Peru’s President-elect Ollanta Humala will name Miguel Castilla to head the finance ministry as part of a Cabinet that may ease concerns his policies will stunt the Andean nation’s economic growth and fiscal stability.
The appointment was announced by Humala’s political party, Gana Peru, on its Twitter account today. Humala will also name Salomon Lerner as Cabinet chief, the party said.
Castilla, 42, stepped down as deputy finance minister to departing President Alan Garcia last weekend. Lerner is a former deputy trade minister and businessman who served as an adviser during the presidential campaign.
Humala, a former army rebel who takes office July 28, is seeking to reassure investors concerned that his plans to raise mining royalties and enlarge state control may erode economic growth fueled by private investment under Garcia. Humala this week tapped central bank President Julio Velarde, who oversaw a tripling of international reserves, to remain in his post for another five-year term.
Peru’s $153 billion economy expande
Luis Miguel Castilla, who until Friday was deputy finance minister, was chosen to be Humala's finance minister. Castilla is an orthodox economist and was chosen over the academic economists Humala relied on during the campaign, many of whom favor more government intervention in the economy and were frowned on by the business community. Castilla has a doctorate from Johns Hopkins University in the United States and is a former World Bank official. He is closely associated with the free-market growth boom of recent years, which relied heavily on foreign investment and which Humala has criticized for ignoring the fight on poverty.
The widely respected Julio Velarde was Humala's surprise pick to stay on as central bank president. By announcing he intended to reappoint Velarde, Humala won praise from investors and local financial markets rallied. Velarde, 58, is credited with helping Peru weather the global economic crisis in 2009 by cutting interest rates to an all-time low, thereby avoiding deflation. The Brown University PhD also helped slay hyperinflation as a member of the bank's board of directors from 1990-1992, when the country was near financial ruin. Humala needs to appoint three directors to the central bank's board and Congress will appoint three of its own choosing.
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