Maduro picks central bank chief for Venezuela's finance minister

Nelson Merentes will be finance minister and central bank governor for the time being; analysts see his appointment as part of a shift to a more 'pragmatic chavismo'
flag-of-venezuela

The governor of the Venezuelan central bank was today handed the finance ministry by the country's newly elected president, Nicolás Maduro.

Nelson Merentes will remain governor of the Central Bank of Venezuela for now, according to a central bank spokesperson. He is also vice-president for the economy, a fusion of two pre-existing roles: vice-president for the financial economy, and vice-president for the productive economy.

Merentes served as finance minister for two stints under Chávez, from 2001–02 and 2004–07, before becoming governor of the central bank four years ago.

His predecessor at the finance ministry, Jorge Giordani, will head up the planning department, which has been broken off from the finance ministry.

'Pragmatic chavismo'

Maduro, the heir apparent to the recently deceased Hugo Chávez, last week won the presidential election triggered by Chávez's death by a margin of less than 1% – far less than expected.

A research note from HSBC analysts last week said the narrow margin of victory could see Maduro pursue "some moderation of economic policies". They said the election result could be seen as "a signal of growing dissatisfaction among the population with the conditions of the country", making the administration more likely to try and "resolve some of the most visible sources of pressure in the economy, starting with the lack of USD supply."

Ramiro Blazquez, an economist with HSBC in Buenos Aires, told CentralBanking.com today that Merentes' promotion appears to signal a gain in influence for the more ‘pragmatic' wing of the dominant chavismo ideology, named after Hugo Chávez.

He said the appointment supports HSBC's view that Maduro would "have little room for radical policies like nationalisations". He expects that Merentes will take a "more moderate approach to economic policies", perhaps "revamping the foreign exchange regime and speeding up forex allocations, probably at a higher exchange rate".

Blazquez said he expects the confirmation of the existing oil minister in his post to signal a move to more investment in the oil sector. Venezuela, said Blazquez, will need more oil revenues if it is "to continue an expansive fiscal policy without inflationary consequences".

He said reports in local media suggest there has been a further devaluation in the value of the Venezuelan currency, in line with HSBC's expectations – adding that his bank, along with Capital Economics, are the most bearish on Venezuela's growth prospects, predicting a contraction of 0.6% this year, against a consensus mean forecast of a 1.5% expansion.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account

.