Peru plunges into political crisis

On December 7, the president of Peru, Pedro Castillo, announced that he would close the Congress and convene a new one with powers to draft a new constitution and "reorganize" the judiciary and the prosecutor's office. This plan collapsed within hours.

Instead, Congress voted by 101 to 6 to impeach him. There were ten abstentions. After an emergency meeting of the high command, the police decided to arrest Mr. Castillo for rebellion. His vice-president, Dina Boluarte, has replaced him.

Despite Castillo’s failure, there is concern about what will happen next. Five days later, on December 12, Ms. Boularte proposed moving the elections forward two years to April 2024. Since then, protests have broken out.

Peru declares a state of emergency

Faced with increasing protests, the Minister of Defense declared a state of emergency for 30 days and announced a curfew in 15 of the country’s 25 regions, worrying the population. The most distressing occurrence is that 21 people are reported to have died during the protests in the last few days.

Economic impact

Many businesses in downtown Lima and even in the provinces have closed their doors as a security measure in the face of the protests and the demonstrators' violence.

The provinces where commerce is most important – Arequipa, Cuzco, and Puno, among others – have decreed curfews, business closures, and in many areas, even road blockades causing a total halt to all economic activity. This is seriously damaging the local economy and paralyzing imports.

This instability can lead to a fall in the value of the Peruvian sol versus the U.S. dollar, which in turn will lead to the shutdown of commercial businesses and a temporary halt in payments.

Written by: Desiree Calderon and Melissa Gervacio?

*This article is informative and is not to be used as legal, economic, or commercial advice.

Source: LAFM