What are the proposals of Pedro Francke, the new Minister of the Economy of Peru? | Finally, he was sworn in before President Pedro Castillo

The images transmitted by the Peruvian media on Thursday evening were eloquent: the economist Pedro Francké He was withdrawing through the back door of the Grand National Theater, walking alone, without making a statement, while the president of PeruPedro Castillo has appointed 16 of his team’s 18 members, including Prime Minister Guido Bellido, an appointment that later cost the government multiple criticisms from both right and left.

The photos of the collapsed Francke contrast with other images also widely disseminated, in which he appeared triumphant, celebrating the electoral triumph from a balcony and with his arms raised, next to Castillo.

From that moment, just a few hours after the projections of favorable votes for the leftist candidate were known, Francke’s option as possible Minister of the Economy consolidated as the most consensual version in the dance. names for the cabinet, a certainty only comparable to the appointment of Hernando Cevallos to the Ministry of Health.

This Friday almost at midnight, and after a two-hour conclave they had had earlier, Castillo finally succeeded in appointing Francke as Minister of the Economy and Finance.. “For sustained progress and good living, with equal opportunities regardless of gender, ethnic identity or sexual orientation, for democracy and national consensus, I swear,” Francke said at the time. of the taking of the oath, in what could be interpreted as a message to Bellido and to the sectors aligned with the secretary general of Free Peru, Vladimir Cerrón.

Far from the more conservative positions of the traditional Peruvian left, Francke cultivated a technical and moderate profile, both at the head of public functions and in his role as advisor to the former presidential candidate Verónika Mendoza, Castillo’s main “lima and urban” partner.

In the toughest moments of the electoral campaign, Francke had to reassert himself in this role. “We have nothing to do with Venezuela’s proposal, we will not expropriate and we will not nationalize,” Francke repeated in each interview, while Keiko Fujimori insisted on his plans to “stop the outbreak. ‘arrival of communism’ in the country.

The career and the economic program

When taking the oath, they called him by his full name: Pedro Andrés Toribio Topiltzin Francke Ballvé. The 60-year-old teacher and magister was trained at the Pontificia Universidad Católica del Perú and has extensive experience in public administration.

He was director of Foncodes, a program of the Ministry of Development and Social Inclusion, during the government of Alejandro Toledo (2001-2006) and director of Social Security of Peru (known by the acronym Essalud) in the government of Ollanta Humala (2011 -2016). He has also served as parliamentary advisor on education and health issues and senior human development economist at the World Bank.

As technical advisor to the Mendoza (Together for Peru) candidacy, Francke showed his letters on economic policy. The program of this political force aimed to recover three million jobs in 2022 and a strong commitment to reactivate the economy from public spending.

It aimed to finance temporary employment programs, the delivery of bonds to vulnerable sectors and public purchases of agricultural products. A program of the Ministry of the Economy called “Reactiva Peru” would be the tool to activate these plans.

In an interview published on March 21 by Ojo Público, Francke assured that the Peruvian State is able to face these investments with the funds available in the Public Treasury. This public expenditure, according to the economist, would generate macroeconomic and infrastructural conditions that would later allow to revive private investment.

“It is undeniable that the private sector generates more investment than the public, but in this crisis, companies are not at their best either. We are not opposed to them entering the economy, but it is a job in which the state cannot be by their side, ”the economist told Peruvian media.

After this step to overcome the impacts of the pandemic, the Together for Peru program has set itself more ambitious objectives, such as a tax reform, a tax on large fortunes (more than 100 million dollars) and an increase the tax burden on large properties.

In more recent interviews, Francke has proposed moving towards a “popular economy with a market,” according to Radio Programs of Peru. “We want agriculture, small businesses, micro-enterprises and entrepreneurs to grow and develop, this is where the vast majority of Peruvians live and work.”He said in July, when his name was already consolidated as an alternative to the Economy Ministry.

“We will scrupulously respect family savings, private property, the functioning of the markets and we will keep inflation under control, the rest is just a lie”the economist said, in response to the attacks he received from Fujimori.

Regarding the fiscal space to increase the tax burden on mining companies, a sensitive subject for the Peruvian economy, Francke was cautious but determined to move forward: “There is an economic space which allows the State to obtain more resources, while respecting the fact that companies demand a reasonable profit. Peru needs these resources to improve its education and health, especially now. It is the power of the state to change the tax rules ”.

Critics of Cerrón and his relatives

the Francke’s gradualism is a guarantee for the markets, but it also arouses criticism from the left, as we saw even before his official appointment.

Although he has not spoken publicly on the matter, mainstream Peruvian media speculate that Francke did not take office on Thursday due to annoyance over Guido Bellido’s appointment as prime minister. . Bellido is a man close to the secretary general of Peru Libre, Vladimir Cerrón, and before his appointment he had made critical remarks towards Francke.

“Other professionals who have all the rights like Pedro Francke are evaluated (for the economy). It doesn’t bother me personally, but I see where it is headed (economically) and it’s not based on the party’s program and postulates, ”Bellido said.

The now “prime minister” had also demonstrated against the continuity of Julio Velarde as head of the Central Reserve Bank (BCR), as Castillo and Francke claim. “Is there not another patriotic professional who can take over the leadership of RBC?” Why do you want to keep Julio Velarde? What’s the trick? The people voted for real and profound change, ”posted Bellido on his Facebook account.

Cerrón, for his part, visited the Francke intersection, also from his social networks. Francke often repeats that “high level” civil servants are needed. It smells like the Chicago Boy. These have failed for decades. We need change and self-confidence, ”Cerrón tweeted on Sunday 25.

Velarde’s continuity at the Central Bank

In Peru, the name Julio Velarde is synonymous with “tranquility in the markets”. The president of the BCR has held this technical post for 15 years and in mid-June announced his intention to step down from the civil service. However, Castillo asked him on Saturday June 26 to remain in office.

“Our commitment is to maintain a balanced budget and improve the quality of public expenditure, to promote investments and to respect the independence and autonomy of the CBR. Therefore, our will to ratify Dr Julio Velarde in as president of this important institution, “Castillo wrote in your Twitter account.

Francke acknowledged that Castillo’s proposal was intended to be a signal to “reinforce the idea of ​​pursuing monetary stability” and keep inflation levels low “as the BCR is working on it”. These gradual signals generated “calm in the markets” and a “positive” exchange rate reaction, according to a survey published hours later by the Peruvian newspaper La República. Francke also asked Socorro Heysen, head of the Superintendence of Banking and Insurance (SBS) to remain in office, to “take care of the financial system” of the country.

Beyond political tensions and signals to the market, Francke will have to face a complex situation. The pandemic caused the worst GDP drop in 30 years and an estimated 30% of the population – around three million people – earn less than $ 100 a month, according to The Economist.