Economist Hernando de Soto has been appointed prime minister by interim President José María Balcázar, in a surprise move that reshapes Peru’s fragile political transition with just four months left in the current presidential term.
The announcement followed a meeting at the Government Palace late Sunday, ending days of speculation in Lima’s political circles. De Soto will be sworn in Tuesday and is expected to lead a cabinet that largely retains current ministers.
“He is a very broad-minded man, with an exquisite culture. He has the most modern and interesting international contacts — we can make use of that for any supplementary international credit”, Balcázar said publicly, praising the 80-plus-year-old economist’s global reach. “We must not govern only with common sense. We also need the technical side.”
Former Prime Minister Luis Solari described the appointment as a turning point.
“When Balcázar named Hernando de Soto as prime minister, the entire international perception shifted. That was a powerful message”, Solari said.
He went further, underscoring De Soto’s global standing: “De Soto is like a key that opens many doors. He’s in the Hall of Fame in China, in the Arab world. He can pick up the phone and reach a former U.S. president”.
A technocrat in a political crossfire
De Soto’s appointment is notable not only because of his age and long résumé, but also because of the ideological distance many perceive between him and Balcázar’s political base.
Though Balcázar emerged from left-wing political ranks, observers see the appointment as a pragmatic shift designed to reassure markets and ease international pressure.
Solari framed the move as a decisive ideological signal.
“Balcázar has spent days saying he is not a communist. By appointing De Soto, he sealed that message”, he said.
Peru is entering the final stage of a turbulent five-year term marked by presidential turnover, constant tensions with Congress, and an economy that has lost momentum. The new prime minister will have to navigate a fragmented legislature increasingly focused on electoral calculations.
A familiar and controversial figure
De Soto is no stranger to Peru’s political stage. He ran for president in 2021 under the banner of Avanza País, finishing outside the runoff but securing a congressional bloc that remains active today. During that campaign, he also held a widely discussed meeting with then-candidate Pedro Castillo, an early sign of his willingness to engage across ideological lines.
Critics have questioned whether accepting a four-month premiership risks entangling De Soto in a government with limited time and uncertain political capital. Others argue he has little to lose.
Solari, who worked with De Soto until mid-2025, strongly defended his intellectual capacity.
“He has a brilliant mind. I worked with him until about eight months ago, he’s a brilliant mind,” Solari said.
Mining, security, and the economic agenda
Balcázar suggested that De Soto could take a different approach to long-standing problems like illegal mining and reforming the justice system.
“We need a good lawyer to lead the Justice Ministry,” the president said, stressing that technical knowledge should go hand in hand with political skill. Speaking about illegal mining, he added that “Hernando has a different idea of how to solve it.”
Beyond specific reforms, the main challenge for the incoming prime minister will likely be keeping the economy stable. Peru is one of the most resource-rich countries in South America, but political instability has weakened investor confidence.
De Soto’s supporters say his international contacts and pro-market reputation could help attract foreign funding and reassure financial markets.
“There’s no need to wait for the next government. Important steps can still be taken even in five months,” Solari said.
A final act in a turbulent term
For De Soto —founder of the Institute for Liberty and Democracy and author of The Other Path and The Mystery of Capital— the premiership may represent a final high-stakes chapter in a decades-long career that oscillated between intellectual influence and direct political ambition.
Whether he can translate that experience into short-term governance gains remains uncertain. With elections looming and Congress in campaign mode, Peru’s transitional government faces limited time and little margin for error.
Featured image: Hernando de Soto, Peru’s new primer minister
Image credit: Agencia Andina