CABINET CHANGE: MINISTER OF ECONOMY AND FINANCE

C O N F I D E N T I A L LIMA 000093 SIPDIS E.O. 12958: DECL: 01/22/2019 TAGS: PGOV ECON PREL PINR PE SUBJECT: CABINET CHANGE: MINISTER OF ECONOMY AND FINANCE REF: A. 08 LIMA 1868 ¶B. 08 LIMA 1659 Classified By: Ambassador P. Michael McKinley for reasons 1.4 (b) and (d). ¶1. (SBU) Luis CARRANZA Ugarte was sworn in (again) as Peru's Economy and Finance Minister following the January 19 resignation of Luis VALDIVIESO Montano, who had held the post over the last six months. The widely respected Carranza previously headed the Ministry of Economy and Finance (MEF) from July 2006 to July 2008. ¶2. (C) Upon taking his oath of office, Carranza said he would accelerate spending on public infrastructure projects as a means to blunt a deceleration of economic growth, seeming to confirm rumors that Valdivieso had been reluctant to increase public spending. One embassy contact told us that Valdivieso left because he continually clashed with APRA party members, particularly those holding important positions in regional governments who wanted to be able to spend freely with little or no controls. Another contact told us Valdivieso was charged by President Garcia with the main purpose of ensuring the full implementation of the FTA with the U.S. Now that this task has been accomplished, Valdivieso wanted to return to a more lucrative career in the private sector, he claimed. ¶3. (C) Comment: We understand that Valdivieso has little chemistry with the President, whereas Carranza does enjoy a close personal relationship with Garcia. This may be of significance in a period where the President, despite high levels of public confidence, is increasingly focused on the effects of the global financial crisis. End Comment. MCKINLEY