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Kuczynski's economic reforms in Peru hit hurdle in Congress


LIMA (Reuters) - A key panel of Peru's opposition-controlled Congress rejected a request by President Pedro Pablo Kuczynski to expedite his economic reforms, the first blow to his bid to revive flagging domestic demand.

All but one member of the budget panel on Wednesday voted against giving Kuczynski's centrist government special powers to legislate the reforms, saying they appeared to be unconstitutional and needed in-depth review, according to a statement from Congress.

Kuczynski's government has been pressing lawmakers to clear the way for new policies it says are urgently needed to jumpstart private investments after a three-year slump.

Kuczynski, who took office July 28, has proposed boosting infrastructure development through private-public partnerships, trimming the value added tax rate to help small businesses and raising corporate taxes to rein in the fiscal deficit.


Every Peruvian president this century has been granted special powers for legislating initial reforms.

But the rightwing party of Kuczynski's defeated rival Keiko Fujimori, which controls some 70 of 130 seats in Congress, has said it needs more time to evaluate the reforms. The opposition has especially criticized a proposal to raise the deficit ceiling.

Kuczynski, a 77-year-old former investment banker, won this year's presidential election with one of the weakest recent mandates, beating Fujimori by less than a quarter percentage point and securing just 18 seats for his party in the single-chamber Congress.

But his approval rating climbed to 63 percent in September, and 91 percent of Peruvians think Congress should give him special powers to legislate his economic reforms, according to an Ipsos poll published Sunday.

The request will ultimately be decided by the plenary.

(Reporting by Marco Aquino Writing by Mitra Taj; Editing by Clarence Fernandez)