Peru faces significant barriers in addressing climate change, including limited institutional capacity to integrate environmental, social, and climate considerations into financial planning and public debt tools; local financial sector unable to effectively screen and mitigate climate risks; a lack of mechanisms to integrate climate change considerations into PPPs; and constrained institutional ability to tap into international climate funds like the GCF. These challenges affect governmental entities such as the Ministry of Economy and Finance (MEF), the Ministry of Environment (MINAM), Superintendence of Banking, Insurance and Private Pension Funds Administrators (SBS), and the Superintendence of Securities Market (SMV), as well as local financial institutions and infrastructure planning bodies. As a result, the country's climate action, sustainable development, and infrastructure resilience efforts are hindered, making it more vulnerable to the impacts of climate change.

The proposed Readiness grant plays a pivotal role in the implementation of the country’s Climate Finance Strategy (CFS) and Green Finance Roadmap (GFR) which outline strategic measures and actions to accelerate the flow of international climate finance and private sector investments towards lowcarbon, resilient projects and initiatives.