Castillo cabinet points to troubles ahead in Peru

Significance

The delayed ratification of Pedro Francke as finance minister was designed to calm concerns. Castillo’s agenda, outlined in his Independence Day speech to Congress, sought to blend the demands of his party with a programme that seeks to appease the private sector. Lacking a majority in Congress, Castillo will have difficulty in legislating.

Impacts

• Cabinet splits may soon emerge, further testing Castillo’s leadership skills.
• Peru’s international credit rating may suffer if Castillo abandons economic orthodoxy.
• Castillo’s ability to honour promises to vaccinate 70% of the population by year-end will be a metric of initial success.
• International support for the new government may prove fleeting if foreign investments are endangered.