Politics Torpedoes Growth

Sep 1, 2002

A casualty of the politics surrounding Alejandro Toledo's first year as president, Pedro Pablo Kuczynski succeeded in growing Peru's economy, sealing a deal with the IMF and issuing a historic international bond. But the public failed to embrace his free market ideas.

A political career in Latin America can be brutally short these days, especially for those associated with the free market policies the region has struggled with since the 1990s. Last year, street fighting in Buenos Aires brought down the government of Fernando de la Rúa. More recently, bloody riots in Peru and Paraguay broke out to protest privatizations. The damage in Arequipa, Peru's second city, was so bad that Alejandro Toledo, Peru's increasingly unpopular and isolated president, postponed his privatization program and reshuffled his cabinet, kicking out supporters of free market policies he had brought in to reassure markets that he would not indulge in populism. The collapse of Toledo's cabinet in the wake of the riots with the departure of the interior minister, foreign minister and Prime Minister Roberto Dañino, prompted Toledo to replace these pro-market stalwarts with more pliable appointees. Pedro Pablo Kuczynski, economy and finance...

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