Context

After Brazil and Argentina, Peru is the third-largest country by area in South America. Its western border is the South Pacific Ocean, known as the Mar de Grau. Peru also shares borders with Bolivia, Brazil, Chile, Colombia, and Ecuador.

Peru is geographically diverse. The Amazon rainforest composes roughly 60% of the country. The Andes mountain range is about 30% of Peru’s area; the rest of the country, where more than half of Peruvians live, is coastal desert plain. The population of the urbanized coastal region is predominately White and Spanish-speaking. In rural communities in and around the Andes, the population is mostly Indigenous and Quechua-speaking.

Peru’s population is relatively young: in 2022, 26% of Peruvians were younger than 15, and the mean age of the population was approximately 31. It is also disproportionately urban: 79% of the population lived in urban areas in 2022. About 9.5 million people, just over one quarter of the population, live in Peru’s capital, Lima.

Indigenous Peru

Peru’s colonial period lasted for nearly 300 years from when Francisco Pizarro and a small band of Spanish conquistadores arrived in present-day Peru in 1531, until independence in 1821. For most of this time, the conquistadores’ exploitation of the silver mountain at Potosí made Peru the most valuable part of the Spanish empire. Today nearly half of the land once owned by peasant communities in rural Peru, and three-quarters of the Peruvian Amazon, are covered by oil, gas, and mining concessions.

Between 25% and 40% of Peru’s population identifies as Indigenous, and many Indigenous Peruvians live in the country’s most marginalized regions.

Peru is a multiparty, representative presidential republic with 25 regions and one province. Peru’s government is divided into executive, judicial, and legislative branches.

Since 1860, Peru has been a constitutional republic, though its governance has often been characterized by turmoil: threats to dissolve the legislature, bloody and bloodless coups, assassinations, disputed elections, dictatorships, and terrorism from almost every point on the political spectrum. Between 1980 and 1992, in a civil war financed in part via taxes insurgents levied on coca farmers and drug traffickers in rural areas, the Maoist rebel group Sendero Luminoso (Shining Path) attempted to overthrow the Peruvian government. In 1990, a relatively unknown professor named Alberto Fujimori won the presidential election.

In 1992, in the “Fujimorazo” autogolpe or self-coup (in which a leader overthrows their own government), Fujimori dissolved the country’s congress and judiciary and suspended the constitution. Though he ruled as a dictator until 2000, he bowed to international pressure and in 1993 established a new constitution—the 11th since the country declared its independence in 1821. This constitution established Peruvians’ “right to the protection of . . . health” and to a “regime of protection, care, rehabilitation, and security” and enabled many of the health system reforms featured in this report.

Between 2002 and 2016, Peru’s average per capita real GDP grew about 4.5% per year, and the World Bank now classifies it as an upper-middle-income country.,

As Peru’s population grew in the 20th century, the supply of arable land for subsistence farming shrank. One result was a pronounced migration from rural areas to cities: between 1940 and 1981, the population of Lima increased from 645,000 to 4.6 million. Meanwhile, the economy was sustained by exports: from gold, silver, and guano in the 19th century to copper, petroleum, and fishmeal from anchovies in the 20th.

In 1968, after a coup toppled President Fernando Belaúnde’s government and replaced it with a military dictatorship under General Juan Francisco Velasco Alvarado, the government limited foreign investment, nationalized many aspects of the economy, and raised tariffs on imported goods. However, he incurred enormous debts in the process, and inflation surged—especially after the oil crisis of 1973. Belaúnde returned to power in 1980 and began to reprivatize the economy, but in 1983 a series of catastrophic weather events related to El Niño devastated the country’s infrastructure and agricultural sector. To rebuild, Peru turned again to punishing loans, this time from the International Monetary Fund. Inflation, poverty rates and unemployment soared, and this economic instability was a key cause of the civil war of the 1980s and 1990s.

The economy did not begin to recover until President Alberto Fujimori implemented a neoliberal austerity strategy known as “el Fujishock.” Initial measures to stop hyperinflation, followed by widespread privatization and reduced restrictions on foreign investments, eventually ended the economic crisis.

Between 2000 and 2022, Peru’s GDP grew from $51.74 billion to $242.63 billion, an increase of almost 370%. The World Bank has classified Peru as an upper-middle-income country since 2008.

This strong economic growth and the cross-sectoral antipoverty reforms it made possible have significantly reduced poverty in Peru: between 2004 and 2019, the country’s poverty rate fell from 59% to 20%. The health burden of causes associated with poverty, like malnutrition, declined sharply during this period.

The COVID-19 pandemic eroded many, but not all, of those social and economic gains.

Peru’s health system provides care through four main networks of health facilities: those operated by the Ministerio de Saludand the police and armed forces health services, both funded through general taxation; those operated by EsSalud, which are funded through payroll contributions; and the private sector, which includes for-profit and nonprofit facilities. Health policies and priorities are set at the national level and implemented by local authorities: in the public health system, regional governments are responsible for delivering care.

In 2013, Peru started to implement a series of reforms to its health system aimed at establishing a system of universal health coverage (UHC):

• The Seguro Integral de Salud (SIS) budget tripled, and every newborn without other health coverage was automatically added to the program. As a result, population health insurance coverage increased from 64% to 73%.
• Some 200 new health facilities were built under the supervision of federal health officials., Regional governments and other health sector institutions collaborated on further infrastructure investments.
• MINSA gained new and more expansive regulatory powers, such as the ability to limit and label sodium, sugar, and fats in industrially prepared foods.
• In addition, it made more pharmacies available to Peruvians with SIS insurance.

Between 1995 and 2020, Peru’s total health expenditure increased from $3.7 billion to $12.8 billion, an increase of almost 250%. Health spending per capita in Peru increased by 132% during the same period. For comparison, between 1995 and 2020 health spending in Peru’s upper-middle-income neighbors Colombia and Brazil grew 133% (from $11 to $26 billion) and 111% ($75 to $158 billion), respectively. As Figure 11 below shows, over the same period Peru’s reliance on development assistance for health decreased from 3.62% of total expenditure on health to only 0.54%.

At the same time, the country’s reliance on out-of-pocket spending—which can lead to catastrophic spending on health for individuals and families—was cut almost in half.