As customary, President Martín Vizcarra gave his Independence Day speech to Congress on 28 July, while some of the other activities associated with Fiestas Patrias were cancelled because of Covid-19. It was his last such speech before he hands over office to a successor this time next year.
Much of the speech was a spirited defence of his government’s policies in response to the pandemic. He argued that without a radical lockdown – which included suspension of all forms of travel, the closure of schools and most businesses, and a nightly curfew – the death toll would have been much higher.
It needed to be spirited. As readers of the newsletter will be painfully aware, Peru has one of the world’s highest Covid-19 mortality rates in relation to its population, and its economy is likely to be among Latin America’s worst affected. Unemployment is rising rapidly with some 2.6 million people estimated to have lost their jobs, with a consequent increase in the numbers of people living in poverty.
In order to offset the suffering of individuals and families, Vizcarra stated his intention to make a second payment to vulnerable people valued at the equivalent of US$215. The first payment was made in May, but many found themselves excluded by lack of access to the banking system. Others became infected with the virus as they visited banks to receive their cash payment. Orphans whose parents have died from the virus will now also receive US$56 a month.
Vizcarra also offered to increase government spending on health in this year’s budget by around US$420 million. The emergency response to Covid-19 has already resulted in a substantial increase in health spending. Peru is paying the price for giving only low priority to health spending over recent decades, a point acknowledged by Vizcarra in his address, especially in the field of public health.
The president used his speech to urge Congress to pass speedily his package of political and judicial reforms, invoking what he called “a pact for Peru”. Readers will also be aware of the fact that Congress has gone out on a limb since its election last year to sponsor projects that cut across the executive’s chosen policies. Vizcarra appealed to unity in overcoming the Covid-19 crisis, in improving educational standards, and in promoting sustainable development.
The president’s speech was significant for what it did not contain. Little mention was made, for example, of the sort of economic policies that will be employed over the next year to reactivate an economy that is likely to contract by over 12% in 2020. It is probable that more attention to this will be paid by Pedro Cateriano when he delivers his speech to Congress this week in order to win a vote of confidence in the new cabinet.
Cateriano, appointed in mid-July, is considerably closer to the private sector than his predecessor, Vicente Zeballos. His designation was warmly welcomed by Confiep, the confederation that represents and lobbies for business interests. Confiep has for years been pushing for a ‘liberalisation’ of the labour market making it easier to hire and fire workers at will. It will be interesting to see what he says in his speech on this topic.
Other omissions include reference to attempts to reform the pension system and proposals that have surfaced in recent weeks to increase the burden of taxation on the rich.
As regards mining, Vizcarra sought to strike a balance between the interests of companies and people living near to mining activities. But some specific points underline the suggestion previously enunciated by Cateriano that some of the regulatory hurdles in the path of investment look like being struck down.