Peru may struggle to find a new political path as Boluarte assumes a very unstable role

By Jose Enriqe Arriola

What comes next for Peru is hard to predict. Dina Boluarte was sworn in December 7 as the nation’s first female president following the removal of Pedro Castillo, 53, who just last year was elected as the first leftist president in more than a generation. And the path ahead may be as complex as ever,  as the Andean nation faces this new political maelstrom with a weakened economy and general inflation running at 7.5%.

Boluarte is the sixth politician to hold the presidency of Peru in five years. And there is a convoluted history behind the recent events: Since 1950, on average, a Peruvian president has been in office for two and a half years, according to LatinTrade.The average had already dropped to two years in this century while the last five presidents only lasted 452 days in office.

And the circumstances are offering another cynical twist. The ousted president is detained in a police prison in Lima where another former president, Alberto Fujimori, is also being held, a judicial source told Reuters on Thursday. 

With an ever-changing political scenario, institutions such as the Organization of American States applauded the new president’s call for “national unity” and offered a much-needed international support as the country will be under its sixth president since 2018. The question is whether Boluarte, a politician lacking popular support and charisma, will be able to steer the country in the right direction by building a much-needed consensus in a very turbulent environment.

“We’re going to continue with the instability, the scenario hasn’t changed very much,” Carlos Meléndez, a political scientist and director at 50+1, a Lima-based consulting firm, told  The Wall Street Journal . “On a scale of one to 10, where Castillo is a one in terms of level of experience, she’s a two. She’s less bad, but still part of that second tier of Peruvian politics.”

For a change, the markets will most likely take in the political drama as investors focus on fundamentals, Reuters reported. With the crisis unfolding yesterday,  the nation’s central bank proceeded as expected to raised its reference rate by 25bps to 7.5%, the seventeenth consecutive hike in a cycle of monetary adjustments that seek to curb high inflation in the Andean nation. But the economy and other economic-related matters are less relevant at this critical crossroad.

Peru’s markets are closed on Thursday for a holiday. The nation’s currency, the sol, weakened on Wednesday immediately after Mr. Castillo’s announcement that he was dissolving Congress. It recovered after he was impeached, closing the day slightly stronger at ~ 3.8/USD, the The Wall Street Journal reported.

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Jose Enriqe Arriola is the Editor of Zignox (jearrioja@zignox.com).

zignox.com 12 08 2022