(Bloomberg) -- Peru’s finance minister wants to retain the central bank president after the two men spoke, and said he’s been given room by the new government to implement his economic policies.
Pedro Francke, a former World Bank economist, was sworn in as finance minister late Friday night amid earlier investor concern that he wouldn’t take the post following cabinet appointments by President Pedro Castillo, including naming Guido Bellido, a lawmaker who considers the communist government of Cuba to be a democracy, as prime minister. Bellido tweeted his support for Francke’s policies Friday night.
“It seemed essential to me to have full support for the economic policy that we had proposed,” Francke said Sunday in his first interview in the new post, adding that he hasn’t had much contact with Bellido before they were sworn in. “Fortunately that has already been resolved and it seems to me that it gives us space to develop our economic line in a completely safe way.”
For investors, Francke offered a counterbalance, and a reappointment of Julio Velarde, the central bank president since 2006, would help preserve a sense of continuity for markets.
“We are convinced that it’s necessary to act with fiscal responsibility” and keep debt “at a prudent level,” Francke said. “The most important thing is to ensure that there is coordination between economic policy and monetary policy,” he said, adding that that’s the objective of his meeting with Velarde.
Another call with Velarde has been scheduled for Monday and he expects the central bank chief to accept Castillo’s offer to stay on in the role, Francke said.
Read: Peru’s Finance Minister May Calm Markets but Challenges Ahead
Castillo, a former schoolteacher and union leader, emerged out of relative obscurity this year to win the presidency after consolidating support from Peru’s left-wing. He’s vowed to spend much more on education and health while seeking greater tax revenue from mining operations. He also wants to rewrite the constitution.
Francke, who’s tasked with reviving an economy battered by recession and the world’s worst Covid-19 death rate, said the country will invest heavily in health care.
“Tax collection has come at a good speed, growing at a good pace,” he said. “There is room to have a little more spending.”
He also said there are plans to announce more tax measures shortly, including a levy on mining.
During the campaign, Francke advised Castillo on the economy and vowed to largely maintain the country’s macro-economic policies while putting more focus on social issues.
The sol fell to a record low Friday and bond yields rose to the highest in seven weeks after Castillo failed to name a finance minister on Thursday during a ceremony to name his cabinet. Investors now expect the markets to rebound with Francke’s appointment.
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