Peru’s finance minister resigns, Luis Carranza sworn in for second stint

Six months after stepping down as finance minister, Luis Carranza was sworn in for a second stint in the post after his successor Luis Valdivieso stepped aside to accept President Alan Garcia’s offer of a high-level government position abroad.

Valdivieso provided few details about his new position, but told reporters “President Alan Garcia has honored me again” with an appointment abroad to promote Peru.

Luis Carranza is a guarantee of continuity, added Valdivieso. Political economy depends not on the people who occupy the position, but on politics we follow, he added.

“With this affirmation of continuity, which seeks to utilize the capacities of people inside and outside of Peru in the manner that best serves the Republic, I nominate, for the second time, Dr. Luis Carranza as minister,” said Garcia Monday, when the second-time-around finance minister was sworn in.

Carranza, 42, has been lauded by Peru’s investment and business sectors as the architect of the country’s unprecedented economic boom — economic growth in 2007 was around 9 percent — and for keeping the inflation rate lower than that of most other countries in South America during his previous tenure in the post, from July 2006 to July 2008.

Now, despite Peru’s considerable economic success in 2008 and the fact that it is weathering the global crisis better than most other Latin American countries, Carranza nevertheless faces a daunting task.

In October, plummeting prices for copper caused Peru’s exports to fall for the first time since 2002, down 11.4 percent compared to the same month last year. All mining companies have put expansion and development plans on hold. Peru is the world’s largest silver miner and third-biggest copper producer.

In September, Peru announced a trade deficit for the first time in more than five years, and a $506 million shortfall in October. And, the government has already lowered its forecast for next year’s economic growth from 9 to 6.5 percent.

In December, Garcia rolled out a $3.2 billion emergency package to cushion Peru from the global financial crisis.

“I will dedicate myself to making sure that the (anti-crisis) plan functions as best as possible,” said Carranza during a press conference, just minutes after he was sworn in. “(Valdivieso’s) plan can perfectly be financed and won’t destabilize public finances. What is important is making sure that it is rapidly implemented.”

Valdivieso, 58, a veteran International Monetary Fund economist, took over from Carranza in July. He helped plan Peru’s economic stabilization program for 1990-1992 when former President Alberto Fujimori wrestled with the hyperinflation left by the current President in his first term, and recently concluded free trade talks with China.

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