Peru’s new leader appoints moderate cabinet after months of chaos

Peru’s new president, Dina Boluarte, on Saturday appointed a moderate cabinet that could calm investor nerves after the downfall of Pedro Castillo, who was impeached and arrested after attempting to shut down congress and rule by fiat.

Investors will hope that stability is restored to the executive branch after the chaotic 16-month tenure of the leftist former schoolteacher Castillo. Over 80 ministers passed through his cabinet, including five prime ministers and three finance ministers.

Lawyer Pedro Miguel Angulo was announced in the role of prime minister, while Ana Cecilia Gervasi is the new foreign minister. Former police general César Cervantes will serve as interior minister, overseeing the country’s police.

Alex Contreras, who served as deputy finance minister in the previous government and previously worked at Peru’s central bank, will serve as finance minister continuing with Castillo’s preference for career economists in the crucial cabinet post.

Castillo remains in custody in a police base on the outskirts of Lima. He was apprehended on Wednesday shortly after announcing the dissolution of the country’s congress and the formation of an emergency government. Lawmakers had been preparing to vote on his impeachment. That vote was then brought forward and Castillo was impeached by a margin of 101-6. 

Boluarte, Castillo’s vice-president, was swiftly sworn in as president and the country’s first female head of state. In an abruptly organised ceremony she vowed to bring stability to the country with a pluralist cabinet. She said on social media that her predecessor’s gambit amounted to “a coup”.

Peru has had six presidents in little over four years. In 2020, it had three in one week. But the economy of the world’s second-largest copper exporter had weathered the political instability until it was hit by the Covid-19 pandemic and the extreme dysfunction of the Castillo administration.

Growth in the Andean nation was stable for much of the past two decades, though the finance ministry last month lowered its economic growth expectations for 2022 from 3.3 per cent to between 2.7 per cent and 3 per cent. In October, rating agency Fitch revised the country’s outlook from “stable” to “negative”. 

Markets did not move much this week, though they did seem to react slightly to Castillo’s removal, with the dollar bond maturing in 2031 trading just above 86 cents on the dollar on Friday, having dipped on Wednesday to about 84.6 cents.

Before this week’s fireworks, congress had twice tried unsuccessfully to impeach Castillo, while investigators launched multiple investigations into him and his family for graft.

One of Boluarte’s first challenges will be to mend the wounds left by Castillo’s dramatic ouster on Wednesday. Protests in support of the leftist former schoolteacher have broken out in towns and cities across the country. Demonstrators have blocked highways calling for his release, while others have gathered outside the police base on the outskirts of Lima where he is being held.

Castillo’s approval rating nationwide stood at around 31 per cent, while in rural areas it was 45 per cent, according to polls late last month by the Institute of Peruvian Studies. Castillo hails from the impoverished and rural Chota province in northern Peru. Before narrowly winning the presidency last year, he had supplemented his income as a teacher with subsistence farming.

“We’ve always supported Castillo because he is one of us,” said Pilar Pillaca, who had travelled from the southern province of Ayacucho to attend a protest in downtown Lima. “We’re from Andes and we want a government that represents us, not just the people in Lima.”

Another protester said Boluarte was illegitimate. “Castillo is our legitimate president,” said Wilmer Díaz, a taxi driver from the capital. “Boluarte shouldn’t be there, congress should be closed.”

The relative newcomer joined Castillo’s ticket during last year’s bitter election campaign, and served as both vice-president and his minister for development and social inclusion. But her resume in public life does not run much longer — aside from a failed bid to run for mayor of one of Lima’s districts, she worked as a practising lawyer for 18 years.

The personal and political stakes are high too. If she is forced from office, new elections must be called. She previously broke with Peru Libre, the Marxist party on whose ticket Castillo campaigned. The party holds a minority bloc in congress.

“Her main challenge is to build a pro-government bloc,” said Gonzalo Banda, a Peruvian political analyst and columnist. “In Peru, not having a bench is a symptom of the president’s weakness.”

“At the moment there are protests which, although they are not massive in the regions of Peru, do suggest that the government will be very shaken by social discontent.”


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