PERU: Peru's new president has pledged to do what few Latin-American leaders have achieved: seduce Wall Street with prudent policies and simultaneously lift millions out of poverty.
In a sign of the optimism surrounding former President Alan Garcia, who won Peru's presidency at the weekend, stocks in Lima surged 3 per cent yesterday, thrilled by his pledges of strong economic growth and a low budget deficit. Peru's foreign bonds also climbed.
Mr Garcia is aiming to atone for the dire record of his 1980s term.
Hundreds of thousands of people danced in the streets on Sunday night shouting: "He's going to give us a better life," ecstatic at the prospect of his promises of loans, schools, drinking water and cheap petrol.
However, making good on ambitious promises of 7 per cent annual economic growth, a fiscal deficit of 1 per cent of gross domestic product and cutting both illiteracy rates and soaring domestic fuel prices could be too much for Mr Garcia.
"The country is a time bomb," wrote Augusto Alvarez, editor of respected daily Peru.21, in an editorial. "The benefits of progress don't reach the half of Peruvians who live in poverty, many of them in the southern Andes and who did not vote for Garcia."
Mr Garcia's left-of-centre American Popular Revolutionary Alliance will have a minority share of Peru's fractured congress, outweighed by the nationalist movement of former army commander Ollanta Humala, whom Mr Garcia beat with 55 per cent of the votes to 45 per cent with 84 per cent of votes counted.
Mr Humala vows to be a fierce opposition leader. He garners huge support from rural areas where he won 70 per cent of the vote in some southern provinces, underscoring Peru's polarisation between the impoverished Andes and a coastal society that is home to foreign-owned megamarkets, banks and beauty salons.
"The south [ of Peru] is always looking for a messiah . . . We are going to have a serious problem [ in alleviating poverty there]," Mr Garcia recently told the US-based think-tank the Inter-American Dialogue.
Mr Garcia's first term, 1985-1990 , which began with high hopes, quickly went sour when he sharply limited international debt payments. The virtual default made the country an international financial pariah, and Peru spiralled into hyperinflation that destabilised the economy.
Mr Garcia staged a huge political comeback from the economic distress and food lines by courting bankers in visits to New York and sporting traditional Andean dress in trips to remote towns that have barely changed since the Spanish conquest of the 1500s.
That was a tactic that worked for outgoing Peruvian president Alejandro Toledo, the son of an Andean labourer who played up both his indigenous roots and his training as a US-educated economist.
While Mr Toledo succeeded in helping Peru's $75 billion economy grow for an unprecedented four straight years, though, he failed miserably in his promises to create jobs and prosperity for the poor, making him one of Latin America's most unpopular leaders with a single-digit approval rating in 2005.
"Garcia's challenge is to devise policies that will work for the good of the poor," said Daniel Hewitt, senior international economist at Alliance Bernstein in New York, which invests in Peruvian sovereign bonds. "He's going to have to take his government to a new level."