Analysis: No honeymoon for Toledo

Toledo's slim majority means he will have to build consensus

By Claire Marshall in Lima

As Alejandro Toledo prepares to assume the reins of power when he is formally made president on 28 July, a formidable challenge faces him as future leader.

Peruvians have exhibited their capacity to pursue a democratic recovery without firing a shot - they have chosen the road of dialogue

Organisation of American States election observer

His highest priority will be to show the Peruvian people that he is effectively tackling the corruption left over from the Fujimori era and to rebuild public confidence in government institutions.

Such a close election result means that Mr Toledo will be forced to forge alliances outside his own party, Peru Posible.

In his concession speech, Alan Garcia pledged to assist the next government.

'Flawless election'

In a hint that he will stand again for the Presidency in 2006, Mr Garcia said that the strength of support for his candidacy has energised his APRA party.

A vital step on Peru's road to full democratic recovery has been the certification of these elections as free and fair.

The head of the Organisation of American States observer delegation, Eduardo Stein, said that the election was "flawless".

Mr Garcia greets supporters at his last campaign rally

He added: "Peruvians have exhibited their capacity to pursue a democratic recovery without firing a shot - they have chosen the road of dialogue."

According to political analyst, Francisco Sagasti: "Whoever wins it's essential that he behaves like a president, as there won't be a honeymoon for this government."

He said the honeymoon period has been used up by the interim president, Valentin Paniagua, who took office last November after Alberto Fujimori was sacked by Congress for "moral unfitness".

Public distrust

Mr Toledo's management of the economy will be closely watched by international investors. His experience as an American-trained economist with World Bank credentials is likely to calm the international markets.

Peruvians were disillusioned by Mr Fujimori's corruption

Foreign currency investors had become increasingly concerned at the prospect of former president Alan Garcia taking the reins given his past record of economic mismanagement. By the end of the Garcia era, inflation had reached 7,500%.

With only a slim margin of victory, Mr Toledo will have to work hard to overcome public distrust. Public confidence in politicians is at an all-time low.

With allegations of drug abuse and sexual misconduct having been raised during the campaign, the job of the president-elect will be doubly hard.