Vizcarra gets his way
After gleaning that Congress was dragging its feet on his four proposed constitutional amendments, President Vizcarra addressed the nation on TV and accused the congressional majority of trying to modify them. The president implied that if his call for a referendum was delayed or denied, he could, according to the Constitution, dissolve Congress as this would be the second time he’d called for a confidence vote.
Three days later, Prime Minister Cesar Villanueva presented a vote of confidence to secure the prompt approval of the constitutional amendments. Not only Congress granted its confidence to the cabinet, but did also approve the amendments to be voted in the referendum on schedule. Vizcarra has called for the referendum to be held December 9th, to coincide with the runoff election for regional governors. But he has shown his disapproval of changes introduced to his proposal on the bicameral system, which could bring further conflicts of power.
In October 7th elections for local and regional authorities, the great surprise was the triumph of Jorge Muñoz (of Accion Popular), elected mayor of Lima. But by large, most of the subnational elections were gained by regional movements. In at least three regions the elected governors could be considered leftist populist or holding views opposite to the mining industry. Runoff elections will now be held December 9th for governorships of 15 of Peru’s 25 regions.
The annulment of the pardon that ex-president Pedro Pablo Kuczynski granted to the aging ex-president Alberto Fujimori is bound to inject further polarization into Peruvian politics. Further, her daughter and leader of Fuerza Popular was sent to 10-days imprisonment in the context of a preliminary investigation on contributions by Odebrecht during her 2011 presidential campaign.
The Central Bank, in its September quarterly report, maintained its 4% GDP growth projection for the year, but cut its 2019 projection from 4.2% to 4%. We think the Bank’s estimate is still optimistic. Inflation is rising: we expect the 12-month figure to be around 2.3% by yearend.
The Bank raised its forecast for the external current account deficit (converging toward our July 2nd forecast). We don’t expect the Central Bank to raise its policy rate until well into 2019.
Fiscal revenues are continuing to increase strongly, and a deficit of only 2.7% seems now likely.
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