Peru’s Interim President Eyes New Debt Amid Economic, Political Crises

RIO DE JANEIRO, BRAZIL – “Our country has the capacity to raise debt at interest rates that are relatively reasonable,” interm President Francisco Sagasti, 76, said late on Thursday evening, November 19th, in his first interview since taking office earlier this week amid a sharp political crisis in the country.

“When one has space to raise debt and you are going through a crisis, that is what you have to do,” he explained.

Sagasti, a centrist lawmaker, has taken the reins in the nation amid some of Peru’s most heated demonstrations against the political classes in decades, which saw huge protests in which two people killed and dozens injured.

Peru had been an economic success story for almost three decades, but the coronavirus pandemic has hit the country’s mining-driven economy hard, pushing up poverty levels and driving it towards its biggest annual contraction in a century.

The government of the ousted President Vizcarra had launched one of the region’s biggest economic package to weather the coronavirus crisis, including cash transfers for the most vulnerable, even as mining production was hit by a lockdown.

The stimulus package will cost around 20% of Peru’s pre-pandemic gross domestic product, though the economy is set to contract 12.5% this year and tax revenue has dipped 30%.

Sagasti says his interim administration is weighing the possibility of spending more on new cash transfers. He added said that while mining was key, there were other areas of industry such as agriculture, fishing, and forestry that had enormous potential for growth.

“Let’s not just get obsessed with one sector of the economy in a country that is so rich and that has so much diversity in terms of natural resources,” he said.

Sagasti said he would look to promote measures that balanced foreign investment with the needs of local communities and the environment. “What the government will do is create the conditions and act as a guarantor of the rights of communities and investors, we have to be a mediator,” he stated.

Source: Reuters