August 24, 2012 / 1:12 AM / 7 years ago

Colombia replaces finance minister in surprise move

BOGOTA (Reuters) - Colombian President Juan Manuel Santos moved Energy Minister Mauricio Cardenas to head the finance ministry on Thursday in a surprise move for Latin America’s fourth-largest economy.

Colombia's Mines and Energy Minister Mauricio Cardenas speaks during a news conference after a meeting with his Venezuelan counterpart Rafael Ramirez in Cartagena March 28, 2012. REUTERS/Joaquin Sarmiento

At the midpoint of his four-year term, Santos asked all 16 ministers to resign, including Finance Minister Juan Carlos Echeverry, and set the stage for a cabinet shuffle aimed at shoring up his slumping approval ratings.

“The challenge ahead is to strengthen, maintain, ensure that Colombia remains a country that has excellent international credibility,” Cardenas said.

Cardenas, 50, who helped preside over a boom in the mining and oil industries, will also represent the government on the central bank’s board and seek ways to bolster growth in an economy being hit by the international financial crisis.

Santos, after naming Cardenas, said he was “designed to be finance minister.” He holds a doctorate in economics from the University of California at Berkeley and previously held ministerial posts in economic development and transport.

“Cardenas is an extremely well-known and respected economist, with fiscally sound ideas, so from a market perspective this will be well received,” said Alberto Bernal, head of research for Bulltick Capital Markets in Miami.

“What’s more important now for the market is the political makeup for the entire Santos cabinet.”

Among other posts that may change hands in coming days are the education, health, interior, agriculture and defense portfolios, according to government sources.

Cardenas, who takes on the new role in about a week, may emulate Echeverry’s vocal stance at the central bank and press policymakers to seek more aggressive measures to ease gains in the peso, among the strongest gaining currencies worldwide.

The central bank meets on Friday to vote on whether to cut its benchmark lending rate to stimulate a slowing economy.

Echeverry said he would attend that meeting and “once again try to persuade” the board to more actively purchase dollars in the foreign exchange market to weaken the peso.

Once an investment pariah as drug-trafficking insurgents kidnapped, killed and attacked authorities in rural areas with bombs, Colombia has seen a dramatic turnaround in the last decade, attracting record foreign investment.

But the 61-year-old Santos has come under a constant stream of criticism from former President Alvaro Uribe and a growing number of attacks by leftist rebels, denting his once commanding popularity.


Known for his lively language and joking with the media, Echeverry will be nominated for a top role in the International Monetary Fund, Santos said.

He is credited with guiding a fiscal rule through Congress that aims to save money during boom times and balance the budget by 2014. He also helped secure investment-grade ratings last year from three major credit-rating agencies.

Echeverry said he had asked to leave the government to focus on his family.

Santos did not say who would be the next minister of mines and energy.

Whoever replaces Cardenas as energy minister will be the third person to hold the post in less than two years.

Cesar Diaz, head of the Colombian Mining Chamber, said he did not believe that would affect investor sentiment.

“Officials are important, but more important than officials are the policies of the central government. In this case it won’t affect the sector,” Diaz said.

Others, however, said moving Cardenas to the finance ministry at a critical time for the mining sector, when Colombia is trying to push through a raft of changes, would be negative for the industry.

Some analysts said Defense Minister Juan Carlos Pinzon could be among those leaving the cabinet after a rise in assaults by FARC rebels and a perception that security is deteriorating.

Santos, credited with some of the biggest blows to the rebels, accuses foes of using attacks by rebels as a “political weapon” and dismisses claims by Uribe and his followers that he is failing on security.

Editing by Leslie Adler, Lisa Shumaker and Todd Eastham

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