Peru Replaces Finance Minister With Top Economic Adviser

Published by Anadolu Agency September 15.

President Ollanta Humala has swapped his prominent finance minister with the ministry’s key adviser, in an unexpected move as the economy showed its slowest growth in five years.

Newly sworn-in Alonso Segura vowed to shore up recently launched reforms and kickstart economic growth.

Segura takes over as the Andean country’s mineral exporting economy expanded just 0.3 percent in June compared to a year earlier, amid slumping copper exports and weakening private investment.

He said the economy could grow 4 percent this year, lower than the central bank’s latest forecast of 4.2 percent, and below the 6.4 percent annual rate that made it South America’s best performer durring the last decade.

But the former International Monetary Fund economist said that the “worst is over” and would evaluate different methods to revive growth.

“Growth figures from July to September should gradually regain dynamism,” he told state television on Sunday.

Unclear exit

Departing Finance Minister Luis Miguel Castilla (pictured) was regarded as the most influential member of Humala’s Cabinet as well as its longest-serving, surviving a revolving door of Cabinet chiefs since Humala swept to power in July 2011.

The reason for Castilla’s sudden exit is still unclear, though he cited family commitments.

“It’s time to take a step aside to dedicate myself to my family, but my departure doesn’t mean my distancing from government,” Castilla said in a statement.

“I will continue to support the president,” he added.

Pension law

A fall in private investment, and a dispute over a controversial pension law that raises contributions for self-employed workers, however, last month heightened pressure on the technocrat that joined the government as deputy Finance Minister in the Alan Garcia administration in 2009.

Opposition in Congress to Castilla’s key reforms saw the law sacrificed in order to guarantee enough votes to win a vote of confidence for the ruling party’s sixth Cabinet, which holds no majority in Congress.

“Castilla has fallen because of the pension fund contributors,” opposition congressman Victor Andres Garcia Belaunde said in a radio interview Sunday.

Growth outlook 

The outlook for South America’s sixth-largest economy had been improving before Castilla’s exit, with the minister last week predicting 5 percent growth in the second half of 2014.

In July, Segura was named head of a committee to “unleash” foreign investment.

The government expects 6 percent growth for 2015 with several large mining and infrastructure projects set to get underway.

Morgan Stanley and Banco Credito de Peru forecast 5.3 percent, and between 5 percent and 5.5 percent respectively.


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