ANALYSIS

Peru's Toledo stumbles on promises, politics

LIMA, Peru, March 26 (Reuters) - When he was running to become Peru's first president of Andean Indian descent, Alejandro Toledo's campaign slogan was simple: "To work!" 

Now, eight months into his term, many Peruvians are waiting impatiently for the U.S.-trained economist to roll up his sleeves and do just that. 

Analysts say that while Toledo hailed a return to true democracy after former President Alberto Fujimori's 10-year hard-line regime, his sheen has faded fast amid political sparring and over-the-top promises. Many Peruvians say he hasn't acted on tough issues like jobs and poverty. 

With polls showing his approval rating down to just 25 percent, Toledo's strong reputation abroad could be battered even as Peru looks to leave corruption scandals behind and reel in badly needed foreign investment, they said. 

"People are disenchanted with Toledo. He promised a lot and this is the price," said Guillermo Loli of consultancy Apoyo. 

Peru seems a country barely keeping its head above water with 54 percent of its 26 million people scraping by on $1.25 a day or less, unemployment and underemployment over 50 percent and a quarter of people without access to medical care. 

The streets where laid-off state workers and mothers from sprawling shantytowns protest nearly every day are at night a refuge for homeless, drugged-out 13-year-old gang members and teenage prostitutes, their cheeks still plump with baby fat. 

MAKING GOOD ON HIS PROMISES 

When Toledo, a former shoeshine boy who studied at Stanford University, took office last July, world observers praised his pledges of market economics with a human face. 

A major global bond issue this year was hailed by Wall Street. Toledo hosted U.S. President George W. Bush in Lima last weekend, sealing Peru's newfound respectability, and the government says its work programs have created 54,000 jobs. 

But many Peruvians complain Toledo, who often appears in a hard hat and safety goggles on factory visits or pledging relief for a flood-stricken shantytown, is still in campaign mode as he makes promises on which he simply cannot deliver. 

"The bad thing about Toledo is that he just keep promising and he's not a candidate anymore. He's digging his own grave," said 38-year-old taxi driver Andres Paredes. 

Even Economy Minister Pedro Pablo Kuczynski, seen by Wall Street as an anchor of fiscal discipline, said "there can't be a promise a week." 

Rumors that Kuczynski, a respected former investment banker, could resign before the scheduled end of Toledo's term in 2006 have sent shivers down the spines of businessmen. 

Juan Ribaudo de la Torre, who heads the National Fishing Society, groaned at the thought of Kuczynski leaving. "It would be terrible for us. (He) doesn't dole out populist measures." 

Kuczynski, who denies he will soon step down, is one of Toledo's most unpopular ministers, along with Prime Minister Roberto Danino, a former high-powered Washington lawyer. 

"Kuczynski and Danino ... have fabulous international reputations but the poor don't like them," said Manuel Torrado, head of Datum pollsters. 

ECONOMY AND JOBS CRUCIAL 

But even more important for many Peruvians is whether the government can reignite a stalled economy and turn around rampant poverty. 

Latin America's seventh largest economy grew by just 0.2 percent last year. Officials say 2002 will be more encouraging with 3.5-4.0 percent growth. But Peru must keep a close watch on state spending to hit budget deficit goals. 

The "populist" current that business leaders fear includes Congress' move to give firms low interest rates for tax debts and Toledo's plug to shift power to regional governments. 

"The minute you try to shift the ... environment in which decisions are made, it's much harder to predict where a country is going," said Bruno Boccara, director of Latin American sovereign group ratings for ratings agency Standard & Poor's. 

Celinda Contreras, selling clothes a busy Lima street, says Toledo has good intentions but his own heady pledges of putting Peru "To Work!" fast could come back to haunt him. "People need jobs. If they don't get them, they're going to turn on him." 

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