• Short Summary


    Peru's President Fernando Belaunde is facing his worst government crisis in nearly four years in power.

  • Description

    1. GVs AND SVs People in courtyard with unemployed miners and their families; women wash clothes in street; children playing; food being prepared in makeshift accommodation; children during school lessons; chanting miners, holding banners (18 shots) 0.53
    ORTIZ: APRIL, 1984: LIMA
    2. GVs and SVs People exchanging Peruvian currency for US dollars in street; exchange-rate signs (8 shots) 1.16
    3. GV AND SVs Market-place with goods on display; people eating food at fast-food stalls; stalls with goods on display (13 shots) 1.54
    4. GVs Closed-down factories (4 shots) 2.03
    PAITA AND AT SEA: 1974
    5. GV AND SVs Harbour with fishing boats in port; fishing boats at sea; men hauling in catch (6 shots) 2.27
    SEPTEMBER 1981
    6. GV ZOOM IN TO Shanty-town on the hillside (3 shots) 2.44
    7. GV AND SCU Beggar in street (3 shots) 2.53
    8. GV People queueing for bread 2.58
    9. GV AND SVs Evicted families with their belongings in the street (3 shots) 3.08
    10. GV AND SVs Demonstrators, protesting at the economic crisis, marching through the streets; police look on (3 shots) 3.24
    11. GVs NIGHT SHOTS Demonstrators chanting and carrying mock coffin, apparently symbolising the anticipated sacking of the Finance Minister, Carlos Rodriguez Pastor (5 shots) 3.45

    Script is copyright Reuters Limited. All rights reserved


    Peru's President Fernando Belaunde is facing his worst government crisis in nearly four years in power. With an economy in tatters, disgruntled workers regularly strike for better pay and conditions. The army is fighting a four-year-old battle with the Moist guerrilla group, Sendero Luminoso (Shining Path). And now, the President has had to form a new Cabinet after his ministers resigned. Last month, the Prime Minister Fernando Schwalb quit his post, citing differences with President Belaunde over economic policies. Schwalb's departure from the government ranks came a month after the resignation of Finance Minister Carlos Rodriguez Pastor, who had faced mounting criticism over his economic programme. The economy has suffered seriously since 1975 because of a fall in the value of Peru's exports, rising imports and the costly nationalisation programme embarked upon by the Belaunde Government.

    SYNOPSIS: Industrial unrest in Peru has intensified in recent months. About 900,000 jobs have been lost since 1980, pushing the level of those without a full-time job to an estimated 60 per cent of the six million workforce. About 150,000 new jobs are needed every year just to keep pace with the fast-growing population of 19 million. Hundreds of miners lost their jobs when the Rio Pallanga mine was closed last year. And now they have brought their plight to the capital, Lima, where they live in makeshift accommodation, surviving only on minimal handouts from their union and local charities.

    Peru is facing a dire economic crisis and much of this has been caused by high international interest rates on its 12.8 US billion dollars external debt. Low world prices for its oil, copper and silver exports have only worsened its problems. The government's failure to meet the targets of its 700 million US dollars extended fund facility programme with the International Monetary Fund (IMF), has led to a delay in paying back massive credits. Finance Minister Pastor's departure has only prolonged the uncertainty of how President Delaunde will be able to comply with the IMF adjustment programme, and, at the same time, reactivate the economy. Peru wildly over-shot its four per cent target set for 1982-1983 because of the spending habits of the country's profligate and influential military which ruled Peru for 12 years until 1980.

    Monetary sources in Washington said the IMF was seeking assurances that Peru would reform its economy. Peru and the IMF have been negotiating intensively since last November, after an earlier accord was dropped when Peru failed to meet its targets.

    Leading economists tip fishing and agriculture to be the potential growth areas in the Peruvian economy. Fishing has always been an important factor. In 1976, anchovy fishing was virtually suspended because of depleted stocks but resumed in 1982 when supplies were once again abundant. Emphasis has been placed on increasing the amount of fish caught for food consumption as opposed to the more wasteful production of fishmeal and oil.

    Peru's government is confident that it can meet the IMF deficit targets, although it is justifiably worried about the impact of its austerity programme on the country's fledgling democracy. Workers are finding that wage levels will take a sharp decline after falling 25 per cent last year. The legal minimum salary is 72,000 soles (32 US dollars) a month. The price of basic foodstuffs will continue to rise, as efforts are made to cut the deficits of bodies such as the state-owned rice marketing agency. Some economists see the major problem area to be the price-rise issue accompanied by an expected increase in labour disputes among a population which is seeing its purchasing power dwindling noticeably.

    Public dissatisfaction at the government's economic record is becoming more vocal. Strikes are commonplace. In March, the President was forced to impose a state of emergency when faced with the sixth general strike since he came to power. Even if Peru succeeds in refinancing a portion of its debt, it will still have to pay 985 million US dollars in interest and capital repayments. And the IMF is encouraging the government to cut military expenditure. But the President is reluctant to get tough with the military. On the one hand, the opposition from the Sendero Luminiso guerrillas is intensifying and on the other hand, Belaunde is mindful that his government was overthrown by the military in 1968. A modest recovery in the world economy would have a significant impact on Peru, pushing up its export prices. But the nation will still find it difficult to fight its way clear of the restraints of its economic straitjacket.


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