June 6, 2018 / 6:40 PM / a year ago

Exclusive: Mexico election front-runner wants new blood for central bank - adviser

MEXICO CITY (Reuters) - The front-runner to win the Mexican presidency, Andres Manuel Lopez Obrador, would aim to bring “fresh blood” to the central bank’s board as members’ terms expire if he wins election on July 1, one of his top economic advisers said.

Carlos Urzua, the main Mexican leftist Lopez Obrador says will be his finance minister, speaks during an interview with Reuters in Mexico City, Mexico June 5, 2018. REUTERS/Henry Romero

Carlos Urzua, the leftist Lopez Obrador’s pick for finance minister, said it was important to bring new perspectives onto the board of the Bank of Mexico, while rejecting the idea of altering the central bank’s focus on price stability.

“We think that it is time for fresh blood,” Urzua told Reuters in an interview late on Tuesday.

More nationalist in his outlook than the current government, Lopez Obrador’s populist instincts stirred concerns about his economic competence during his previous two bids for the presidency. He finished runner-up in 2012 and 2006.

This time he has established a broader base of support, and his advisers have met dozens of financiers and investment funds to help reassure them he would not be a liability.

The next Mexican president will take office in December. Most opinion polls give a double-digit lead to Lopez Obrador, who was mayor of Mexico City from 2000 to 2005.


On Dec. 31, 2018, the eight-year term of one of the central bank’s five-strong board, Manuel Ramos Francia, will end.

Urzua noted the Senate could be deliberating who should occupy that seat by November, and that a victorious Lopez Obrador team would like to be able to submit a name.

He gave no indication of who that might be, but praised current governor Alejandro Diaz de Leon as “a good example of what we would like to have” on the board.

Diaz de Leon took office in December to complete the final portion of his predecessor Agustin Carstens’ second term. That will conclude at the end of 2021.

Urzua said it was too early to say whether a Lopez Obrador administration would want to re-appoint Diaz de Leon.

“We will see. At that point he is going to be a possible candidate of course,” said Urzua, who served as Lopez Obrador’s finance minister during his term as mayor of the capital.

“Diaz de Leon from my personal point of view has been a very good governor,” he added. “Not only in terms of monetary policy, but also in terms of (being) administrator of the central bank.”

The terms of two other board members will expire at the end of 2020 and 2022 respectively, well inside the remit of the next Mexican president’s six-year term in office.

Urzua said Lopez Obrador’s government would be “very careful” and was wary of appointing “a dove” to the board.

“Because everyone is going to think that we are taking advantage of our power,” he said.

The central bank’s stated priority is to ensure price stability and Urzua said a Lopez Obrador administration would not want to modify that when asked if it might look to push towards a more growth-oriented focus.

Carlos Urzua, the main Mexican leftist Lopez Obrador says will be his finance minister, speaks during an interview with Reuters in Mexico City, Mexico June 5, 2018. REUTERS/Henry Romero

“No, we wouldn’t change that. It’s in the constitution,” Urzua said. “We wouldn’t want to mess with that, because we would lose our credibility.”

The 62-year-old also said he believed that Mexico’s financial authorities had been “totally correct” in how they have handled the peso exchange rate, which has come under pressure from economic threats from U.S. President Donald Trump.

“We are going to be extremely pro-floating exchange rates,” he said. “I would say that in the last 100 years more than 50 percent of our crises were partly due to the mismanagement of exchange rates through artificially fixing exchange rates.”

Reporting by Frank Jack Daniel, Dave Graham, Jean Yoon, Paritosh Bansal and Daniel Flynn; Editing by Susan Thomas

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