TITLE III. THE ECONOMIC SYSTEM
CHAPTER I. GENERAL PRINCIPLES
Article 58
Private initiative is free. It is exercised within a social market economy. Under this system, the State guides the development of the country and it is principally active in promoting employment, health, education, security, public services, and infrastructure.
Article 59
The State promotes the creation of wealth and guarantees the freedom to work, as well as free enterprise, trade, and industry. The exercise of these freedoms must not be harmful to the public morals, health, or safety. The State provides opportunities to those sectors suffering from unequal opportunity for advancement. In this spirit, it promotes small businesses of all types.
Article 60
The State recognizes economic pluralism. The national economy is sustained in the coexistence of diverse forms of ownership and enterprise.
Authorized solely by express law, the State may subsidiarily engage in business activities, directly or indirectly, for reasons of high public interest or manifest national convenience.
Business activity receives the same legal treatment, whether public or private.
Article 61
The State facilitates 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 related to freedom of speech and communication, cannot be objects of exclusivity, monopoly, or hoarding, directly or indirectly, by the State or private parties.
Article 62
The freedom of contract guarantees that parties may validly negotiate, according to the rules in effect at the time of the contract. Contractual terms may not be modified by laws or any other provision whatsoever. Conflicts deriving from contractual relations may be resolved solely through arbitration or judicial recourse, in accordance with the protective mechanisms provided for in the contract, or established by law.
By means of contract law, the State may provide guarantees and grant security. These may not be modified legislatively, without prejudice to the protection provided in the preceding paragraph.
Article 63
National and foreign investments are subject to the same conditions. The production of goods, services, and foreign exchange are free. If another country or other countries adopt protectionist or discriminatory measures that are detrimental to the national interest, the State may, in defense of it, adopt similar measures.
All contracts of the State and public corporations with resident foreign nationals are subject to the national laws and courts of competent jurisdiction, and surrender to any diplomatic claim. Contracts of a financial nature may be exempted from national jurisdiction.
The State and other public corporations may submit controversies arising from their contractual relations to courts specially established by virtue of treaties in effect. They may also submit them to national or international arbitration in the manner provided by law.
Article 64
The State guarantees the free possession and disposition of foreign currency.
Article 65
The State defends the interests of consumers and clients. For this purpose, it guarantees the right to information on goods and services available to them on the market. Likewise, it especially watches over the health and security of the population.
CHAPTER II. THE ENVIRONMENT AND THE NATIONAL RESOURCES
Article 66
Natural resources, renewable and non-renewable, are patrimony of the Nation. The State is sovereign in their utilization.
An organic law fixes the conditions of their use and grants them to private individuals. Such a concession grants the title holders a real right subject to those legal regulations.
Article 67
The State determines the national environmental policy. It also promotes the sustainable use of its natural resources.
Article 68
The State is obliged to promote the conservation of biological diversity, and protected natural areas.
Article 69
The State promotes the sustainable development of the Amazonia by means of appropriate legislation.
CHAPTER III. PROPERTY
Article 70
The right to property is inviolable. The State guarantees it. It is exercised in harmony with the common good, and within the limits of the law. No one shall be deprived of his property, except, exclusively, on grounds of national security or public need determined by law, and upon cash payment of the appraised value, which must include compensation for potential damages. Proceedings may be instituted before the Judiciary to challenge the property value established by the State in the expropriatory procedure.
Article 71
With respect to property, foreign nationals, whether they are persons or corporate entities, fall under the same conditions as Peruvians. Therefore, they may in no instance invoke exception or diplomatic protection.
However, within a distance of fifty kilometers from the borders, foreigners may not acquire or possess under any title, directly or indirectly, mines, lands, woods, water, fuel, or energy sources, whether individually or in partnership, under penalty of losing that so acquired right to the State. The sole exception involves cases of public need expressly determined by executive decree and approved by the Cabinet, in accordance with the law.
Article 72
The law may temporarily, solely on grounds of national security, set forth specific restrictions and bans on acquisition, possession, exploitation, and transfer of certain types of property.
Article 73
Public property is inalienable and may not be prescribed. Property available for public use may be granted to private parties, in accordance with the law, for its economic development.
CHAPTER IV. TAX AND BUDGET REGIME
Article 74
Taxes are created, modified, or abolished. Exemptions are granted exclusively by law or by legislative decree in case of delegation of powers, except for tariffs and rates, which are regulated by an executive decree.
Regional and local governments may create, modify, and eliminate taxes and rates, or exempt the same within their jurisdiction and within the limits defined by law. In exercising its taxing power, the State shall respect the principle of the legal reservation and those principles concerning equality and respect for basic rights of the person. No tax shall have a confiscatory nature.
Budget Acts and emergency decrees shall not contain provisions on taxes. Laws concerning annual taxes come into force on the first day of January of the year following their enactment.
Tax provisions set forth in violation of this article are null and void.
Article 75
The State guarantees payment of public debt only when contracted by constitutional governments, in accordance with the Constitution and the law.
The domestic and foreign debt operations of the State are approved in accordance with the law.
Municipalities may undertake credit transactions charged against their own resources and assets without requiring legal authorization.
Article 76
Public works and acquisition of supplies with public funds or resources are compulsorily based on contracts and public bidding, as are the acquisition and sale of assets.
The contracting of services and projects, whose importance and amount are determined by the Budget Act is done by public bidding. The law sets forth the procedures, exceptions and respective responsibilities.
Article 77
The economic and financial administration of the State is governed by the budget passed annually by Congress. The budget structure of the public sector consists of two parts: the central government and decentralized agencies.
