The centerpiece of President Cáceres's recovery program…

The centerpiece of President Cáceres's recovery program for Peru is the Grace Contract, a controversial proposal by a group of British bondholders to cancel Peru's foreign debt in return for the right to operate the country's railroad system for sixty-six years

The contract provokes great controversy between nationalists, who see it as a sellout to foreign interests, and liberals, who argue that it will lay the basis for economic recovery by restoring Peru's investment and creditworthiness in the West.

Finally approved by Congress in 1888, the Grace Contract, together with a robust recovery in silver production (US$35 million by 1895), lays the foundations for a revival of export-led growth.