Emerging Insight: Peru elections – Uncertainty lingers

Research evidence excerpt

Emerging Insight: Peru elections – Uncertainty lingers

on by conservative candidates at the

expense of leftist adversaries. Peru would be the seventh if Fujimori wins. And Colombia –

to be held on 21 June – could become the eighth. In Peru, political analysts argue the most

formidable force in Peruvian politics is anti-Fujimori sentiment (rejection of former

President Alberto Fujimori’s legacy) which – in their view – explains why Keiko, his

daughter, lost three consecutive runoffs (2011, 2016, 2021). That is why Fujimori

potentially wining in 2026, in her fourth try, would be supportive of the Latam trend

hypothesis.

Clearer picture of economic policy under Fujimori

Visualizing what economic policy would look like in a Fujimori government is easier

because the Fujimoristas were in office for over a decade (Keiko says she feels proud of

her father’s economic policy decisions) and controlled majorities in Congress since 2016.

Inter alia, we believe there would likely be a deregulatory push in the mining sector (to

boost the ~$60bn in mining projects), macro discipline, civil service modernization

reform, and efforts to sell Petroperu’s assets (reducing the drag on fiscal accounts)

although with some changes compared to the decree passed by the government last

December.

Guidance on fiscal policy is a bit mixed though

On the one hand, the message is hawkish. Fujimori’s economic advisers have proposed

to cap the growth of current government expenditures at the inflation rate (so these

should shrink, as a percent of GDP, if nominal GDP growth is positive) and request the

Constitutional Tribunal to prevent Congress from approving laws that increase

government expenditures (in line with Article 79 of the Constitution, whose enforcement

weakened a lot in the last two years).