Peru launches $1.6 billion economic recovery plan after protests

By Marion Giraldo and Kylie Madry

(Reuters) -Peru’s finance minister on Thursday announced a $1.55 billion plan to revive the economy, impacted by weeks of protests that have followed the ouster of former President Pedro Castillo.

Alex Contreras said the package, costing 5.9 billion soles and to be financed with extra tax income and funds left over from the 2022 budget, will target regions most affected by the unrest and roadblocks.

It will create an estimated 130,000 jobs over the next 12 months and help raise economic growth to 3% in the next quarter, he said.

Measures rolled out over the next six months include expanding welfare provisions like pensions, soup kitchens and access to natural gas in homes as well as public works, and investments in mining and agriculture, Contreras said.

At least 22 people have died during the protests, which have also crippled trade activity. They came to a head after Castillo was removed from office and arrested as he tried to illegally dissolve Congress.

His former vice president, Dina Boluarte, took his place and declared a state of emergency, giving security forces special powers and limiting freedoms such as the right of assembly.

Contreras, who was appointed by Boluarte, said the protests by Castillo supporters and those unhappy with her government had caused the country to lose around 100 million soles a day, plus infrastructure damage.

Total losses come to 1 billion soles, or 1% of Peru’s December GDP, a ministry presentation showed.

Peru is the world’s No. 2 copper producer, though the industry had already been facing protests and road blockades from local communities before the political turmoil caused by Castillo’s exit.

With the plan, the Andean nation will maintain its growth estimate of 3.1% to 3.9% for 2023, Contreras said.

This month, Contreras told Reuters the country would hold steady to “non-negotiable” fiscal deficit targets.

($1 = 3.8017 soles)

(Reporting by Marion Giraldo and Kylie Madry; Editing by Brendan O’Boyle and John Stonestreet)