Peru's Humala aims to calm investors over economy's direction

July 22, 2011 at 6:24 AM
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LIMA, July 22 (UPI) -- With a week to go before his inauguration Peruvian President-elect Ollanta Humala rushed through Cabinet appointments likely to reassure investors he wouldn't emulate Venezuelan peer Hugo Chavez when reforming the Latin American country's economy.

Peru is showing healthy growth but critics want more substantive changes to legislation and regulatory frameworks to embed the benefits of that growth. Peru's investor community and international partners also have hinted they want assurances Humala won't embark on state interventionism or extreme measures such as nationalization.

Humala visited Chavez for a goodwill visit before he flew to Cuba to continue cancer treatment. Humala loyalists said the president's visit to the populist Venezuelan firebrand was a brotherly gesture rooted more in Latin American nationalism than sympathy for Chavez's radical policies.

Humala has already indicated he will seek close partnerships in the United States and has described U.S. ties as strategically important for Peru. The shift took observers by surprise as until recently Humala was widely regarded as a populist firebrand in the mold of Chavez.

After he lost the 2006 president election to Alan Garcia, the former army officer began changing tack and, before this year's race for the presidency, reinvented himself as a center-left politician with an ambitious program of reducing income disparities in Peru.

He also made clear he wanted to protect foreign investment in the country and encourage more entrepreneurs to take part in Peru's economic growth. Humala wants more industry and less dependence on commodity exports as the source of Peru's sustenance through the coming years.

Peruvian economy is growing at an annualized 7.1 percent, below last year's performance but still strong -- unlike Chavez's Venezuela, an oil-rich nation now in the second year of recession.

Despite the growth, however, Humala's election victory spread alarm in the Peruvian economic sector, prompting some companies to hold off new investment.

Even after Humala's repeated assurances and frequent pronouncements the economic sector is waiting to see how Humala will fare in the first few months in office, which means investment this year may still be slow.

Incumbent Alan Garcia, blamed for some of the worst economic crises in Peru's recently history, caught up with economic reforms that seek to support business and investment, the declared agenda of the new president-in-waiting.

Humala has also vowed to follow more realistic poverty reduction programs in support of the country's population of 30 million, the fourth largest in Latin America after Brazil, Colombia and Argentina.

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