PERU: ALAN GARCIA PEREZ INAUGURATED AS PRESIDENT.

Former president of Peru Alan Garcia Perez (1985-1990) returned to office on July 28. Among his first acts as president were declaring austerity in public spending, reducing his own salary, and calling for the death penalty for child molesters. In the Congress, Mercedes Cabanillas, a member of Garcia's Alianza Popular Revolucionaria Americana (APRA), won the presidency of the 120-member legislative body.

Pledges austerity

The 57-year-old Garcia, sworn in as president 16 years after his first five-year term ended in a debt default, hyperinflation, and food shortages, said his new government would provide jobs, housing, and health care while seeking to avoid excessive spending.

Garcia attacked waste in the administration of outgoing President Alejandro Toledo, a Stanford University economics graduate and Peru's first democratically elected leader of indigenous descent.

Speaking at the nation's Congress after receiving the presidential sash, Garcia said he would seek to renegotiate natural-gas contracts to lower local prices and force employers to accept an eight-hour day with overtime pay for all workers. "Peru can grow and advance much more," Garcia said in his inaugural speech. "But it must be growth with a stable currency and prices."

Garcia said he would close six embassies and cut the president's salary and that of other officials by executive order to help fund some of his proposals.

Garcia said that in the first 17 months of his new administration he plans to spend US$1.6 billion to build roads, schools, and health clinics in rural areas where poverty is most severe. He said the program would be funded with loans from international lenders like the Inter-American Development Bank (IDB), voluntary contributions from mining companies, and savings from austerity measures. Peru's overall budget is nearly US$16 billion.

He said he would restore the agricultural loans offered to peasant farmers during his first administration, a program that was widely criticized as wasteful and subject to political patronage.

Garcia said he was lowering the annual presidential salary from US$144,000 to US$60,000. Toledo originally set his salary at US$216,000, the highest of any Latin American president, but later reduced it under intense public pressure.

Garcia also said he was lowering the pay of 17,000 high-ranking officials. Other austerity measures include halving the Government Palace's US$6 million annual budget and directing the savings to a rural...

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