Kuczynski's speech: better things to come?

5 August 2017

In his speech to the nation on the occasion of Peru’s Independence Day celebrations on 28 July, President Pedro Pablo Kuczynski summed up what many, probably the majority, think: “Peruvians do not want more promises,” he said “they want results”.

However, promises were by no means absent: the Peruvian economy, which will grow by 2.8% this year, will reach 4% next, the president claimed. With all the negatives from his first year behind him, Kuczynski made out that his second year will be a lot better: investment will take off, the mining projects currently suspended will get going, the weather will improve, the relationship with the opposition in Congress will be more harmonious, et cetera.

The problem is that there is no guarantee that all will be, as Voltaire’s Dr Pangloss would say, for the best in the best of all possible worlds. Although it is likely that there will be no repeat of the sort of flooding that beset Peru in the first quarter of this year, it will take time for the increased public spending to filter through into economic growth. Much will depend on the efficacy of sub-national tiers of government to spend the money in ways at once effective and honest.

It also remains to be seen if foreign investment, which has fallen in the last two or three years, begins to recover its lost dynamic. The famous projects like Conga and Tía Maria continue to face strong hostility in their respective regions, with other projects likewise awaiting conferral of a ‘social licence’. And even if investment begins to pick up, it will take several years before it bears fruit in terms of export-led growth.

Perhaps the greatest imponderable relates to the war of attrition between the executive and the opposition-controlled legislature. The meeting between Kuczynski and Keiko Fujimori a few days prior to 28 July may have resulted in smiles on the faces of both, but there is no guarantee as to whether the bonhomie will last. Keiko’s supporters in Congress already show signs of looking for new points of friction with the government. In the near future they will face the challenge of repeating last year’s electoral success in the regional and municipal elections scheduled for November 2018. As campaigning begins, they will seek to berate the government’s record, not to praise it. More ministers may thus find themselves in the congressional firing-line.

If the pattern of previous administrations (those of Toledo, García and Humala) is any guide, the five-year presidential term is one in which presidential support inexorably sinks – even in the face of buoyant economic growth. Absent such growth, the problems of propping up the popularity ratings are likely to become even more evident. The last twelve months have seen Kuczynski’s support sag badly. The next twelve, promises notwithstanding, will show whether Kuczynski can defy this political logic.

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