Peru’s Finance Minister Pedro Francke is set to release the nation’s reimagined macroeconomic plan today.
The newly-elected President, the left-wing trade unionist Pedro Castillo, campaigned on changing the country’s economic model. Castillo’s model proposes formulating a new constitution which would endow the state with new active business and regulator responsibilities. Additionally, he proposed prioritizing the payment of the country’s internal debt with the workers, such social debt to approximately 200,000 teachers.
Castillo’s leftist takeover shook the financial markets pushing the Peruvian currency to record lows. Castillo has since tried to redirect the crisis with the incorporation of Francke, a moderate leftist economist, as his Minister of Economy and Finance. Still, while he has ruled out the much-feared nationalization of companies, he affirmed a policy of redistribution and greater social spending.
Francke will likely be tasked with maintaining investor confidence while trying to revive an economy battered by recession and COVID-19. Likely he will prioritize an increase in mining taxes and fight against corporate fiscal evasion to spend more on health and education. However, the plan will need support from the population as the government tries to address uncertainty and a complex political environment.
Valeria is a research analyst for the Current Developments team and a regular contributor to the Daily Brief. As the head of the Latin America – Caribbean research desk, she focuses on Latin American politics, foreign policy and security issues.