March 31, 2015 / 10:54 AM / 5 years ago

Peru's prime minister, government to resign after censure vote

LIMA (Reuters) - Peru’s prime minister will resign after losing a confidence vote in Congress following allegations of spying on her opponents, delivering a blow to President Ollanta Humala, who will now have to form another new government.

Peru's Prime Minister Ana Jara (L) and Foreign Minister Gonzalo Gutierrez look at a recovered textile from the Paracas pre-hispanic period at the Foreign Ministry in Lima February 24, 2015. REUTERS/Enrique Castro-Mendivil

The censure by lawmakers in the opposition-controlled house forces Prime Minister Ana Jara and her entire government to resign, damaging Humala’s efforts to bolster consumer and business confidence ahead of next year’s presidential election.

Underscoring investor angst at the prospect of a seventh prime minister during the nearly four years that Humala has been in power, Peru’s currency opened weaker on Tuesday, falling through the psychological barrier of 3.1 sols per dollar.

Seventy-two lawmakers voted late Monday against Jara in the censure motion that came less than a year after she took office, while 42 backed her.

“It is an honor that this Congress has censured me,” Jara said in a Twitter message. She denies snooping on rivals, journalists sympathetic to the opposition and businessmen.

Humala will be constitutionally bound to accept Jara’s resignation, which must come within 72 hours of the vote.

While Humala must name a new prime minister, he can reappoint cabinet ministers. There were no immediate indications from the president on whether he would replace Economy Minister Alonso Segura, who is popular among investors and Peru’s business community.

Humala’s approval rating has hovered around 25 percent this year, according to polling firm Ipsos Peru.

Humala has dismissed criticism as political noise ahead of next year’s presidential vote. He is constitutionally barred from seeking a second straight term.

The spying scandal forced a restructuring of Peru’s National Intelligence Office, which answers to the prime minister.

The political climate of the metals-producing country will deteriorate ahead of 2016 vote, consultancy Eurasia Group told clients in a note ahead of Monday’s vote.

“Still, with no meaningful reforms pending discussion, this will have limited policy impact,” Eurasia said.

In the 1990s, Peru was rocked by a spying scandal that led to the resignations and eventual arrests of former president Alberto Fujimori and his intelligence chief, Vladimiro Montesinos.

Writing by Richard Lough; Editing by John Stonestreet, Chizu Nomiyama and Jeffrey Benkoe

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