LIMA (Reuters) - Ismael Benavides, a banker who previously served in President Alan Garcia’s cabinet, will take over as finance minister as Peru’s economy surges at one of the fastest paces in the world.
He will replace Mercedes Araoz, who stepped down in a broader cabinet shuffle on Tuesday. She had been criticized by the central bank for letting public spending rise too much in an economy forecast to grow 7 percent this year.
Benavides, 64, an agricultural economist, received his degree from the University of California-Berkeley, and paid off his student loans by working as a Bank of America teller.
Widely respected in Peru’s financial world, Benavides was president of the country’s banking association until being tapped to serve as agricultural minister in 2007.
He is not expected to markedly shift economic policies, which have emphasized paying down debt, further opening the economy to trade and foreign investment, and keeping fiscal accounts healthy.
“This will be well received by the market, he is considered part of the business class and will keep fiscal policy moderately disciplined,” said Pedro Tuesta of 4CAST consultancy in Washington.
Expectations of the cabinet change had little impact on stocks or currency prices as no major policy changes by Garcia’s center-right government are expected. Peru’s sol hovered near a two-year high of 2.79 against the U.S. dollar on Tuesday.
As the former chief executive of privately-held Interbank, Benavides acquired failing, state-controlled banks during a privatization of the financial sector initiated by former President Alberto Fujimori and built the company into one of Peru’s largest financial institutions.
A quiet member of one of Peru’s wealthiest families, Benavides owns a sprawling desert farm that exports asparagus around the world. His daughter manages a pisco business founded by Benavides’ great-grandfather in the late 1800s. Pisco is a type of liquor.
Benavides’ first political appointment was as fishing minister in 1985 during the government of Fernando Belaunde.
A main organizer in the Democratic Front party’s failed effort to elect Peruvian writer Mario Vargas Llosa to the presidency in 1990, Benavides was elected on the party ticket that year as a congressional representative for Ica, an important center in Peru’s agricultural export boom. He served until Fujimori dissolved Peru’s Congress in 1992.
As the minister of agriculture, Benavides passed a series of agrarian laws that were approved as part of Peru’s push to sign a free trade agreement with the U.S.
Benavides recently worked as the local executive for U.S. fertilizer company CF Industries , which plans to invest up to $2 billion in a petrochemical plant in Peru.
Additional reporting by Patricia Velez; Editing by Terry Wade and Carol Bishopric