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Peru cracks down on junk food in schools

Date Added: Sat, 18 May 2013 00:06:49 GMT

PM gets set to jet off to Peru as questions mount over Duffy/Wright deal

Date Added: Fri, 17 May 2013 12:38:44 GMT

Sand surfing in Peru ? where only the dunes are steep

Date Added: Sat, 18 May 2013 04:00:30 GMT

Peru foreign minister meets regional counterparts

Date Added: Sat, 18 May 2013 21:37:29 GMT

Peru gov't completes rural electrification projects in Huancavelica

Date Added: Sat, 18 May 2013 22:07:46 GMT

Peru Mulls Deals to Buy Russian Helicopters, Tanks

Date Added: Sat, 18 May 2013 08:18:40 GMT

Brazilian firm to build thermal plant in Peru

Date Added: Sat, 18 May 2013 06:58:58 GMT

Peru Businessman, Mario Brescia Cafferata, Dies At Age 84

Date Added: Fri, 17 May 2013 17:54:48 GMT

Peru: Government's Revenge On Lawmaker

Date Added: Sat, 18 May 2013 21:55:40 GMT

New UN assessment of disaster risks highlights Peru

Date Added: Thu, 16 May 2013 02:21:16 GMT

Results 1 - 10 of Headlines for Peru

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Only a year into his five-year term, Peruvian President Alejandro Toledo’s popularity has plunged from 59 percent approval in August 2001 to only 15 percent in June 2002, while all of his pro-free-market ministers resigned last week. Privatization chief Ricardo Vega Llona also resigned last weekend after claiming that Toledo lacks the "vision and strategy" needed to address the country’s critical unemployment and poverty crises, according to news reports from Lima.

The collapse of Toledo’s popularity -- and the growing instability of his government -- likely are due to a combination of factors, including his lack of management experience, perceived inability to make tough decisions, unrealistically high voter expectations and even disdain for his indigenous roots. Moreover, instead of confronting his mounting difficulties with sound policies and a more decisive and coherent political discourse, Toledo is bowing to the pressures of his critics and moving away from investor-friendly free-market policies.

For instance, Toledo suspended the government’s plans to sell off state-owned enterprises after violent protests in June blocked the privatization of two electrical power companies in the southern Arequipa region. He also restructured his Cabinet to include eight new ministers more to the liking of the ruling leftist Possible Peru Party and the main political opposition Peruvian Aprista Party, led by former President Alan Garcia.

Toledo’s new Cabinet is expected to support more interventionist policies that recently have found favor among voters in neighboring countries like Argentina, Bolivia and Brazil. However, instead of boosting Toledo’s popularity and credibility with voters and opposition parties, his recent actions appear to have increased widespread perceptions that he is weak and can be manipulated.

For instance, on July 19 Toledo was booed and pelted with rocks and vegetables during a speech in Cajamarca, and even members of the ruling party now are suggesting that it may be necessary to call early elections to defuse the current political situation.

Toledo is scheduled to make a state of the union speech on July 28 outlining concrete policies to promote economic growth, reduce unemployment and raise living standards. Political observers in Lima warn that the formation of the new Cabinet and Toledo’s speech may be his last chance to silence calls for his resignation and early elections. However, the president likely will find it difficult, if not impossible, to balance demands by mainly poor Peruvians to move away from free-market policies against demands by investors for sound policies that would facilitate new investments and loans to Peru.

Toledo and his dwindling circle of political supporters blame the year-old government’s troubles on parallel conspiracies to topple his regime by an extremist faction of the Peruvian Communist Party and imprisoned former spy chief Vladimiro Montesinos. However, Peruvian Nobel Prize winner Hernando de Soto recently told the Lima television network America that Toledo’s mismanagement is the principal cause of Peru’s growing social and political instability.

Popular perceptions that Toledo may be unable to govern Peru effectively also have been bolstered by his refusal to take a court-ordered DNA test relating to a paternity lawsuit brought against him by a woman who claims he is the biological father of her 14-year-old daughter. A recent survey by Lima-based polling company Apoyo, Opinion y Mercadeo found that three-quarters of the country’s voters are upset over Toledo’s refusal to submit to the testing.

His political troubles are snowballing at a time when Peru’s economy is doing considerably better than other countries in the region. Private economists agree with Peruvian government forecasts that the economy should grow about 3.5 percent in 2002. However, Toledo’s government needs to raise at least $500 million in additional revenue in 2002 to close a fiscal deficit estimated at slightly more than 2 percent of GDP, while UBS Warburg bank reported in a recent study that Peru’s debt amortization obligations in 2003 would total at least $1.5 billion.

The privatization program that Toledo suspended would have raised most of the fiscal revenue Peru needs to cover its debt repayment obligations over the next 18 months. New Economy Minister Javier Silva Ruete said last week that selling state-owned enterprises was not the only way to generate fiscal revenues for Toledo’s cash-strapped government, but he did not specify what, if any, alternatives were being considered.

As a result, Peru’s international creditors and potential investors must wait until Toledo’s scheduled July 28 state of the union speech to decide whether to commit more resources to Peru, or if they should instead start disinvesting and preparing for a debt default within the next year.