Improving economic conditions draw many migrants back from the cities to the countryside, where the government implements policies to increase agricultural credit and guarantee prices for key food products. In urban areas, President García implements a new public works program to reduce unemployment. Higher living standards bring hope for continued improvement in social conditions.
With the beginning of a financial and economic crisis, social expenditure begins to fall. By 1990, it is 27 percent of its 1986 level. Minimum and average real wages fall nearly 60 percent in one year. Water and electricity shortages further worsen the quality of life.
President Fujimori announces a series of emergency social programs which go largely unimplemented. Government funds are focused on debt servicing and tackling political violence rather than on social spending. Almost 60 percent of Peruvians live in poverty. In rural areas, much of the population lacks access to basic services. A cholera epidemic illustrates deteriorating public-health conditions.
Favorable economic development brings increased social spending. Growth in the construction, commerce, and agricultural sectors contributes to a reduction in the rate of extreme poverty, but regional disparities grow. The government's social programs reach only a small, usually urban portion of the poor. Indigenous populations fall behind in social and political integration.
The poverty rate stands at 54 percent. While the unemployment rate is 10 percent, approximately 60 percent of the labor force is underemployed. President Toledo's incoming government announces a social policy program valued at US$500 million designed to benefit the country's poorest, but Toledo's popularity plummets amid protests over economic policy and privatization.
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