Julio Velarde to Stay On at Peru Central Bank for Five Years, Humala Says
QBy John Quigley - Jul 18, 2011 1:00 AM ET .
Peru’s President-elect Ollanta Humala said Central Bank President Julio Velarde will remain in his post for another five-year term to help maintain economic stability.
Velarde accepted an invitation to stay on after his term ends July 28, Humala said in an interview with Lima-based America Television yesterday. Velarde has led the central bank “well,” he said. Humala said he’ll announce ministerial posts July 20.
“Our commitment is to provide macroeconomic stability and stability in monetary policy, which Julio Velarde is going to do,” Humala said. “We’re sending the right messages.”
Humala, who takes office July 28, is seeking to reassure investors concerned that his plans to raise mining royalties, increase Peru’s minimum wage and enlarge state companies may crimp private investment fueling the region’s fastest growth of the last decade. The $153 billion economy expanded at the slowest pace in 15 months in May as companies reduced spending while waiting for the 49-year-old former army rebel to announce his economic policies.
The Lima General Index of stocks has fallen 13 percent this year amid concern Humala’s plans to introduce a mining windfall tax will endanger $42 billion of investment in mine expansions. The yield on Peru’s benchmark 7.84 percent sol-denominated bond due August 2020 has risen 36 basis points, or 0.36 percentage point, to 6.30 percent this year, according to prices compiled by Bloomberg.
Since being appointed in 2006 to head the central bank, Velarde, 59, has helped triple international reserves to a record $47 billion and raised lending rates to a two-year high in May to curb inflation, which has been the lowest in the region since 2006.
Velarde, who holds a doctorate in economics from Brown University, introduced measures including raising reserve requirements for bank deposits to rein in lending. He increased the operating limit on pension fund managers’ investments overseas four times last year to help cool demand for the local currency.
Humala said he’ll seek to spur investment in the Andean nation’s mining and gas industries and will urge pension fund managers to invest in infrastructure projects instead of buying stocks or overseas assets.
To contact the reporter on this story: John Quigley in Lima at
jquigley8@bloomberg.net To contact the editor responsible for this story: Joshua Goodman at
jgoodman19@bloomberg.net