After only seven months in office, Peru’s president Pedro Castillo (“Castillo”) has survived an impeachment attempt and has reshuffled his Cabinet no less than four times. Castillo’s constant flip flopping has kept business confidence depressed. Investors remain deeply sceptical as to whether he will manage to stay in office until the end of his term in 2025. Castillo has insisted he will. Congress, worried that political turbulence is keeping investment at bay, is not done trying to oust him from power. Their latest attempt – a “vacancy” motion – is essentially a congressional vote of no confidence.

A political analyst based in Peru explained, “Congress is looking to expedite the vacancy motion process. First, the vacancy motion request is presented, for which 13 congressional signatures are needed. Then the vacancy motion is debated, for which 66 votes are needed for it to be approved. Finally, 87 votes or more in favour of the motion will be required to oust Castillo from power.”

"Congress is looking to expedite the vacancy motion process [...] 87 votes or more in favour of the motion will be required to oust Castillo from power."

Political analyst, Peru

The Acción Popular party pushed for the vacancy motion after local media published revelations that businesswoman Karelim López (“López“) - under investigation for corruption crimes by the Public Prosecutor’s Office - implicated the president in the activities of an alleged criminal order entrenched in the Peruvian Executive. López allegedly asked for “effective collaboration” to offer information to the Prosecutor’s Office in exchange for judicial benefits.

However, congressional opposition from government-allied parties Peru Libre, Together for Peru and the Purple Party could impede the motion’s progress. That said, the administration’s constant fumbling has cost him the support of centre-left allies grouped in the Nuevo Peru movement. Last month, the grouping announced that they would no longer participate in his administration.

Broader geopolitical developments will also influence the administration. An asset manager based in Peru said, “The conflict in Ukraine means that the price of commodities will increase, good for Peru’s exports but challenging for import dynamics, not least in oil, soybeans and wheat which will generate a problem in our trade balance. Russia and Ukraine control more than the 25% of the global grain exports, corn is one of several imports which are critically important for the Peruvian agricultural sector.”

"The conflict in Ukraine means that the price of commodities will increase, good for Peru’s exports but challenging for import dynamics."

Asset manager, Peru

The economic and political adviser explained, “The potential for the vacancy motion lies in the hands of congress. There are political considerations, a vacancy would be a major political upheaval which could lead to increased scrutiny on sitting members of congress, particularly their sources of income. They may to look to their own self-preservation and resist vacancy proceedings.”

The asset manager added, “The other possibility is that if Dina Boluarte (the current vice-president) resigns, Maricarmen Alva (president of the council of ministers), will likely assume the presidency. She is not popular. In terms of governance stability, the best option would be to call for elections again.”

Peru enters a new politically turbulent phase, moves to push for Castillo’s removal will lead to an even more toxic and partisan congress. The other option is for a lame-duck president to continue whilst capital continues to pour out of Peru. Both options, sadly, reflect Peru’s dire political reality.