Fixed Income Analysis /

Peru: Back to musical chairs?

  • President Pedro Castillo stages a failed coup and is ousted by Congress

  • VP Boluarte takes over adopting a conciliary tone, while domestic assets post a muted reaction

  • Endemic political instability could pave the way to a de-rating

Ramiro Blazquez
Ramiro Blazquez

Head of Research and Strategy

8 December 2022
Published byBancTrust

Pedro Castillo was ousted from power on Wednesday, after attempting to dissolve Congress only hours before the discussion of the third vacancy motion against him. Minutes after the destitution of Castillo, First Vice President Dina Boluarte was sworn in by Congress as president to complete the remainder of Castillo’s term until July 2026. Boluarte adopted a conciliary tone, calling for a political truce and formal dialogues between the different political and institutional actors. Her administration, however, is expected to be extremely fragile. Despite heightened political tensions, Peruvian assets posted a muted reaction. We see a high probability of a repeat of the musical chairs that followed the removal of Pedro Kuczynski, by which Peru had four different presidents between 2018 and 2021.