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Venezuela Names Third Central Bank President This Year

Aug. 14 (Bloomberg) -- Venezuela President Nicolas Maduro appointed the third central bank president this year as Latin America’s biggest oil exporter seeks to rein in the fastest inflation among the world’s major economies.

Eudomar Tovar, a former central bank vice president and head of state currency board, was nominated by Maduro and approved by the National Assembly yesterday, the Information Ministry said in an e-mailed statement.

“Tovar will give more coherence to economic decision-making because his vision is very close to that of Finance Minister Nelson Merentes,” Alejandro Grisanti, economist at Barclays Plc, said by phone from New York.

Tovar replaced Edmee Betancourt, who had served since April 22. No reason was given for her departure.

Tovar’s academic degrees in currencies, finances and foreign trade compare to Betancourt’s training as industrial engineer.

“Tovar has a good understanding of economic issues,” said Jose Manuel Puente, public policy professor at the Institute of Advanced Administrative Studies in Caracas. “He’s a pragmatic and sober-headed man.”

‘Pragmatic Camp’

The new appointment strengthens Merentes, Tovar’s former boss at the Finance Ministry and central bank, while also weakening Planning Minister Jorge Giordani, the Marxist economic architect of late President Hugo Chavez’s “Bolivarian Revolution,” said Asdrubal Oliveros, director of consultancy Ecoanalitica.

Since becoming finance minister in April, Merentes started new dollar auctions to companies and met more than 5,000 businessmen in a bid to damp world-beating inflation and reduce shortages of staple goods such as sugar, toilet paper and meat.

Giordani has advocated greater state ownership of the economy and stricter currency controls to combat the same problems.

“Tovar’s appointment is a victory for the pragmatic camp of the government,” Oliveros said in a telephone interview from Caracas.

Venezuelan consumer prices accelerated 42.6 percent in July from a year earlier, the fastest rate among 105 economies tracked by Bloomberg, as dollar shortages cripple imports.

Stalling Economy

“His appointment is a positive sign, but I’ve seen no country in Latin America change their central bank president after just a few months,” Grisanti said. “It’s a sign of institutional weakness.”

The $382 billion economy expanded 0.7 percent in the first quarter, the slowest pace among major Latin American economies. In the second quarter, gross domestic product likely shrank 0.5 percent, according to the median of seven economists surveyed by Bloomberg.

In a Twitter message yesterday, Maduro announced that he had promoted Jose Khan to the presidency of the Cadivi currency board, which distributes around $30 billion annually to Venezuelan citizens and businesses under the decade-long currency control system.

A central bank spokeswoman, who requested she not be named in accordance with official policy, had no comment.

Venezuela’s five-year credit-default swaps, contracts protecting holders of the nation’s debt against non-payment, fell 137 basis points, or 1.37 percentage point, to 899 basis points, the third-highest level in the world after Argentina and Greece, according to data compiled by Bloomberg.

The yield on the government’s benchmark 9.25 percent dollar bonds due in 2027 fell two basis points, or 0.02 percentage point to 11.40 percent yesterday in New York, according to data compiled by Bloomberg. The price rose 0.1 cent on the dollar to 85.10 cents.

To contact the reporters on this story: Anatoly Kurmanaev in Caracas at akurmanaev1@bloomberg.net; Corina Pons in Caracas at crpons@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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