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Creeping inflation is a specter. Last year Peru's cost of living edged up 11 % —still small by Latin American standards, but considerably higher than the 1963 rate. This year, Belaúnde's budget is set at $1.1 billion, 45% more than his budget in 1964. To help pay the freight, Belaúnde has raised import and mining taxes, tightened collections and cracked down on tax dodgers. The result has been a 60% jump in tax revenues. Yet his budget deficit is projected at $80 million this year—up 10% from 1964—and brings dour predictions of sharper inflation and opposition howls that Belaúnde will spend the country into bankruptcy.
Too Busy Building. While Belaúnde builds, Communism tries to tear him clown. Each week, Moscow, Peking and Havana beam 110 hours of short-wave hate into Peru and the other west-coast nations. The broadcasts, in Spanish and Quechua, urge the Indians to take up their slingshots to "exterminate the capitalist wolves." From time to time, a few Red-led bands have invaded highland haciendas and stirred trouble in the mines. But the Communists are few and out of date in Peru. The country is too busy working on Fernando Belaúnde's Peruvian architecture to pay much attention to foreign voices.
In his Lima presidential palace, Belaúnde has turned the ornate, wood-paneled state dining room into a wall-to-wall showcase for his housing, road and irrigation projects. Huge maps cover the walls, and dozens of scale-model projects are lined up neatly on tables. "This one will open in July," he says, pointing to a housing project. "We've just broken ground on that one over there." He turns to the maps with their probing lines thrusting east from the Pacific. "You know," he mutters, putting his finger on a village deep in the towering Andes, "that used to be a ten-day trip on horseback—five days in and five days out. This June, I'm going there in a few hours by car."