New Peru President Castillo vows stability

Pedro Castillo has vowed to tackle what he says are persistent social divisions in Peru that date back to colonial days as he was sworn in as the country's president but pledged he would make no radical changes to the economy.

In a speech shortly after he was inaugurated, Castillo, sporting his trademark wide-brimmed hat, struck a conciliatory tone for investors, saying he wanted the state-owned bank to compete with private lenders but that he would maintain economic "order and predictability".

Castillo was elected in last month's vote as a representative of a Marxist party, shaking the political elite and worrying companies fearful of his plans to hike taxes on mining to fund health and education reforms in the world's second-largest copper producer.

The former schoolteacher reassured them on Wednesday there was "not the remotest" plan to nationalise industry but said he would seek "a new pact" with private investors.

He wanted to streamline regulation of the mining industry to improve the local economy with tax revenue and net capital inflows, he added.

Peru's riches needed to be more equitably shared, he said.

"The defeat of the Inca Empire gave rise to the colonial era, it was then... that the castes and differences that persist to this day were established," he said.

"The three centuries in which this territory belonged to the Spanish crown, they exploited the minerals that sustained the development of Europe, to a large extent with the labour of many of our grandparents."

The son of peasant farmers gave his address amid strict health and security protocols.

His inauguration was attended by heads of state and senior ministers from around Latin America.

His challenges are significant.

He faces the world's deadliest COVID-19 outbreak, tensions in his party and weak congressional support in a starkly divided country that was split almost in half by a polarised June 6 ballot he won by a margin of just 44,000 votes.

There is intense interest in the make-up of his cabinet of ministers, still under wraps amid horse trading between the radical wing of his Free Peru party and more moderate advisers and allies.

The cabinet's swearing in was due to take place shortly after Castillo's inauguration but his party announced on Wednesday morning that it would be delayed until Friday.

"Castillo's message will set the guidelines for the start of his government. But the cabinet and team he announces will tell us even more about the direction we're headed in," said Jeffrey Radzinsky, a Lima-based governance expert.

Castillo, 51, edged out conservative rival Keiko Fujimori in the election, although his win was not confirmed until last week.