Peru’s Castillo becomes president, vows to bridge social divide

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Pedro Castillo vowed Wednesday to address what he said lingering social divisions in Peru dating back to colonial times when he was sworn in as the country’s president, but pledged he would not make radical changes to the economy.

In a speech shortly after he was inaugurated, Castillo, wearing his trademark wide-brimmed hat, struck a conciliatory tone for investors, saying that he wanted the state-owned bank to compete with private lenders but that he wanted economic “order and predictability.” would maintain. “

Castillo was elected on a ballot last month as a Marxist party representative, shaking the political elite and disturbing corporations fearful of his plans to raise mining taxes to fund health and education reforms in the second-largest largest copper producer in the world.

He assured them on Wednesday that there was “not the most distant” plan to nationalize the industry, but said he would seek “a new pact” with private investors.

He wanted to streamline mining regulation to improve the local economy with tax revenues and net capital inflows, he added. Peru’s wealth needed to be distributed more fairly, he said.

“The defeat of the Inca Empire gave rise to the colonial era, it was then … that the castes and differences that exist to this day were established,” he said.

“In the three centuries that this area belonged to the Spanish crown, they exploited the minerals that supported the development of Europe, in large part with the labor of many of our grandparents.”

Challenges to come

Farmers’ son gave his address amid strict health and safety protocols. His inauguration was attended by heads of state and senior ministers from all over Latin America.

Its challenges are significant. He faces the world’s deadliest COVID-19 outbreak, tensions in his party and weak congressional support in a deeply divided country nearly bisected by a June 6 polarized vote that he won by a margin of just 44,000 votes.

There is intense interest in the composition of his cabinet of ministers, which is still confused amid horse trade between the radical wing of his Free Peru party and more moderate advisers and allies.

The cabinet was sworn in shortly after Castillo’s inauguration, but his party announced Wednesday morning that it would be postponed to Friday.

“Castillo’s message will set the guidelines for the start of his administration. But the cabinet and the team he announces will tell us even more about the direction we are going,” said Jeffrey Radzinsky, a management expert from Lima.

Sources close to Castillo have said the role of economy minister will likely go to Pedro Francke, a moderate left-wing economist, who in recent months has helped soften the outsider’s image and calm jittery markets.

JP Morgan said in a note that the investment bank expected to revise its fiscal and growth forecasts for Peru once Castillo unveiled his cabinet and confirmed whether current central bank director Julio Velarde – who is in Peru through a period of turbulence – remains in post.

Castillo, 51, defeated right-wing rival Keiko Fujimori in the election, although his victory was only confirmed last week. Fujimori had claimed fraud without evidence and disputed the result, drawing comparisons to Donald Trump’s tactics after he lost the 2020 US presidential election.

Castillo will face a fragmented congress where he lacks support for key pledges, including his plans to redraw the constitution, as well as tensions with the far-left wing of his party, led by Marxist doctor Vladimir Cerron.

He also faces a balancing act between maintaining investor confidence and strengthening the government coffers to improve the lives of the largely rural base that propelled his unlikely rise to the presidency.

“Castillo must unite the hardcore of his party, but he must do it without destroying the image people have of him, which is that he is against radicalism,” Radzinsky said.

(REUTERS)