Peru Elects Centrist Lawmaker Francisco Sagasti as Third President in One Week

RIO DE JANEIRO, BRAZIL – Peru’s Congress on Monday elected legislator Francisco Sagasti as Peru’s interim president in an attempt to defuse a sharp political crisis in the Andean nation after angry protests and the departure of two presidents in the past week.

Sagasti, 76, from the centrist Morado Party, won enough votes to head the unicameral Congress, which means he would constitutionally assume the presidency of the country ahead of national elections called for April.

The move makes Sagasti Peru’s third president in a week, after interim leader Manuel Merino resigned on Sunday, five days after being sworn in following the ouster of centrist Martin Vizcarra.

Sagasti, a former World Bank official and engineer, faces a formidable challenge to bring stability to the world’s no. 2 copper producer, which was already hard hit by COVID-19 and heading for its worst economic contraction in a century.

Sagasti, who received 97 votes in favor with 26 against, is set to complete the current government’s mandate that ends in July 2021 and will include the holding of general elections on April 11.

Peru’s Congress overnight had knocked back another candidate, Rocío Silva-Santisteban, a leftist human rights defender, raising concerns over a power vacuum.

“The main thing for Peru is to regain stability and for this nightmare to end,” legislator Alberto de Belaunde, from the same Morado Party, told reporters ahead of the Monday vote.

Settle the Nerves?

The recent crisis started when Vizcarra, a popular independent who has long clashed with Congress over his anti-corruption stance, was impeached and removed from office by lawmakers last week over allegations of graft, which he denies.

It was the second impeachment Vizcarra had faced in two months, after surviving the first one in September.

Merino, who as president of the Congress led the impeachments, succeeded Vizcarra. But he too resigned, after two people died in protests against his fledgling government and lawmakers threatened to impeach him unless he stood down.

Citibank said in a note earlier on Monday that Sagasti would likely help calm the situation and support rattled markets. Sovereign bonds fell on Monday amid fears of a political vacuum and the currency hit a record low. “If Sagasti is elected, that might be enough to settle the market’s nerves as well,” Citi said in a note, adding that it did not rule out the return of Vizcarra.

“(But) tensions are likely to remain high for now, and the situation places downside risks on our macro outlook.”

Shamaila Khan, director of emerging market debt at AllianceBernstein in New York, said it would take an “extreme” candidate to really hit Peruvian bonds hard. “Political volatility has been part of the Peru landscape for some time,” she said.

Source: Reuters