October 31, 2013 / 8:53 PM / 6 years ago

Peru's Humala swears in fourth prime minister, retains finance minister

LIMA (Reuters) - Peru’s President Ollanta Humala swore in a widely praised regional politician as his fourth prime minister in a mini-cabinet reshuffle on Thursday, but retained his finance minister despite rumors he might quit.

President of Peru Ollanta Humala speaks at the Harvard Club during the United Nations General Assembly in New York September 25, 2013. REUTERS/Joshua Lott

The new prime minister, Cesar Villanueva, 67, has twice been elected as president of the northern Amazonian region of San Martin and is affiliated with center-left parties. He is the first prime minister picked by Humala to have been elected into a previous office.

Finance Minister Luis Miguel Castilla, who has served in the post since Humala’s election in 2011, remained in place even though he is widely rumored to be seeking a departure from the government for personal reasons.

A source familiar with government plans told Reuters that Castilla had agreed to stay on until next July to shepherd the economy toward stronger growth rates, which he expects as early as the end of this year.

Humala made one other switch - replacing Education Minister Patricia Salas with Jaime Saavedra-Chanduvi, the acting vice president for poverty reduction and economic management at the World Bank.

The changes, a month earlier than a traditional cabinet shake-up in December, come as economic growth has slowed on weak mineral exports and Humala’s popularity has dipped to its lowest level since his election in 2011.

Villanueva has been described as a pragmatic, effective and influential leader by political figures ranging from former president and Humala critic Alan Garcia to left-leaning Salomon Lerner, who resigned as Humala’s first cabinet chief in 2011.

His appointment marks a shift away from decision-making typically dominated by Lima’s political elite.

The outgoing prime minister, Juan Jimenez, who led the cabinet for 15 months, has said he had discussed resigning with Humala for months, and that the president told him early this week that the time had arrived to “refresh” the cabinet.

The president of the central bank and several analysts have said Castilla’s potential resignation would not upset growth as long as he is replaced by another orthodox economist.

As a regional president, the new prime minister promoted zoning rules as a way to prevent land disputes and a new indigenous rights law that Humala has scaled backed to exclude Quechua-speaking peasant communities in the mineral-rich Andes.

Villanueva has also been a competitiveness director for the coffee-trading consortium, Rainforest Trading, a project chief for a Canadian-Peruvian financial group and a manager with the NGO, Cedisa, which advocates sustainable development.

Humala, a former army officer and radical before becoming president, has been criticized for ruling through an insular team that includes his wife - the co-founder of his party - military chiefs and technocrats.

His administration, which turned to the right during massive anti-mining protests in 2011, has settled in the political center over the past year.

Reporting by Lima Newsroom; Editing by David Brunnstrom

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