branch appoints the Superintendent of Banking and Insurance for the period corresponding to its constitutional term of office. Congress confirms the appointment.  

Chapter VI  Concerning the Agricultural System - and Rural and Native Communities

Article 88
The government gives preferential treatment to agricultural development. It guarantees the right of ownership of the land, whether private, communal, or under any other form of partnership. The law may define boundaries and land area based on the characteristics of each zone. Land deemed legally abandoned reverts to government ownership and is to be put up for sale.  

Article 89
Rural and Native Communities are legally recognized and enjoy legal status. They are autonomous in terms of their organization, communal working, use and free disposal of their land, as well as economically and administratively within the framework established by law. Ownership of their land is imprescriptible except in the case of abandonment described in the preceding article. The government respects the cultural identity of the Rural and Native Communities.