José María Balcázar, a leftist lawmaker who was sworn in late Wednesday as Peru’s fifth president in five years, sought to reassure investors worried by the country’s endless political turmoil, saying he won’t make changes to macroeconomic policy and plans to meet with the country’s long-standing central bank chief, Julio Velarde.
Balcázar also said he will consider maintaining the country’s current finance minister, Denisse Miralles, and other members of his predecessor’s right-leaning cabinet.
“We’re going to talk with the minister to see what needs to be adjusted, but we’re not going to make a leap into the unknown on economic matters,” he told local radio broadcaster RPP.
Regarding the restructuring of state oil company Petroperú, initiated by the previous administration, Balcázar said it was a technical matter that will be managed by his government and congress.
Four of Peru’s seven presidents since the 2016 election have been forced out by Congress and another two have resigned. But despite the high rotation of public officials, the country has continued to attract foreign capital given its open economy, vast mineral wealth, stable currency and investment-grade rating. Still, the political wrangling has risks for bond investors, said Andres Abadia, chief Latin America economist at UK-based Pantheon Macroeconomics.
“Macroeconomic fundamentals remain solid, but political volatility and rising security costs risk widening spreads and lifting PEN and bond volatility as governance risk increasingly drives asset pricing,” he wrote in a note Wednesday.
PRESIDENTIAL CHURN
Balcázar was part of the Peru Libre party whose presidential candidate Pedro Castillo won the 2021 race but was subsequently impeached and is currently in prison awaiting trial for attempting to unlawfully dissolve Congress. Castillo was succeeded by his vice president Dina Boluarte, who was also impeached in October last year after becoming entangled in various corruption probes.
Boluarte was succeeded by the then head of Congress, José Jerí, who was removed from his post by lawmakers on Tuesday in a move that some analysts see as the result of electoral calculations by the main parties in congress as they seek to maintain or increase their share of seats in April’s general election.
Given the country’s profound electoral fragmentation, with a record 36 presidential candidates in the running, the current race will likely be decided in a runoff vote in June.
Balcázar will serve until July 28, when the country’s next elected leader assumes office and becomes the country’s 10th head of state in as many years.
José Luis Gargurevich, the executive director of Proética—the Peruvian chapter of Transparency International—said the main reason for the current political crisis is the existence of private interest groups that have “captured” the different arms of government.
“Congress has an almost presidentialist power, you could say, which is why we have had these eight or night changes of government, which are in reality the result of tussles between political groups that use” institutions to their own advantage, Gargurevich told RPP.