By Marco Aquino
LIMA (Reuters) – Peru’s new Cabinet started to take shape on Wednesday as lawyer and long-time politician Ántero Flores-Aráoz said he had agreed to be the Andean country’s new prime minister and pledged to hold a steady course amid the recent political upheaval.
Flores-Aráoz said in a radio interview he had accepted the role after the controversial removal of centrist President Martín Vizcarra on Monday plunged the world’s no. 2 copper producer and a regional economic outperformer before the pandemic struck into turmoil.
Congress head Manuel Merino, who had led the charge to impeach Vizcarra twice in recent months, took office on Tuesday, with question marks about how an interim government would steer the country ahead of planned elections in April.
“We have a very strong economic crisis, galloping unemployment, plus the health crisis, it is not the best time to do experiments,” Flores-Aráoz told RPP radio.
Some analysts fear that Merino could allow Congress to make a populist swerve amid the painful impact of the coronavirus pandemic and as the country heads for its worst economic contraction in a century.
“These events generate uncertainty, which can erode investor confidence and reduce the capacity to implement reforms,” ratings agency S&P said, though added that the often crisis-hit country’s rating was not impacted for now.
“An unexpected negative shift in macroeconomic policies that harms Peru’s record of predictable policymaking would be negative for the rating.”
Fitch Ratings in a report on Wednesday said that Peru’s fragmented Congress meant that cabinet instability and the risk of impeachment had become the “new political norm” which could hit plans to reduce the deficit and the post-pandemic rebound.
“Persistent governability challenges and perceptions of weakening institutions could also weaken the 2021 economic recovery,” Fitch added.
Flores-Aráoz, who was a legislator for many years and also a former defense minister, said he hopes to carry out an “orderly transition” and pledged transparent elections on April 11.
The ouster of popular Vizcarra, who long battled Congress over his anti-corruption drive, saw hundreds of people take to the streets to protest, with several clashes with the police.
There were no major demonstrations early on Wednesday, but new protests have been called for on social media.
Peru, a Latin American growth success story with stable state policies, has meanwhile experienced constant corruption scandals that have led to three former presidents to pretrial detention and another to commit suicide in the past 20 years.
(Reporting by Marco Aquino; Additional reporting by Rodrigo Campos; Writing by Adam Jourdan, Editing by Alexandra Hudson)
