MercoPress. South Atlantic News Agency

Best performer Peru changes financial helmsman

Minister Luis Carranza

In an unexpected move and only after six months in the job, Peru's Finance Minister Luis Valdivieso resigned Monday and later in the day was replaced by his predecessor Luis Carranza who is closely linked to the Andean country's praised economic performance.

Although the official version was that Mr. Valdivieso was leaving for an "important international post", Peruvian cabinet sources said his image had been seriously eroded by his constant clashes with other ministers and provincial governors over budget cuts and tight jealous control over monetary outlays. Apparently with the outcome of the global crisis his strict fiscal discipline generated strong resistance from the Environment and Defence ministries, among others. The orthodox Valdivieso was originally named to help combat inflation, rising unemployment and improved distribution of the country's minerals bonanza. Prime minister Yehude Simon, prime minister told a local radio that Mr Carranza, who had presided over the economy at a time of rapid growth on the back of a commodities boom, was the right man for the job. "He did a good job in his first administration and we hope he approaches the job with a new strength, after a period of rest," Mr Simon said. Mr Valdivieso, a career economist at the International Monetary Fund, took over from Mr Carranza just before the onset of the global financial crisis and the slump in commodities prices. Mr. Carranza remained as an advisor on economic affairs of President Alan Gracía. Congressional reaction was positive since Mr. Carranza ensures "continuity" to the current successful economic policies said Luis Falla La Madrid, chairman of the Budget Committee. "He's very professional, very capable", underlined the Congressman recalling that in 2007 Carranza had been criticized at home for advancing foreign debt payments, "but today we are harvesting his planning: lesser and lower interest payments and access to international credit". However Falla La Madrid said that the committee would be inviting Minister Carranza to render details of the 3.4 billion US dollars stimulus package for 2009 announced in early December by outgoing Valdivieso. Peru considered one of the best performing economies in Latinamerica in recent years, experienced 9% growth for the past two years, securing an investment grade rating. The central bank forecasts that growth will slow this year to about 6%, although some economists predict a rate closer to 4.5%. Valdivieso took over from Carranza in July after years as an economist with the IMF and was instrumental in helping with the free trade agreement with the US, which becomes effective next February. He also concluded similar discussions with China.