Economically, Toledo stayed close to a commitment to traditional economic policies, and provided an economic stimulus package in the 2002 budget. New tax collection measures were proposed, although full-scale tax reform was not in place by April 2002. That month, Toledo announced the country's roadwork and highway budget would increase by 53% in 2003. Toledo's response to an uprising in Arequipa in June 2002 called into question his commitment to privatization, through which he had hoped to finance social infrastructure works, rural electrification and the expansion of waterworks services on a nationwide scale.
Toledo has directed resources to nutrition, health, and education. His pledge to wage a war on poverty has been a cornerstone of his domestic policy, and one of the ways in which he has attempted to wage that war has been to reduce military spending. He has said that the defense of a country does not depend on numbers of tanks, ships or aircraft, but on the strength of the economy and the education of the people. Toledo, however, also recognizes the power of the tourism industry as being a catalyst to economic recovery and growth.
One of the main overriding themes of Toledo's administration has been coming to terms with the past—which has meant diplomatic efforts to bring Fujimori to justice, and to carry out continual corruption investigations. In September 2001 Peru's attorney general filed homicide charges against Fujimori, linking him to two massacres by death squads in the early 1990s. Peruvian legislators aim to persuade Japan to return Fujimori to Peru for trial, even though Japan has no formal extradition treaty with Peru. A Truth Commission, established by Toledo's predecessor, Paniagua, has traveled throughout Peru gathering testimony about human rights abuses during the Fujimori years, including thousands of "disappearances" and execution of prisoners by the armed forces.
Toledo has improved transparency in government through websites, toll-free information numbers, and the appointment of a high-level anti-corruption official. His reform programs, however, have suffered a few setbacks. In June 2002, Toledo cancelled a planned trip to the United States when violent protests resulting in $100 million in property damage erupted in the southern city of Arequipa over privatization of the power-generation operations there. A few months later, in early 2003, Toledo dismissed Gino Costa, his minister of the interior, following resistance to Costa's aggressive implementation of police reforms.