Bloomberg News

Peru President-Elect Understands Need for Stability, Aide Says

June 08, 2011

June 8 (Bloomberg) -- Peru’s President-elect Ollanta Humala understands the importance of economic and fiscal stability to the country and needs a few more days to choose his Cabinet, economic policy aide Oscar Dancourt said.

“I think he knows very well the importance of maintaining macroeconomic stability, monetary and fiscal policy,” said Dancourt, who Bank of America-Merrill Lynch said in a report yesterday may be a candidate for central bank chief, said in an interview. "He knows well the importance of the need to have an autonomous central bank."

Humala, 48, edged out his rival, Congresswoman Keiko Fujimori, in the presidential election June 5, sparking a sell- off of Peru’s stocks, bonds and currency the following day. Investors are betting his choice of ministers will reveal whether he has moved away from his past support of Venezuelan President Hugo Chavez’s policies and pledges to boost government control of the economy.

Finance Minister Ismael Benavides yesterday urged Humala to send “clear signals” to the market about his economic policies to reassure investors and offered to accompany members of Humala’s team to meet overseas investors before the government’s term ends July 28.

“It’s not necessary,” Dancourt, central bank chief under former President Alejandro Toledo, when asked about the offer. “What we need now is to concentrate on the transfer from one government to the next, work on the different areas of national policy and not only on the economic sector.”

‘Interventionist’ Stance

Humala said in an interview with CNN’s Spanish-language channel yesterday that he will meet with current bank chief Julio Velarde to decide whether he will keep his job. Bank of America said in its report that Dancourt poses more risk due to his “interventionist” stance in favor of capital controls and taxing inflows. The report said Humala’s Cabinet may include former deputy finance minister Kurt Burneo or economic consultant Raul Salazar as finance minister.

The nation’s stocks, bonds, and currency rose today for a second day as investors took advantage of the sell-off. The Lima General Index climbed 3 percent to 20,468.56 at 11:03 a.m. New York time after plunging 12 percent on June 6.

The sol was little changed at 2.7853 per dollar.

Dancourt dismissed Benavides’s pledge to boost liquidity in the financial system if there is a “substantial” withdrawal of funds and said the finance minister should have been more “prudent” in calming the market ahead of the election. He criticized the government’s proposal to raise the limit on private pension funds’ investment overseas to 50 percent from 30 percent shouldn’t be approved by congress.

“I don’t think the bill was prudent,” he said. “You have to be careful about the effect these sort of things have on the exchange rate and the economy. I don’t think it should be approved.”

--With assistance from John Quigley in Lima Editors: Bill Faries, Richard Jarvie

To contact the reporter on this story: Helen Murphy in Lima at

To contact the editor responsible for this story: Joshua Goodman at

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