Mexican President appeals to allies for top finance jobs to support social change

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MEXICO CITY, June 9 (Reuters) – Mexican President Andres Manuel Lopez Obrador on Wednesday asked his finance minister to head the central bank and chose a close ally to lead the finance ministry to help it achieve its vision a fairer economy during the latter half of his term.

Lopez Obrador said on Twitter that Finance Minister Arturo Herrera will replace Bank of Mexico chief Alejandro Diaz de Leon, whose term ends at the end of 2021.

To replace Herrera, Lopez Obrador has chosen economist Rogelio Ramirez de la O, who will be the third finance minister since the president took office in December 2018.

Ramirez faces the challenge of reinvigorating the economy after two difficult years for Lopez Obrador, whose efforts to strengthen state control over sectors like energy were undermining corporate investment even before the coronavirus pandemic.

Yet, buoyed by massive US stimulus spending, the economy is expected to rebound strongly this year as the president nears half of his single six-year term.

In a video posted to social media to signal the changes, Lopez Obrador pledged to increase social spending, while Ramirez said he will maintain fiscal discipline and prioritize the poor in Mexico.

“We will continue to behave responsibly, without taking the country into debt, without spending more than what we receive, with honesty and austerity,” said Lopez Obrador.

Ramirez, trained at the National University of Autonomy of Mexico and the University of Cambridge, is a long-time adviser to Lopez Obrador and was his choice for finance minister when he presented himself for the first time. once as president in 2006, an election he narrowly lost.

Herrera has said he will step down around mid-July and pledged to maintain central bank independence. He recently defended himself against congressional efforts to change his duties and criticism from Lopez Obrador.

“The role that I will play if the Senate ratifies me is very clear and the importance of defending the autonomy of the Bank of Mexico, and I think the president understands that,” Herrera said in a radio interview. Mexican.

Jorge Gordillo, economist at CI Banco, said Herrera’s appointment was good news as he had a proven track record.

“Herrera is seen as a technical person. He knows the markets, he is respected,” he said. “But we don’t know how much of a man Herrera will be for the president of the Bank of Mexico.”

Luis Gonzali, co-director of Franklin Templeton Investments in Mexico, said Herrera would likely be more independent in the bank than he had in the ministry. He noted that Lopez Obrador’s other candidates for Banxico’s board had not bowed to his will.

Diaz de Leon was appointed head of the central bank under the previous government. Lopez Obrador, who regularly denounces his predecessor, has made it clear that he sees these ties as a problem and has promised to choose a successor who supports “the moral economy”.

Herrera, a former World Bank executive, took over as finance minister in July 2019 when his predecessor resigned after being frustrated by the policy drift.

Under the auspices of Lopez Obrador, Herrera managed tight budgets as a minister and managed to keep taxes relatively high during a prolonged phase of weak economic growth.

The Mexican economy entered a mild recession in Lopez Obrador’s first full year in office and suffered an 8.5% drop in 2020 when the pandemic took hold.

While trying to prop up the economy, Herrera has tried to help the loss-making and heavily-indebted state oil company Petroleos Mexicanos (Pemex). Lopez Obrador has made relaunching Pemex a top priority.

To improve business efficiency, Ramirez is known to be a proponent of simplifying the corporate structure of Pemex, which over time has been split into several companies.

Reporting by Dave Graham; Written by Anthony Esposito

Our standards: Thomson Reuters Trust Principles.


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