Spotlight: Peru's presidential race frontrunners expected to work together to boost economy

As Keiko Fujimori and Pedro Pablo Kuczynski are heading to a runoff with the majority of the votes counted, Peruvians hope that the two candidates can work together to solve the country's economic and social problems.

HEADING TO RUNOFF

Fujimori, of the Popular Force (FP) party, has won 39.77 percent of the votes cast in the first round of Peru's presidential elections, the National Office of Electoral Processes (ONPE) said Tuesday.

With 96.07 percent of the votes tabulated, the ONPE's latest figures showed Fujimori garnered nearly twice as many votes as runner up Pedro Pablo Kuczynski, of the conservative Peruvians for Change (PPK) party, who received 21.01 percent.

Those numbers showed that a vast majority of Peruvians, some 75 percent, voted in the general elections to continue along the country's current economic path, as the winner and runner up of the presidential race both belong to conservative center-right parties.

The two will face off in a June 5 runoff to determine who will take office on July 28 for a five-year term.

The FP also won a majority of congressional seats, while the PPK is poised to be the second largest political group in parliament, according to Tuesday's vote count.

WORKING TOGETHER

After growing at an average annual rate of 6 percent for nearly 10 years, Peru's economy has slowed down in recent years. Growth registered 2.7 percent in 2015 and is expected to reach a maximum of 4 percent in 2016.

While Peru's gross domestic product (GDP) has grown threefold since 1990, which surpassed 200 billion U.S. dollars and raised the per capita income to more than 7,000 dollars, it has fallen due to the global financial crisis and low international prices for raw materials.

Minerals such as copper, gold and iron represent 60 percent of Peru's exports.

Still, Peru's economy remains relatively healthy, with the inflation rate at 4.1 percent in 2015, more than 61 billion dollars in net international reserves, and a falling poverty rate that has gone from 55 percent in the 1990s to 25 percent today.

To revitalize the sluggish economy, analysts recommend diversifying production -- given that the extractive economic model that relies on raw material exports currently brings in lower profits, and the country needs to continue to create jobs -- through greater national and foreign investment, and tax reforms to boost government revenues.

The government needs to expand its tax base by promoting formal jobs in a country where informal employment is as high as 65 percent.

Besides, average Peruvians have concerns about the quality of their public services, especially the lack of drinkable water and sanitation; the availability of decent, well-paying jobs; education and healthcare; and crime, corruption, drug trafficking and money laundering.

In the lead-up to the runoff, Peru's nearly 23 million registered voters are expecting to see Fujimori and Kuczynski present and debate their proposals to solve these problems.

Both Fujimori and Kuczynski, in their first statements to the press following the exit polls and preliminary results, agreed that Peru's voters want their politicians to work together, reach a consensus and commit themselves to tackling the country's problems.

By working together and forming alliances with other congressional political groups, the two candidates could carry out structural reforms to strengthen state institutions.

Fujimori proposes using a Fiscal Stabilization Fund of more than 8 billion dollars to finance infrastructure investment, create the Public Investment Management Unit, and zero taxation of mini- and small-sized companies for a period of two years.

She also proposes raising the fiscal deficit for spending on social welfare programs and allowing communities around mining and oil sites to become shareholders in extraction companies.

Kuczynski proposes gradual cuts in the general sales tax, lowering the price of fuels, granting tax breaks to small- and medium-size companies, cutting red tape, and creating unemployment insurance to replace worker compensation.

Both candidates want to attract foreign direct investment and domestic investment (by tapping into national savings) in some 50 large-scale mining projects that need some 60 billion dollars in investment to get off the ground, as well as greater legal and environmental guarantees.

Other areas in which the two candidates concur include the need to extend drinkable water and sewage services to some 10 million Peruvians, promote agriculture, expand transport and communications infrastructure, and improve education and healthcare.

Both candidates have also proposed expanding welfare programs, distributing wealth more equally, increasing international markets for Peru's goods through free-trade agreements or treaties, and spurring innovation, science and technology. Endi