New Peru Leader Tries to Restore Calm With Cabinet Pick

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Peru’s new president, Manuel Merino, tapped an experienced former defense minister to lead his cabinet as he seeks to bring stability back to a nation in turmoil.

Antero Flores-Araoz was sworn in as cabinet chief Wednesday and said he’s in talks with the president about picking a ministerial team.

Peru has been in political chaos since congress impeached President Martin Vizcarra on Monday over corruption allegations. Merino, as head of congress, assumed the presidency Tuesday, giving the country its third head of state in less than five years.

New Peru Leader Tries to Restore Calm With Cabinet Pick

The surprise ouster of the country’s most popular leader in decades triggered street protests against what some see as a power grab by the opposition. A nationwide protest has been called for Thursday evening.

Flores Araoz told RPP radio the government’s priority is to leave the country in an orderly state for the next government. He declined to identify his choice of finance minister, saying he still has to discuss it with the president.

The Organization of American states said Wednesday it’s up to the country’s top court to comment on the “legality and legitimacy” of Vizcarra’s ouster.

Peru’s constitutional court is expected to rule next month on a lawsuit filed by Vizcarra’s administration in September that seeks to curb congress’ ability to impeach the president on the grounds of “permanent moral incapacity.”

Sol Rebounds

Peru’s sol posted a small gain Wednesday, after falling to an 18-year low Tuesday. Investors are braced for more political turbulence as the country struggles back from one of the world’s deepest economic slumps.

JPMorgan Chase & Co. cut its recommendation for Peruvian equities to underweight from overweight, saying it expects political uncertainty to increase significantly until the April 11 general election.

Moody’s Investors Service warned Tuesday the new government looked unlikely to stand in the way of populist congressional initiatives that risk undermining Peru’s creditworthiness.

But the new cabinet chief said he’s criticized the recent wave of populist proposals from congress and will continue to do so.

“We have a major economic crisis, runaway unemployment and a health crisis. It’s not the best moment for experiments,” Flores-Araoz said.

Since a new congress took office in March, with Merino as its head, the legislature has passed measures that Vizcarra’s government considered reckless, such as allowing Peruvians to withdraw a quarter of their private pension savings during the pandemic and pressing for payouts from a state retirement fund.

Peru’s neighbors issued contrasting statements on the change of leadership. While Chile’s Foreign Ministry wished Merino well, Colombia noted the progress in bilateral and regional issues during Vizcarra’s administration, and made no reference to the new president.

Flores Araoz was a lawmaker from 1992 to 2006 with Peru’s conservative Popular Christian Party, and head of congress from 2004 to 2005. He served as defense minister during the government of Alan Garcia from 2007 to 2009, and made a failed bid for the presidency in 2016.

©2020 Bloomberg L.P.

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