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Peru’s presidential election

  • With 98.33% of votes counted, Pedro Castillo from the far-left Free Peru party was the frontrunner with 50.20%,
  • Due to the closeness of the race, isolated altercations between pro-Castillo and pro-Fujimori supporters could escalate
  • If Castillo wins, he will likely seek to increase corporate taxes, and renegotiate extractive-sector contracts.

IHS Markit Analyst: Veronica Retamales Burford

Preliminary results from the second round of Peru’s presidential election, which took place on 6 June, show (as of the time of publication on 9 June) a likely victory for far-left candidate Pedro Castillo.

Peruvian presidential candidate Pedro Castillo gestures at supporters from a balcony of his party's headquarters in Lima on 7 June 2021.

Ricardo Moreira/Getty Images

  • With 98.33% of votes counted, Pedro Castillo from the far-left Free Peru (Perú Libre: PL) party was the frontrunner with 50.20%, while conservative candidate Keiko Fujimori of the Popular Force (Fuerza Popular: FP) party had 49.79%. The results are subject to change as some of the rural votes and foreign vote are still being counted. With the candidates separated by just over 0.5% and 71,764 votes apart, neither side is likely to concede until the National Office of Electoral Processes (Oficina Nacional de Procesos Electorales: ONPE) announces a final result. In 2016’s tight presidential race the ONPE took four days to complete counting before announcing the winner. Fujimori has claimed that irregularities have taken place in the vote. Electoral authorities have refuted the claims. Once results are final, she is likely to request a recount of the vote and challenge the results.

  • Because of the closeness of the race, isolated altercations between pro-Castillo and pro-Fujimori supporters are likely to escalate, especially if the vote counts continue for several days, as is likely. Protests have taken place outside ONPE offices following the early results on 6–7 June. There is a high risk of confrontations between supporters of rival candidates and security forces, with the latter using teargas against protesters. Protests are likely to concentrate in Lima near the historic centre and outside ONPE offices throughout the country, especially in the southern areas of Peru where Castillo preliminarily obtained between 65% and 85% of the vote, such as Arequipa, Cusco, and Puno.

  • If Castillo wins, he will be likely to seek to revise the 1993 Constitution, increase corporate taxes, and renegotiate extractive-sector contracts. Castillo’s programme proposes an increase in the role of the state with the revision of the 1993 Constitution to “recover strategic resources”. Although he originally proposed expropriating the main mining sites, Castillo is now likely to seek instead that 70–80% of companies’ profits be retained by the state. Currently, the all-in tax rate for the Peruvian mining sector amounts to 47% of profits. To impose such contract changes Castillo would be likely to seek a reform to Title 3 (the Economic Regime) of the Constitution, which guarantees the functions of a market economy and delimits the role of the state to one of subsidiarity. Amending the Constitution would require the backing of 67 of the 130 members of Congress, followed by approval in a public referendum, which remains unlikely.

  • A Fujimori victory would be very likely to result in broad continuity in economic policy, promoting private investment in the mining sector. Fujimori does not support changes to the Constitution and would maintain the existing mining code, which dates from the 1990s, both designed by her father, former president Alberto Fujimori (1990–2000). He is currently serving a 25-year sentence for corruption and human rights violations. Keiko Fujimori would be likely to prioritise improvements in the technical capacities of the Ministry of Energy and Mines to attract more foreign direct investment. However, because of the increase in copper prices since February 2021, she has proposed an additional “voluntary contribution” from mining companies to finance the construction of reservoirs and irrigation channels to develop the agricultural sector.

  • Castillo will be constrained by the lack of a parliamentary majority if he wins. If Fujimori wins, she is still likely to need to negotiate support on an issue-by-issue basis. Castillo’s PL will be the largest party in Congress with 37 of 130 seats, but he is only likely to form a coalition with left-of-centre’s Together for Peru (Juntos por el Perú: JPP), leaving him with 41 votes. If he wins, Castillo will be forced to negotiate to implement his legislative agenda with Fujimori's FP, which holds 24 seats. He will also need to negotiate with centre-right and right parties Alliance for Progress (Alianza para el Progreso: APP), Popular Renewal (Renovación Popular: RP), and Forward my Country (Avanza País: AP), which supported Fujimori in the second round. If Fujimori wins, she will have the initial support of APP, RP, and AP, and is likely to receive the backing of a faction of centre-right Popular Action (Acción Popular: AP) of around eight seats, putting her close to a majority of 66 of the 130-seat Congress. However, given Peru’s weak party system and the formation of factions within parties, Fujimori is still likely to need to negotiate her agenda heavily in Congress.

Indicators of changing risk environment

Increasing risk

  • Vote counting extends beyond 9 June, exacerbating tensions with supporters of each candidate and leading to public allegations of voter fraud; this would result in protests, many of which would be likely to involve violence in the form of vandalism, especially of election and party offices, and government buildings. Repeated allegations of fraud by either candidate would make this outcome more likely and increase the probability of protests turning violent.

  • If Castillo loses, grassroots movements, particularly in the southern parts of Peru such as Arequipa, Cusco, and Puno, where according to preliminary polling he obtained a high proportion of support, would carry out disruptive protests claiming voter fraud, including roadblocks affecting mining operations and access to the Matarani port in Arequipa.

Decreasing risk

  • An overwhelming victory by Castillo in the remaining rural areas leading to his election would decrease risks of prolonged protests, especially if Fujimori concedes within the first 24 hours of an ONPE declaration.


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