Peru’s Lame-Duck President in Last-Ditch Move for Redemption

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Peru’s President Ollanta Humala will ask Congress for special powers this week to tackle an economic slowdown as one of Latin America’s least popular politicians makes a last-ditch attempt to salvage his administration.

The powers would last for 120 days and enable Humala to rule by decree on issues ranging from mining projects to Amazon river-boat services. It is the broadest set of powers the president has requested from Congress since coming to office four years ago.

“It’s definitely positive that they’re doing something at the end of the government,” said Pablo Secada, chief economist at the Peruvian Economy Institute in Lima. Should Congress approve the request, it “will have an impact on investor sentiment and help improve Humala’s standing.”

The president needs the boost. His approval rating fell to a record low 16 percent in May after deadly protests broke out against the Tia Maria copper mine project and the economy expanded at the slowest pace since 2009. With just 13 months left of his five-year mandate, and Peru’s ban on consecutive terms, Humala needs to move quickly to revive an economy that still has the lowest income per capita of any major Latin American nation.

“We can’t stop work for the next year,” Cabinet Chief Pedro Cateriano said in an e-mailed statement June 5. “This isn’t a transition government.”

In a continent where most presidents have seen their popularity decline, Humala’s lack of support only compares with that of Brazil’s Dilma Rousseff, whose approval rating fell to 13 percent in April. The last Peruvian president to be this unpopular was Alejandro Toledo in 2006.

Revitalizing GDP

Congress may deny the government legislative powers in some areas and demand a review of the measures later on, said Carlos Casas, a former deputy economy minister who’s a professor at Universidad del Pacifico in Lima.

Last year, Humala tried to revitalize the economy with increased spending and tax cuts. While lawmakers passed the latter in weeks, Congress took six months to approve plans to streamline bureaucracy and ease permitting rules. They nixed some labor and social security proposals altogether.

The measures that did get through had little impact. The economy expanded 1.7 percent in the first quarter from the year earlier, up from 1 percent in the previous three months and down from 1.8 percent in the two preceding quarters.

Too Late

The problem for Humala is that the measures are more likely to boost growth under the next government than his, Casas said.

Legislative powers “are a convenient way of governing but usually they’ve been requested toward the start of a government when it has a lot of political backing,” Casas said in a phone interview.

Cabinet Chief Cateriano plans to go to Congress on Friday to make the president’s case for additional economic and crime-fighting powers, before lawmakers enter recess on June 15. The government on Tuesday sent a similar proposal to legislate on security issues.

Fourteen defections since July 2011 have left Humala’s Gana Peru coalition with 33 of the 130 seats in Congress. An opposition lawmaker probably will be elected president of Congress next month, Casas said. The last time a member of opposition headed Congress was in 2004.

The president’s press office didn’t respond to an e-mailed response for comment on the government’s request for special powers.

Economic Proposals

The government’s economic proposals comprise administrative measures for industries as diverse as housing, infrastructure, electricity, mining, aquaculture and banking. Among its aims are expanding the home rental market, luring investment funds to real estate, and speeding up projects under its infrastructure concession and taxes-for-works programs, according to a document sent to Congress June 2.

“This is a move by the technocrats who want to advance reforms and have seen them contaminated by the political side,” Casas said. “They’re in somewhat of a hurry to implement reforms that will be the basis for stronger economic growth, not this year, but further ahead.”

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