Why Uncertainty Tops the Ballot in Peru’s April 11 Election


Peruvians are voting April 11 for what will be their fourth president since November in an election that has rattled investors. Years of rapidly improving living standards have been set back by political chaos, the deepest economic crash in three decades and a bumbling response to the pandemic. None of the 18 presidential candidates inspire much enthusiasm, and even the front-runner only has 15% support, making a June runoff almost inevitable. (The new president will take office on July 28.) The high level of uncertainty -- voters are also electing a new congress -- combined with populist proposals from some candidates have whipsawed the bond and currency markets.

1. Who’s leading the race?

Most polls show Yonhy Lescano, a former congressman with the Popular Action party, as the front-runner. He’s promised to share the country’s vast mining wealth and use the central bank to bring down consumer interest rates. Like his rivals, Lescano, 62, has pledged to end endemic corruption, saying he will permanently sideline politicians and government contractors charged with graft. Polls show him with a narrow lead, with four other candidates close behind.

2. Who are the other contenders?

Among those fighting for a spot in the runoff are Hernando de Soto, an economist and property-rights advocate, who was the director of the Central Bank from 1978-1980; Veronika Mendoza, a French-educated former congresswoman whose proposal to levy a wealth tax on the rich has won her support from the left; George Forsyth, a former soccer player and mayor who is offering an amnesty for those who bring their money back to Peru; former congresswoman and presidential candidate Keiko Fujimori, the daughter of imprisoned former President Alberto Fujimori; Rafael Lopez Aliaga, a socially conservative businessman who has talked about driving down “usurious” interest rates; and Pedro Castillo, a community organizer and teacher who says Peru should spend 10% of its gross domestic product on education.

3. What about congress?

Peruvians will elect 130 legislators to their single-chamber congress. With 20 parties fielding candidates, political watchers expect a fractured and divided legislature, which will require the next president to build a coalition or face more instability.

4. Why are investors nervous?

Beyond the fact that there’s no clear leader in the race, a number of candidates have proposed tax hikes, wealth redistribution schemes and greater economic controls. Despite a rally in commodities -- Peru is the world’s largest copper producer after Chile and also a major exporter of zinc, gold and silver -- Peru’s sovereign bonds posted losses of 8.9% this year and the sol hit record lows, before rebounding in April. Investors are already pricing in some risks, but a strong showing for Mendoza could potentially accelerate the sell-off, according to Felipe Hernandez, a Latin America analyst at Bloomberg Economics. Even so, Peru has strong fundamentals, including low debt, an investment-grade credit rating and a flexible credit line with the International Monetary Fund, which reassures investors.

5. What triggered the recent political chaos?

Martin Vizcarra came to power in 2018 when his predecessor, Pedro Pablo Kuczynski, resigned amid vote-buying allegations. The following year, Vizcarra dissolved congress only to clash with the replacement legislature. When prosecutors began investigating allegations that he’d taken kickbacks from the construction sector when he was a regional governor, he had no party in congress to defend him. He stepped down in November 2020 after lawmakers voted 105-19 to impeach him. His replacement, Manuel Merino, resigned after only five days in office, leaving Francisco Sagasti, a former World Bank official, at the helm of the country.

6. How widespread is corruption?

Graft is pervasive at many levels, and since 1985 every president but one has either been impeached, imprisoned or sought in criminal investigations. La Republica newspaper reported that six out of the 18 presidential candidates and 134 congressional candidates in the 2021 race are either facing corruption allegations or are being investigated.

Why Uncertainty Tops the Ballot in Peru’s April 11 Election

7. How bad has the pandemic been?

Peru’s per-capita death toll is among the highest in the world. A strict lockdown early on crushed the economy but failed to stem the spread of the virus. Allegations that politicians and their families -- including the deposed Vizcarra -- jumped to the front of the vaccination line have only helped undermine faith in the political class. That dismal outlook could play a role on Sunday. While voting is obligatory, a full 17% of those polled say they plan to cast blank or intentionally invalidated ballot.

The Reference Shelf

  • An Americas Quarterly article on the 2021 elections.
  • The view from the OAS’s Inter-American Commission on Human Rights.
  • A rundown on the graft scandals embroiling recent presidents.
  • Bloomberg Opinion’s Mac Margolis on Peru’s ugly politics.

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