López Obrador appoints a new finance minister and head of central banking

Mexican President Andrés Manuel López Obrador has appointed Rogelio Ramírez de la O, a consultant with no experience in the public sector, to replace Finance Minister Arturo Herrera, who is transferred to head the country’s central bank.

Flanked by the two officials, López Obrador in a video Wednesday hailed Ramírez de la O as “master of economics… Experienced, serious”.

Ramírez de la O, 72, is general manager of Ecanal, a Mexican private consultancy, and is a doctor from Cambridge. He is a first-time ally of the president and would have been destined to become finance minister if Lopez Obrador had won the 2006 and 2012 elections.

However, he had declined invitations to take over the financial portfolio after López Obrador became president in 2018.

The weight was released fractionally after the announcement. Mexico’s financial markets were boosted this week after the midterm elections on Sunday, in which López Obrador it failed to maintain its two-thirds majority in the lower house of Congress, denying them the ability to change the constitution at will.

Some analysts were skeptical about the choice. “He has literally zero practical experience,” said Eduaro Suárez, vice president for Latin American economics at Scotiabank.

Ramírez de la O is not expected to oppose that of López Obrador economic vision, particularly in energy, where it favors oil and public utility companies over private investment.

The president reiterated that there will be no changes in his priorities: no increase in debt, taxes or energy, and “the poor come first.”

That meant “we will have to continue to juggle,” said Gabriela Siller, head of economic analysis at Banco Base. López Obrador cut spending to the bone and saved rainy days by pouring resources into pensions, scholarships and pet infrastructure projects.

However, MexicoThe economy is picking up from Covid-19 and is expected to grow to 6.5 percent this year, after dropping to 8.5 percent by 2020.

“If it takes more than two and a half years in the president’s administration, Rogelio must know very well the game plan for public spending,” said Alonso Cervera, chief economist for Latin America on Credit. Switzerland. “It will probably allow the president’s ideas regarding the energy sector.”

Herrera said Ramirez de la O was likely to draft the budget, which is due to be presented by September. Pending is also a tax reform that leading government sources have said will not contain wealth or inheritance taxes.

Alejandro Díaz de León, current governor of the central bank, is scheduled to leave his post in December. López Obrador said he had announced his replacement now to avoid market outrage.

If confirmed by the Senate, Herrera – who counts former Federal Reserve Chairman Ben Bernanke among the key influencers – would complete a line of non-Mexican insiders on the central bank’s board. López Obrador had stressed the need for a “moral economist” at the helm.

Herrera is well known to investors, but his closeness to the president makes his ability to defend central bank autonomy less clear. He said he was staying in his current position for about another month.

Díaz de León mounted a severe defense last year when lawmakers pushed a bill he would pass forced the central bank to absorb the dollars that the banks were unable to repatriate.

“I think Herrera has shown to be prudent, and he has won the trust of the markets,” Suárez said. But he added: “He will have to work hard to signal strong independence from the government.”

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