Peru's Garcia praises Humala's Cabinet picks

Reuters News
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Posted: Jul 22, 2011 1:28 PM
Peru's Garcia praises Humala's Cabinet picks

LIMA (Reuters) - Peru's departing President Alan Garcia on Friday praised the Cabinet assembled by leftist President-elect Ollanta Humala for its balance and said it would guarantee economic stability.

Garcia said Humala's picks ensure that Peru "will continue to attract foreign investment" to one of the world's fastest-growing economies. Garcia embraced conservative fiscal and monetary policies in his second term after his disastrous first term in the 1980s ended in hyperinflation and a debt default caused by populist measures.

"I think so far that the eight confirmed are people who guarantee that growth will be maintained at the same time that social programs and infrastructure programs are emphasized," Garcia told reporters.

"It's a balanced Cabinet, that reassures international and domestic capital for continued investment and job growth," Garcia said.

Peru's economy surged nearly 9 percent last year and is on track to grow 6 percent this year on a recipe of free-trade, open markets and foreign investment. But critics have blamed Garcia for failing to steer more funding to social programs. One-third of Peruvians are stuck in poverty.

Humala, who says welfare spending must increase and will create a new ministry of social inclusion, has sought to persuade investors he has shed his radical anti-capitalist past. This week he picked two conservative economists respected on Wall Street to run the finance ministry and central bank.

While Humala's appointments could alienate hardliners in his Gana Peru party, Garcia said the new Cabinet would have a conciliatory style that could pair the growth aims of business with the social concerns of progressives.

Humala's core base of voters, in the restive provinces, have demanded greater access to government services such as education, healthcare and infrastructure spending to help fight poverty. Voters in provinces have also delayed mining and oil projects of foreign companies over fears they will cause pollution or take scarce water supplies.

"I think there will be a constructive relationship with all the political forces in the country," Garcia said.

On Friday, Jose Luis Silva, former head of the country's association of exporters, ADEX, said he accepted Humala's invitation to be trade minister. The choice all but ensures Peru's numerous free-trade agreements from China to the United States will be honored.

(Reporting by Terry Wade and Marco Aquino; Editing by Will Dunham)