Promising continued economic growth but reiterating a commitment to greater social inclusion, Ollanta Humala takes office today as president of the Republic of Peru. Fifteen heads of state are to attend, including all the presidents of South America except for Hugo Chávez, who remains in poor health.
Humala, a nationalist former Army officer, won a runoff election on June 5 after campaigning on promises of more fairly redistributing wealth and taxing the windfall profits of mining companies—promises that particularly appealed to residents of rural Indigenous communities. Since then, he has taken noticeable steps to reassure members of the business community, who had feared that his election may dampen the country’s growth and stifle investment. He has said he would not replicate the actions of Hugo Chávez, for example by nationalizing key industries. And in a spate of key cabinet appointments announced last week and earlier this week, including Luis Miguel Castilla—deputy finance minister under outgoing president Alan García—to the post of finance minister, Humala has demonstrated his intention to maintain continuity with at least some of the previous administration’s economic policies.
Even as Humala signals a desire to maintain Peru’s current rate of economic growth (nearly 9 percent in 2010), analysts believe he will reiterate his commitment to income redistribution and social inclusion today. The rate of overall poverty in Peru is more than 30 percent, and stark inequalities between urban and rural areas persist. During his campaign Humala promised to increase the monthly minimum wage from 600 soles ($220) to 750 soles ($272); create pensions for the indigent; and increase spending on social services for the poor through a windfall tax on gold and copper producers. Nonetheless, as Carlos Monge, a researcher at the Centro de Estudios y Promoción del Desarrollo (Center for the Study and Promotion of Development), points out, members of the economic team the president-elect has assembled have not historically shown themselves to be enthusiasts of taxing mine companies.
Humala will face pressure to continue following through on promises to boost spending for the poor. Renee Ramirez, general secretary of Peru’s Education Workers Union, said, “The new government has built up such great hopes that if it doesn’t follow through there’ll be a big divorce…We threw our weight behind Humala but we didn’t write him a blank check.”
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.