Leftwing candidate Pedro Castillo seemed poised for victory in Peru’s nail-biting presidential election on Monday and spelt out his economic proposals in a move clearly designed to calm jittery financial markets.
With 96 per cent of the vote counted, Castillo had 50.3 per cent to 49.7 per cent for Keiko Fujimori, his rival — a difference of 93,000 votes from a potential electorate of 24.3m people. Earlier on Monday Fujimori had been almost 100,000 votes ahead.
Many of the remaining tallies were due to come in from rural areas, where Castillo is strongest, and although ballots from Peruvians living abroad are likely to favour Fujimori it appears they will not be enough to tip the balance back in her direction.
In private, some Fujimori supporters in Lima were admitting defeat, although she gave a news conference on Monday alleging electoral fraud, suggesting she might be prepared to fight if Castillo’s victory is confirmed.
The sol, which has depreciated sharply in recent weeks in anticipation of a possible Castillo victory, lost more than 2 per cent against the dollar to trade at an all-time low of 3.93.
Peruvian stocks plummeted, with the S&P/BVL Peru General index roughly 7 per cent lower on the day in New York. The country’s dollar bonds also came under pressure. The price of a note set to mature in 2050 dropped roughly 2 per cent to 129 cents on the dollar. Another dollar bond maturing in 2031 fell more than 1 per cent to 99 cents on the dollar.
“We anticipate volatility for Peruvian assets and note that demonstrations against results from both sides is a possibility given the tightness of the race,” Citibank noted.
In an apparent bid to calm markets, Castillo’s team issued a statement outlining its economic plans. It was far more moderate than the campaign manifesto of his party, Peru Libre.
“We have not considered nationalisation, expropriation, confiscation of savings, exchange controls, price controls or import prohibitions in our economic plan,” the statement read.
Castillo’s team said it would “respect the autonomy of the central bank, which has done a good job [of] keeping inflation low for more than two decades”.
It confirmed, however, that as president Castillo would seek to raise taxes on mining companies to pay for health and education spending.
The election has been an extraordinary tussle between populists from opposite ends of the political spectrum.
Castillo is a rural primary school teacher turned hard-left crusader for the downtrodden, while Fujimori is the widely disliked daughter of Peru’s authoritarian former president Alberto Fujimori.
The prospect of a Castillo victory has sparked panic and capital flight among the Peruvian elite. The sol has depreciated further against the dollar than any other currency in the world since the first round of voting in April, when Castillo first emerged as a frontrunner. Dollar-sol transactions have jumped by about 20 per cent in the past month.
In its manifesto, Free Peru advocated nationalisation, higher taxes, a new constitution and a curb on imports in one of the world’s biggest producers of copper, zinc and precious metals. Fujimori, in contrast, largely defends Peru’s economic model.
Castillo has roused people in poor, neglected villages in the Andes with a simple but powerful message: “No more poor people in a rich country.” Fujimori’s bid to become Peru’s first female president, meanwhile, has been complicated by corruption allegations that she denies.
Whoever wins will not have a majority in congress. Castillo’s party has 37 of the 130 seats in Peru’s unicameral parliament while Fujimori’s has just 24.