Poverty and other challenges ahead for Peru’s new President Kuczynski

Pedro Pablo Kuczynski, center, celebrates with his running mates for first and second vice-presidents Martin Vizcarra, left, and Mercedes Araoz, right. File June 5, 2016. (AP Photo/Rodrigo Abd, File)

Over the past few decades, Peru has become something of a poster child for the World Bank, rising from a struggling South American nation into the ranks of Latin America’s most successful economies. Along the way, the country has slashed its national poverty rate from a staggering 54 percent in 2002 to less than 23 percent by 2014.

But a recent drop in economic growth has Peru’s growing middle class concerned, and all eyes are on newly elected President Pedro Pablo Kuczynski, a well-respected economist and former U.S. citizen, to keep the economy growing and continue the fight against poverty.

“Poverty has been slashed in half in the last ten years, but we still have too many people in poverty and too many people who are right on the edge,” said Cynthia Sanborn, a political scientist at Lima’s University of the Pacific, in an interview with Humanosphere.

In a country of 30 million, about 8 million remain poor, and 3.7 million are living on less than $1.90 a day. Poverty is deepest among indigenous populations living in remote rural areas, such as the Quechua and Aymara communities in the arid Andean highlands. The rural poverty rate in Peru is more than 50 percent.

During his campaign, Kuczynski made promises to lower taxes for small businesses to bring them into the official economy, and invest in infrastructure and running water for the 10 million Peruvians who lack it. His supporters are counting on these promises, as well as those to strengthen the country’s institutions, curb corruption and crime, and diversify the mining-heavy economy.

One of the most critical social issues in Peru is informality in the workforce, said Sanborn. According to a recent report, 74 percent of Peru’s workers are not “on the books” – among the highest rates in Latin America.

“We have a significant number of Peruvians who are vulnerable to any kind of setback,” Sanborn told Humanosphere. “Many Peruvians, even though they have climbed out of poverty in the lower-middle classes, can easily slide back, and don’t have the kinds of protections [they need]like a steady job with a contract, a pension or any kind of unemployment support.”

Kuczynski has proposed to formalize Peru’s workforce through expanded access to credit for small- and medium-sized enterprises (SMEs), raising the minimum wage and adding 3 million jobs to the formal economy.

All things considered, it won’t be easy for Kuczynski to pass his plans for reform through Congress. Kuczynski is handicapped by the fact that his party won only 18 of the 130 seats in Peru’s Congress during the first round of voting, while Fujimori’s party, Fuerza Popular (Popular Force), holds more than 70 seats.

“Anything this government wants to do will have to be approved by the Fujimori bloc,” Martin Tanaka, a political scientist at the Pontifical Catholic University of Peru, told World Politics Review. While Kuczynski is technically capable and may have good policies, he added, the effectiveness of his administration will hinge on its ability to negotiate.

Immediately after having been declared the winner of the election, the president-elect began meeting with some of his former rivals, the Buenos Aires Herald reported. A meeting with Keiko Fujimori is in the works and is expected to take place over the next few days.

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Lisa Nikolau

Lisa Nikolau is a Madrid-based reporter for Humanosphere, covering gender equality, indigenous rights and poverty in Latin America and worldwide. Find her on Twitter at @lisanikolau, email lisa.nikolau@humanosphere.org or see her latest work at www.lisanikolau.com