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Peru’s Finance Minister Awaits Congress Move After Hearing

Opposition lawmakers are set to grill Peru’s Finance Minister Maria Antonieta Alva in congress in a move that may sideline her.

Peru’s Finance Minister Awaits Congress Move After Hearing
Maria Antonieta Alva, Peru's finance minister, speaks during an interview in Lima, Peru. (Photographer: Miguel Yovera/Bloomberg)

Peru’s Finance Minister Maria Antonieta Alva, seen as a rising star for steering an ambitious package to cope with a devastating pandemic, is facing the risk of being ousted by opposition lawmakers who say she didn’t do enough to prevent the economic slump.

Lawmakers from two parties including the leftist Union Por Peru are planning to present a censure motion against the minister, who on Monday completed her second day answering questions from legislators, including some dissatisfied with her handling of the economy.

If congress accepts opening proceedings, the motion would be put to a vote within seven days and would need the support of 66 of the unicameral parliament’s 130 lawmakers to pass.

While the minister gained popularity for her initial success with the recovery package, opponents are questioning whether the government did enough as Peru’s economy deteriorates. With the power for congress to vote on the censure of cabinet members, the minister would have to resign if the motion is approved.

The last time a finance minister was censored by Peru’s congress was 141 years ago, according to Lima-based newspaper El Comercio.

Peru’s Finance Minister Awaits Congress Move After Hearing

Peru led the global economic crash in the second quarter with a 30.2% drop in gross domestic product compared to a year earlier, as the pandemic shuttered businesses and put almost half the country’s urban population out of work. By several measures using a per-capita-basis, the country has one of the world’s highest virus death tolls.

“No one ever imagined that a pandemic would come and shake this nation’s economic structure,” Alva told lawmakers at the end of Monday’s hearing. “These are difficult times but all our energy should go toward combating the one and only enemy and picking ourselves up, like we’ve picked ourselves up after other crises.”

Peru is set to hold presidential and congressional elections in April. The current congress is split among nine parties, and with no representatives of its own, the government has suffered repetitive legislative losses.

The country can’t afford to lose a finance minister with Alva’s experience in managing the budget at a time when the economy needs more fiscal stimulus, said Hugo Perea, chief economist at Banco BBVA Peru.

“The minister has done really well in a position of high uncertainty, in a situation where there’s no manual to follow,” he said by phone. “In such a difficult situation, I’d like to see who could have done any better.”

Central Figure

In any case, the government is standing by Alva. Cabinet Chief Walter Martos told the Correo newspaper Sunday that if approved, the censure would be a grave mistake and damaging for the country. Appointed almost a year ago, Alva is a central figure in President Martin Vizcarra’s cabinet, part of a rising generation of new leaders, and is seen as a good communicator in explaining policy to a nervous public.

Congress and the government have been at odds over economic policy since the pandemic hit. Last month, lawmakers approved a bill ordering the state-run retirement fund to make a one-time payment to contributers despite government warnings that the measure is unconstitutional.

Lawmakers have also ordered automatic pay rises for some medical professionals and temporarily suspended road tolls, while local pension funds have warned of a bond rout should congress approve a second withdrawal from private pension accounts.

During Monday’s hearing, members of Union for Peru and We Can parties accused Alva of doing more to help corporations during the pandemic and ignoring the smallest firms, while indicating they would support a censure motion. A lawmaker from a third party called for Alva to quit while leaders from two others said she should continue in her post.

“There were errors and problems but now is not the time for these type of exercises,” said Luis Valdez, a lawmaker with Alliance for Progress, the second-biggest party in congress, told RPP radio. “Peru needs us united, working together.”

Last week, Alva called on lawmakers to not jeopardize the country’s hard-earned reputation for prudent fiscal management. Peru plans to take advantage of low borrowing costs with the sale of as much as 40 billion soles ($11.3 billion) in local currency bonds next year, helping to finance the budget and reverse a deep economic slump.

©2020 Bloomberg L.P.