(Bloomberg) -- Peru President Francisco Sagasti's pledge to smooth ties with congress is coming under strain just two days before his cabinet faces an inaugural vote of confidence.
His interior minister, Ruben Vargas, quit Wednesday following criticism from lawmakers over a purge of top police officials.
Hours later, congress approved a law entitling contributors to payouts from the state retirement fund, despite government warnings the measure is unconstitutional.
The developments underscore the challenges for Sagasti as he seeks to restore calm in the wake of political upheaval that gave the country three presidents last month.
Cabinet chief Violeta Bermudez and her cabinet will present the interim government's plans to lawmakers Thursday, before seeking a vote of confidence Friday. Were they to lose the vote, Sagasti would have to name a new cabinet.
Read more: Peruvian Assets Rally as Sagasti Tapped to Fill Power Vacuum
Days after taking office last month, the government fired the head of the police force and more than a dozen top-ranking police generals over the repression of Nov. 14 street protests in Lima, during which two university students were killed.
Vargas, who resigned after less than two weeks in the post, said the reaction caused by the shake-up and plans to combat police corruption poses a threat to government.
Later Wednesday, lawmakers voted to sign into law the payout from the state retirement fund, known as the ONP, which would cost the government an estimated 15 billion soles ($4.2 billion) at a time when the budget deficit it soaring.
Top Court
Sagasti has said the government will ask the country's top court to declare the bill unconstitutional. Peru's constitution forbids lawmakers from drafting public spending measures.
“There are just demands surrounding the ONP but a group of lawmakers, with evident electoral calculation, are trying to trick pensioners, stealing from the Treasury, which is financed by the money of all Peruvians,” said former Finance Minister Maria Antonieta Alva, via Twitter.
Legislators say the law is needed to help workers during the economic crisis triggered by strict lockdown measures.
The government is also confronting fresh social unrest. Farm workers blocked sections of the Pan-American highway south of Lima for a third day to demand better working conditions. Meanwhile, a community protest is blocking a road near the giant Las Bambas copper mine in the Andean region of Apurimac.
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