Criticism Builds on Congressional Choice of Central Bank Directors

The left-wing Frente Amplio party in Congress has presented a motion to annul the election by Congress last week of three members to the Central Reserve Bank’s board of governors. At the same time, student leaders from the private Pacifico and Ruiz de Montoya universities and the state university of San Marcos —representing a broad spectrum of economic views— are together planning a march against the choice made by the congressional majority.

Economist Elmer Cuba, businessman Jose Chlimper and politician Rafael Rey were elected to the BCR board by Keiko Fujimori’s Fuerza Popular majority in Congress plus the votes of the five Apra party members, in a vote that was pushed through without accepting the request of opposition lawmakers to give time to discuss the virtues or vices of the candidates.

Critics question the strong allegiance all three have to Keiko Fujimori and the influence they may try to wield in the Central Bank, especially since the BCR monetary and fiscal policies have been successful and have led to its chairman, Julio Velarde, being considered the best central bank chief in Latin America and one of the best in the world.

Although directors with both conservative and socialist economic views have previously been elected to the BCR, they were chosen for their technical experience and were never openly political.

Cabinet chief Fernando Zavala has voiced his concern, asking the three new directors to “leave politics behind.”

“We need to make sure of not playing politics in the BCR. So, what I do ask them …. is that they make sure to leave politics behind. The BCR is a public economic institution, and perhaps the best recognized. We’ve had 25 years of an independent and autonomous BCR, what  I ask is that it continue to be so and that politics not enter the BCR,” Zavala said.

The motion in Congress to annul the election, presented by Manuel Dammert, Marisa Glave and other Frente Amplio lawmakers, states “The voting on October 27 was made without complying with the basic requirements of information, without information on the capabilities and qualifications that candidates need to have to be appointed directors of the BCR.”

Juan Carlos Ruiz of the Legal Defense Institute says Rey’s election should be considered illegal.  According to Ruiz, Rey doesn’t meet the requirements in the Central Bank law of having “broad competency and experience in economy and finance.”

Walter Alban, former People’s Ombudsman, says that Congress can, in fact, rectify its decision, based on the arguments being presented, but it is not under any obligation to do so.

“This is a political error and therefore it can be corrected with another political action, by Congress revoking the decision,” Alban said.

Constitutional lawyer Samuel Abad told La Republica daily that Congress could change its mind, given that in 2013 it did so when public pressure led them to annul their choice of members to the Constitutional Court, the People’s Ombudsman Office and the Central Bank.

“But that this Parliament, already three months into its legislature, would want to make the correction is not going to be easy,” Abad said.

And given the climate in Congress, it is doubtful that Fuerza Popular, and the five Apra lawmakers riding its coattails, will backtrack as they enjoy the power they wield over President Kuczynski’s bench and the opposition.

Congressman Carlos Bruce of President Kuczynski’s PPK party does not see any in point in the protest, which he describes as “pure posturing.”  Although his party had also requested the election be delayed, he argues that the election was legitimate and nothing can now be done about it.

The general protest is centered on Jose Chlimper, CEO of the agroexport giant Agrokasa and a former Agriculture minister at the end of Alberto Fujimori’s administration, who is secretary general of the Fujimorista party. But above all, he is considered by his critics to not meet the standards of “moral solvency” required because of his involvement as recently as May,  and still under criminal investigation, with a recording that was tampered with to undermine allegations of money laundering against Keiko Fujimori’s leading campaign financier, Joaquin Ramirez, who is under investigation by the FBI and Peru police.

Rafael Rey, meanwhile, is criticized for not being up to the job.  He served as minister of Production and later Defense in Alan Garcia’s administration, and is a staunch supporter of Keiko Fujimori, but admits he has no knowledge of economics.   “Of course I am going to have to study and proceed prudently” to fulfill the job, Rey said in an interview with El Comercio.

Meanwhile, the university students are going ahead with their protest march, scheduled for Nov. 8.