June 17, 2016 / 8:22 PM / in 2 years

UPDATE 1-Peru's central bank chief open to third term

(New throughout)

By Teresa Cespedes

LIMA, June 17 (Reuters) - Peru’s central bank chief Julio Velarde said on Friday he would consider President-elect Pedro Pablo Kuczynski’s proposal that he head the monetary authority for a third five-year term.

Velarde, widely-respected in Peru and abroad, has been the president of the central bank since former president Alan Garcia appointed him in 2006. Outgoing President Ollanta Humala reappointed him in 2011.

Kuczynski has said he would like Velarde to stay on.

“I don’t rule it out at all. What’s more, I like the central bank,” Velarde told reporters at a presentation.

Velarde said he had not yet met with Kuczynski since the former investment banker narrowly beat Keiko Fujimori, daughter of imprisoned former president Alberto Fujimori, in Peru’s run-off presidential race earlier this month.

Velarde praised Kuczynski and his pick for finance minister and said the economy would be in good hands after the president elect takes office July 28.

“He’ll be a top-rate president,” Velarde said. “His resume is probably one of the most outstanding of any president in the region.”

Kuczynski, 77, worked at the central bank in the 1960s and has also been a World Bank economist, a Wall Street investment banker, and prime minister of Peru. He has been the energy and mines minister and finance minister and headed a bauxite mining company in Guinea in the 1970s.


Velarde said the central bank’s growth outlook for coming years might get a boost during Kuczynski’s term. The bank on Friday forecast an expansion of 4.0 percent this year and 4.6 percent in 2017 before an expected slowdown to 4.2 percent in 2018.

“The forecasts are a bit passive. The mix of measures in the next government can change the outlook,” Velarde said.

Kuczynski has proposed lower sales taxes, rebates for companies that reinvest their earnings, and infrastructure projects built through public-private partnerships. He wants to bring growth to at least 5 percent per year, up from 3.3 percent in 2015, despite slumping prices for Peru’s mineral exports.

Velarde said the government of Humala, a former radical military officer who governed moderately, had set fiscal targets that were “too demanding, too recessive.”

“Whoever would have won (the election) would have raised the fiscal deficit,” Velarde said.

Humala has proposed lowering the ceiling for this year’s fiscal deficit to 2 percent of gross domestic product from 3 percent.

Kuczynski had proposed running a 3 percent deficit but tightened his target after credit rating agencies expressed concern.

Additional Reporting By Ursula Scollo, Writing By Mitra Taj; Editing by Bernard Orr and Andrew Hay

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