Humala Says ‘National Consensus’ for Free-Market Economic Policies

Humala - Jun-28-13President Ollanta Humala on Thursday said there is a “national consensus” on Peru’s free-market economic policies.

In a investment conference organized by Spanish newspaper El Pais and Peruvian daily La Republica called Invest in Peru, Humala said there is a broad agreement about Peru’s economic policies.

“Discussions today could be political, but I think the economic path that Peru has taken is one in which there is a national consensus,” Humala said. “Today, we are one of the top recipients of foreign investment in Latin America.”

Humala’s comments on the economy are the latest attempts to boost business confidence inPeru, as the economy has slowed in recent months. It also follows concerns from the private sector that Humala could change economic policies, especially if Economy and Finance Minister Luis Miguel Castilla leaves the cabinet.

Castilla, Luis Miguel - Apr 2013There has been widespread speculation that Castilla could resign in the coming weeks, despite denials from the government. Some analysts believe that Castilla’s departure from the government could be a signal that the government would not continue with free-market economic policies that have been implemented in Peru during the past decade.

The Eurasia Group, however, does not agree. It said this week that it would not expect a change in economic policies if Castilla left.

“It is unlikely that Castilla’s departure would prompt a shift in the direction of macroeconomic policy, since the first couple has little incentive to abandon the current framework,” the Eurasia Group said.

“Humala is also clearly sensitive to swings in investor sentiment, so if Castilla leaves the cabinet, he would likely be replaced by another orthodox economist who is viewed as investor-friendly,” it added.

2 Comments

  1. Otiose Dodge says:

    This, in my opinion, is just another indicator that Humala intends to march in lockstep with the Washington Consensus ideology, and hence avoid any real commitment to solid social progress. I also think that it’s high time that Peruvians get over the trauma of the Shining Path years, which I think are impeding them from realizing that the Washington Consensus has been empirically debunked as a sustainable solution to countries’ economic problems and that sustainable solutions can come from other ideological approaches. Macroeconomic indicators are hardly the true reflection of what is going on in a country, and the simmering social conflicts all over the country are likely to boil over as frustration grows. I think Humala is showing his deep political immaturity with these comments. Sad day.

    • You raise some good points. Though the neoliberal policies of the Peruvian Government have served the country well in some respects, I think that Humala has just continued with the motions from previous years, and let the markets “solve” the problems without implementing any substantial social policy. Humala does not really have the experience or the political clout to break through the barriers of the post – shining path anti communist economic ideology, which Peru is lazily easing into as the answer to all problems. Though the Peruvian economy will most likely continue to grow, there need to be some social changes, primarily in the public education sector if you ask me (which is poor even for regional standards). Peru has the resources and the labor force to appease the extractivist industries which are dominating the export sector, but this source of revenue is NOT sustainable. We need a more diverse economy, and better social programs to take care of the Peruvian people, but we should still regard the free markets for what they’re worth, after all, we don’t want to turn a 180 degrees and become Bolivia.

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