Peru GDP Slowdown Derails Confidence Vote for Humala Cabinet

Peruvian President Ollanta Humala’s sixth cabinet in three years failed to obtain a vote of confidence from Congress as lawmakers blamed his government for failing to revive a slowing economy.

The majority of the lawmakers abstained from voting on the issue and a second vote will be held at 9 a.m. Lima time tomorrow, according to a statement on Congress’ website. The entire cabinet will have to resign should it fail to win the backing of Congress tomorrow.

The vote comes at a time when the government seeks Congress’ support for measures to reactivate an economy that grew 0.3 percent in June from the year earlier, the weakest expansion in almost five years.

“It’s this government, not the opposition, that has changed the cabinet every six months,” Juan Jose Diaz, a lawmaker from the main opposition party Fuerza Popular, said during the debate that preceded this morning’s vote. “This is one of the reasons why Peru finds itself in a process of clear deceleration.”

Ana Jara, a congresswoman for the ruling Nationalist party, was appointed Humala’s sixth cabinet chief on July 22. Rene Cornejo, her predecessor, resigned after America Television reported that one of his advisers had been plotting a campaign to discredit an opposition lawmaker.

Reactivating Demand

The sol gained 0.1 percent to 2.824 per U.S. dollar at 12:15 p.m. in Lima, according to Datatec prices. The country’s sol-denominated bond due 2020 fell 0.04 centimo to 115.73 centimos per sol.

Before the vote, Jara, the third woman to hold the post in Peru’s history, laid out the government’s plans to increase spending on education, health and policing, and reactivate the economy.

Humala’s government has stepped up spending after exports slumped and private investment stalled in the first half of the year. Humala decreed public sector pay increases and bonuses last month as part of measures to boost gross domestic product by 1 percentage point.

Lawmakers have yet to debate a government proposal to soften tax legislation for the construction industry to bolster growth.

Gross domestic product rose at an annual pace of 3.3 percent in the first half, compared with 5.2 percent in the same period a year ago. June’s 0.3 percent expansion compared with the 1.6 percent median estimate of analysts surveyed by Bloomberg.

Humala’s approval rating rose to 29 percent, a six-month high, this month from 25 in July, according to Ipsos Peru. The poll of 1,247 people between Aug. 12-14 had a margin of error of 2.8 percentage points.

“The economic difficulties are clear,” Alberto Beingolea, an opposition lawmaker, told Lima-based Radio Programas today. “We need a government that’s capable of listening to economic proposals from other parties.”

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