Peru's Humala reshuffling Cabinet in investor-friendly move

Reuters News
Posted: Oct 30, 2013 3:03 PM
Peru's Humala reshuffling Cabinet in investor-friendly move

LIMA (Reuters) - Peruvian President Ollanta Humala is reshuffling his Cabinet after asking his prime minister to leave, part of an investor-friendly effort to push through stalled reforms and projects, sources said Wednesday.

Finance Minister Luis Miguel Castilla, an ally of investors, will remain in office, four sources familiar with Humala's plans told Reuters. Two of them said Humala will change at least five of his 18 ministers.

Energy and Mines Minister Jorge Merino will also stay on, a separate source in his ministry told Reuters.

The regional governor and former business manager whom Humala has tapped as his fourth prime minister, Cesar Villanueva, has been praised by leaders across the political spectrum - except the far left - as an effective leader and savy politician.

The move makes clear that Humala, once a radical nationalist who was elected in 2011 on promises to make sure the poor benefit from Peru's mining-fueled economic boom, intends to continue adhering to orthodox economic policies.

"The market sees this as positive given Villanueva's administration and the fact that it doesn't mean a change to the political economy," said Pedro Tuesta, an economist with 4Cast.

Humala has struggled to carry out controversial reforms to the civil service, education and health care amid large protests staged by government employees, university students and labor unions.

At the same time, several mining projects have been held up by communities worried about water supplies - threatening to hold up Peru's $57 billion pipeline of mining investments.

Outgoing Prime Minister Juan Jimenez presided over 15 months of Humala's most centrist Cabinet so far, during a period marked by relative calm in the Andean country rife with social conflicts.

But many in the country's powerful mining industry have complained the Humala administration has been slow at cutting red tape and brokering deals with Andean towns at a time when Peru's economy has slowed on weaker mining exports.

Villanueva, a member of the center-left Fuerza Social party, once backed Cajamarca Regional President Gregorio Santos in his opposition to Newmont Mining's $5 billion controversial Conga gold project.

He later changed his position, and Santos distanced himself from Villanueva on Twitter Wednesday.

Jimenez had been leading a rocky effort to improve ties between Humala's government and political opponents - a challenge that Villanueva said he would eagerly tackle.

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Former president and free-market crusader Alan Garcia, often eager to criticize Humala, welcomed Villanueva.

"He's a very good choice," Garcia told RPP media. "He is an official who knows how to act."

Villanueva was twice-elected regional president of the northern San Martin department and has been an influential figure in the interior of Peru.

His leadership could bring needed political experience to the Humala administration. Humala, a former military officer, is often criticized for governing through an insular team of technocrats and military officers.

"Throughout the Humala government there has been a real deficit of politicians - people with political experience and political skill," said political scientist Steven Levitsky. "But Cesar Villanueva is a skilled politician."

Humala has seen his popularity fall nearly 30 percentage points this year, with Peruvians polled saying he has not fulfilled his campaign promises.

(Reporting By Patricia Velez, Marco Aquino and Mitra Taj; Editing by Doina Chiacu)