Peru wants its provinces to sell bonds in crisis

LIMA, Feb 23 (Reuters) - Peru's Finance Ministry asked Congress on Monday to let provinces tap local capital markets and to make it easier for the central government to borrow overseas, part of an effort to boost spending in an economic slowdown.

In a bill that Finance Minister Luis Carranza is pushing, provincial governments would be given permission to sell bonds locally in 2009 and 2010 and invest proceeds in public works like roads, bridges and schools.

The law would also allow the Finance Ministry to quickly tap foreign capital markets when conditions are right, without having to wait for approval from President Alan Garcia's council of ministers.

It would also allow the ministry to buy insurance to make sure financing for infrastructure projects does not dry up.

'This is part of an effort to accelerate the (stimulus) plan,' Betty Sotelo, an aide to Carranza, told Congress.

Carranza is working to implement an economic stimulus package to keep the from economy slowing too much after it surged 9 percent last year. Growth of about 5 percent is expected this year.

About $3 billion in stimulus spending is planned for this year, and the government has said total extra layouts could rise to as much as $13 billion.