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'Flexible socialist' to lead Venezuela central bank
April 23, 2013 / 8:56 PM / 5 years ago

'Flexible socialist' to lead Venezuela central bank

* Edmee Betancourt would be second female bank head

* Former commerce minister is staunch socialist

* Congress needs to ratify president’s nomination

By Marianna Parraga

CARACAS, April 23 (Reuters) - The nominee to lead Venezuela’s central bank, Edmee Betancourt, is known as a dedicated socialist who backed the drive by late President Hugo Chavez to expand state control over the economy but who also knows when to ditch dogma for down-to-earth policy.

Former colleagues of Betancourt, a low-profile former commerce minister who would be the second woman to lead the OPEC member-nation’s central bank, say she could reform monetary and exchange rate policy despite her socialist convictions.

“She is a supporter of state control over the economy, but in a flexible way,” said Victor Alvarez, a former industry ministry who once supervised Betancourt. “She’s very hard-working and sensible when it comes to making decisions.”

An industrial engineer with an advanced degree in mathematics, Betancourt has been at the helm of two state-run banks and a development fund financed by China.

She rarely indulged in the vituperative speeches and acrimonious exchange of insults that were typical of high-ranking officials during Chavez’s 14-year rule.

If her nomination is backed by Congress, she will replace Nelson Merentes, considered the most pragmatic and market-friendly member of the government’s economic team. The ruling Socialist Party has a majority in Congress, meaning President Nicolas Maduro’s nomination of Betancourt is virtually assured.

Alvarez said Betancourt is well aware of the need to boost the productivity of the local economy, which has been crimped by price and currency controls and a six-year wave of nationalizations across most sectors.

She led several efforts to adjust government-regulated prices and bring them in line with the realities of the market, including pushing for higher rates at parking garages that were struggling to make ends meet under price controls.


Contrasting with that, however, many associate Betancourt with former Finance Minister Jorge Giordani, who is seen as a recalcitrant defender of rigid price and currency controls that critics deem ineffective.

As commerce minister she was instrumental in pushing forward an expansion of price controls starting at the end of 2011. The system was heavily criticized by private businesses who insisted they were at times being forced to sell below production costs.

“In our opinion this is not a positive nomination as we believe Ms Betancourt - who is an ally of Jorge Giordani - will continue with the policy of subordinating the (bank) to the Executive,” wrote Barclays analysts in a research note.

Betancourt faces a difficult panorama of slowing growth and rising inflation following heavy campaign spending in 2012 that helped ensure Chavez’s re-election shortly before his death of cancer.

The country’s decade-long currency control system is struggling to provide enough dollars to the import-dependent economy, creating shortages of products ranging from motorcycle parts to wheat flour.

Private sector leaders hope she will expand a newly created currency mechanism that auctions U.S. dollars at a rate higher than the official rate of 6.3 bolivars per dollar. Greenbacks on the black market currently fetch close to four times that.

Inflation is being spurred by two devaluations in the first quarter, with consumer prices rising 8 percent in the first three months of the year alone. Most private economists say growth could drop to 2 percent from 5.6 percent last year.

Unlike other countries, Venezuela’s central bank has become increasingly focused on providing financing for state-run companies, providing billions of dollars in loans to state oil firm PDVSA.

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