Musical chairs

Vizcarra ousted, Merino resigned, Silva-Santisteban rejected, now Sagasti.

At the second attempt, President Martín Vizcarra was ousted by an impeachment vote over allegations that he accepted bribes when governor of Moquegua. The Speaker of Congress, Manuel Merino, was sworn in as interim president last week.

Vizcarra supporters immediately labelled his ousting as a coup, the OAS issued a  communique stating it will not recognise Merino as President until the Constitutional Court has ruled and millions of protestors flooded the streets across the country.

This week, Merino resigned after the military were deployed and the protests turned violent, resulting in two deaths and hundreds of injuries. Yesterday, a new president, Francisco Rafael Sagasti, was sworn in but only after Congress rejected Rocío Silva-Santisteban, a controversial former human rights activist.

Vizcarra, an independent centrist, came to power with an agenda to combat corruption and as he followed through on his mandate, he frequently clashed with Congress: last year he dissolved Congress for obstructing his anti-corruption drive and 68 out of the 130 new lawmakers are under investigation!

A young Peruvian politician comments, “We are witnessing the final blow from the old political class that is desperately struggling to survive investigations and their own political mistakes.” 

“We are witnessing the final blow from the old political class that is struggling to survive investigations and their own political mistakes.”

A young Peruvian politician

Our sources have many concerns. Firstly, Peru is already in the midst of a health and economic crisis, this political crisis could not come at a worse time. Secondly, who will supervise the Congress if now it is also acting as the government? Finally, there is the small matter of the 2021 budget that must be approved before 30 November and then elections next year.

Looking forwards a local asset manager is concerned, “We were rapidly coming out of the crisis but that will stop now. Private investment will retract in fear, at least until elections take place next year.”

“Private investment will retract in fear, at least until elections take place next year.” 

Peruvian asset manager

A political and economic analyst already sees the effects, “The stock market has fallen sharply, the dollar is at 3.65, government paper is no longer attractive so Peru’s credit rating will lower and it will be more difficult to borrow abroad.”

An executive at a large Peruvian financial institution despairs, “We are wasting opportunity, the price of copper is very high and we will miss the benefit as this Congress is anti-mining.”

Political crises are sweeping the “Cono Andino”, first Chile, then Bolivia and now Peru, who’s next?

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