Political Risk Latin America Blog @PolRiskLatam

Julio Velarde to Stay On at Peru Central Bank for Five Years, Humala Says

Posted in News and Articles, Political Risk by politicalrisklatam on July 18, 2011

by John Quigley for Bloomberg, July 18th, 2011.

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. (continue reading… )


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