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The new president of Peru, Pedro Castillo, has appointed a moderate leftist as his finance minister in a move that could calm markets after a turbulent few days.
Castillo confirmed to former World Bank economist Pedro Francke during a late-night ceremony in Lima on Friday.
Francke was widely expected to get the job – until Thursday, when Castillo was unexpected a stubborn left designated, Guido Bellido, as its Prime Minister. This called into question the ministerial appointments: moderates, including Francke, apparently withheld the idea of working with Bellido.
When Castillo confirmed most of his cabinet on Thursday night, Francke was not there. He left the venue shortly before the burglary ceremony and raised questions about whether or not he refused to accept the post. The post of Minister of Finance has been left vacant.
On Friday, markets reacted badly. The Peruvian stock market fell by as much as 6 percent, while the currency, the sol, achieved its biggest one-day loss in seven years and fell for the first time ever through the psychological barrier of four soles against the dollar.
After the markets closed, Bellido made a peaceful offer to Francke, saying that the 60-year-old economist had “our full support” to implement the economic program against which Castillo campaigned in the second round of the election, which he won on June 6.
The program is less radical than a previous version, which has frightened many investors, although it still requires urgent changes in the mining sector in Peru, the second largest copper producer in the world.
Francke’s appointment comes after three eight – track days in Peru.
Wednesday – the 200th anniversary of the independence of the country from Spanish rule – Castillo was sworn in his post during a ceremony rich in symbolism. A rural primary school teacher who has never held a public office, he saw his rise to power as a victory for the downtrodden in Peru.
The next day, he astonishes everyone with his appointment of Bellido, a Marxist congressman who is widely regarded as an excuse for Shining Path, the Maoist guerrilla group that waged a bloody war against the Peruvian state in the 1970s and 1980s.
The appointment Castillo’s government plunged into crisis almost as soon as it began, alienated potential moderate and centrist allies.
Francke’s appointment could repair the damage, but Castillo will likely still struggle to get his agenda through parliament.