Reuters/Lima

Peru’s President Ollanta Humala rebuked the head of the central bank for his 6% salary raise, stating in a letter that the pay hike should be revoked since it tarnishes the bank’s image.

The central bank board recently raised Central Bank president Julio Velarde’s annual wages to 617,344 soles ($210,913), nearly triple the president’s salary of 224,000 soles ($76,528) per year.

Humala’s letter, dated November 4, was made public by local broadcaster RPP.

Central bank and government officials confirmed yesterday that the letter is authentic.

The spat comes amid the worst economic slowdown in the Andean country in five years, and follows jabs traded between Velarde and the government in April over the bank’s currency policy.

“I must emphasise my deep disagreement with this decision, considering you are the official who earns the highest salary in the Peruvian state,” Humala said in the letter.

The central bank said it evaluating whether to respond to letter from Humala, a former military officer and left-leaning radical who turned to the right after assuming power in 2011.

Peru’s central bank is constitutionally autonomous.

Three of its board members are appointed by Congress and another three the executive branch.

The bank president is appointed by the Peru’s president and ratified by Congress. Earlier this year, Humala’s government faced a wave of criticism for nearly doubling the salaries of his ministers.

In Peru, the minimum monthly salary is 750 soles ($256).

Peru’s economy has been hit by a drop in key mineral exports this year and is now on track to grow by 3% in 2014 - about half initial government and central bank estimates. In recent months, Velarde has said that a strong economic rebound will only be possible next year if the government cuts red tape holding up investment and mining projects. Velarde has been Peru’s central bank president since 2006.

Humala’s decision to reappoint him in 2011 was widely praised by investors. Peru’s inflation rates is one of the lowest in Latin America and is now running slightly above the central bank’s 3% target ceiling.

 

 

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