The budget allocates public resources fairly. Its programming and implementation depend on efficiency criteria that concern basic social necessities and decentralization. In accordance with the law, every circumscription shall receive an adequate share of the total income and revenue collected by the State for the utilization of natural recourses in each zone as a natural resource royalty (canon).
Article 78
The President of the Republic sends the Budget bill to the Congress each year with a deadline expiring on August 30th.
On the same date, he also sends the national debt and financial stability bills.
The Budget bill shall be effectively balanced.
Loans from the Central Reserve Bank of Peru or the Bank of the Nation are not considered fiscal revenue.
Loans shall not cover current expenditures.
The Budget shall not be passed without an appropriation for the servicing of public debt.
Article 79
Members of Congress have no initiative for creating or increasing public spending, except on matters of their budget.
The Congress may not pass taxes for predetermined purposes, except upon request of the Executive Branch.
In any other case, tax laws concerning benefits or exemptions require a previous report of the Ministry of Economy and Finance.
Only by express law, passed by two-thirds of congressmen, may a special tax treatment for a specific zone of the country be selectively and temporarily extended.
Article 80
The Minister of Economy and Finance sustains the income statement before the Plenary Assembly of Congress. Each minister maintains the expenditure statement of his own sector; prior to that, they shall sustain the outcomes and goals of the previous year budget execution, and the budget implementation progress of the current fiscal year.
Likewise, the Chief Justice of the Supreme Court, the Prosecutor General of the Nation, and the President of the National Election Board sustain the statements of their own institutions.
If the enrolled Budget bill is not referred to the Executive Branch by November 30th, the Executive original draft bill comes into effect and is enacted by legislative decree.
The supplemental credits, additional expenditure and transfers of items are handled before Congress in the same manner as the Budget Act. During the congressional recess, they are handled in the Permanent Assembly. To pass, the votes of three-fifths of the legal number of its members are required.
Article 81
The General Account of the Republic, accompanied by the audit report of the Office of the Comptroller General, is submitted by the President of the Republic to the Congress by August 15th of the year following the implementation of the budget.
The General Account is examined and reported upon by a review committee by October 15th. Congress shall vote on its passage at the latest on October 30th. If the Congress fails to vote within this period, the review committee shall submit its opinion to the Executive Branch so that it may enact a legislative decree that includes the General Account.
Article 82
The Office of the Comptroller General is a decentralized body of public law that enjoys autonomy in accordance with its organic act. It is the highest body of the National Control System. It is responsible for overseeing the respective legalities of the implementation of the national Budget, public debt operations, and activities of institutions subject to its control.
The Congress appoints the Comptroller General for seven years upon recommendation from the Executive Branch. He may be removed by Congress for gross misconduct.
CHAPTER V. CURRENCY AND BANKING
Article 83
The law determines the monetary system of the Republic. Issuance of bills and coins is under the exclusive power of the State. Such power is exercised through the Central Reserve Bank of Peru.
Article 84
The Central Bank is a corporate entity under public law. It is autonomous in conformity with its organic act.
Its aim is to preserve monetary stability. Its functions are: to regulate the currency and credit of the financial system, to manage the international reserve under its responsibility, and to perform other functions as provided in its organic act.
The Bank accurately and periodically informs the country about the state of the national finances under the responsibility of its Board of Directors.
The Bank may not grant financing to public funds, except for the purchase on the secondary market of securities issued by the Treasury within the limits set forth by its organic act.
Article 85
The Bank may conduct credit operations and formalize agreements, in order to cover temporary imbalances in its international reserves.
A legal authorization is required, when the amount of such operations or agreements exceeds the limit as set forth in the Budget of the public sector, which must be reported to Congress.
Article 86
The Bank is managed by a board of directors consisting of seven members. The Executive Branch shall appoint four members, including the President, who must be ratified by the Congress. Likewise, Congress votes the other three members through an absolute majority of the legal number of its members.
All directors of the Bank are appointed for the same constitutional term as the President of the Republic. They do not represent any particular entity or interest. Congress may remove them for gross misconduct. In the event of such removal, the new directors hold office for the remaining constitutional term.
Article 87
The State encourages and guarantees savings. The law establishes the obligations and limits of enterprises that collect savings from the public, as well as the mode and extent of such guarantees.
The Superintendence of Banking, Insurance, and Private Pension Fund Management Firms is responsible for control over banking, insurance, and private pension fund management firms, other companies collecting deposits from the public, and those that conduct related and similar operations, as set forth in law.
The law establishes the organization and functional autonomy of the Superintendence of Banking, Insurance, and Private Pension Fund Management Firms.
The Executive Branch appoints the Superintendent of Banking, Insurance, and Private Pension Fund Management Firms for the period corresponding to its constitutional term of office. The Congress ratifies him.
CHAPTER VI. THE AGRICULTURAL REGIME AND RURAL AND NATIVE COMMUNITIES
Article 88
The State preferentially supports agricultural development and guarantees the right to ownership of the land, whether private, communal, or in any other form of partnership. The law may define boundaries and land area based on the features of each zone.
According to legal provision, abandoned land reverts to State ownership, to be placed on the market.
Article 89
The rural and native communities have legal existence and are corporate entities.
They are autonomous in their organization, community work, and the use and free disposal of their lands, as well as in the economic and administrative aspects within the framework provided by law. The ownership of their lands may not prescribe, except in the case of abandonment described in the preceding article.
The State respects the cultural identity of the rural and native communities.
