Peru's New President Alan Garcia Slashes Government Salaries

President Alan Garcia cut government salaries, including his own, on Monday, three days after announcing a long list of austerity measures in his inaugural address.

Garcia, whose previous 1985-90 government was plagued by mismanagement and corruption that left Peru nearly bankrupt, blasted outgoing President Alejandro Toledo for spending lavishly while failing to help Peru's poor.

In a decree published in the official newspaper El Peruano, Garcia reduced his monthly paycheck to just over $5,000, a 60 percent pay cut. Lawmakers saw their salaries reduced by nearly 40 percent to about the same level.

The decree also lowered wages for regional presidents, mayors, municipal councilors and their deputies.

Garcia said an emergency decree would be issued in the coming days to implement the pay cuts immediately instead of in January, saving the country $16.2 million by year's end.

Jorge del Castillo, Garcia's Cabinet chief, said Monday that the new government would also impose sanctions on public officials who spend more than their budgets.

Toledo five years ago set his monthly salary at $18,000, the highest of any Latin American president, but later reduced it under intense public pressure.

Across Latin America, offering to lower public salaries plays well with voters, but many analysts question whether the money saved is substantial enough to help the needy.

Upon taking office in January, Bolivian President Evo Morales cut his salary by more than half and declared no Cabinet minister can collect a higher wage than his — $1,875 a month — with the savings to be used to hire more public school teachers.

Mexico's presidential candidate Andres Manuel Lopez Obrador — who is now in a heated battle over contested election results — has vowed to pay expanded social programs by cutting the inflated salaries of bureaucrats and politicians and going after wealthy tax deadbeats.

Arturo Woodman, a prominent former Peruvian banking executive, said there is a general sense in Peru that public salaries should be cut as "a corrective measure" for past abuses.

But Woodman said slashing paychecks has its risks, including "attracting corruption."

"It must be well thought out to avoid a loss of interest in public service by upstanding people who might go elsewhere because of the issue of making extra income," Woodman said.