Tags: Chile | Finance Minister

Chile's Finance Minister Out in Sweeping Cabinet Reshuffle

Monday, 11 May 2015 10:41 AM

Economist Rodrigo Valdes was named as Chile's finance minister on Monday, in a sweeping Cabinet reshuffle by President Michelle Bachelet that saw her core group of closest ministers all replaced.

Although a partial reshuffle was expected a year into Bachelet's second term, it is unusual for so many to be replaced at the same time and is the first time since Chile returned to democracy in 1990 that the finance minister has been dismissed mid-term.

The shake-up comes after center-left Bachelet's approval ratings fell sharply, dragged down by a series of financial scandals, as well as a slowing economy and disillusion with her reform drive.

Bachelet took office for a second term in March 2014 after first serving as president in 2006-2010.

Outgoing finance minister Alberto Arenas had a strained relationship with the business community following unpopular reforms and an "inability to communicate with the market," said Tiago Severo, Latin America economist at Goldman Sachs.

Economists welcomed the appointment of Valdes, who is currently chairman of state bank Banco del Estado. He has a doctorate in economics from the Massachusetts Institute of Technology and was formerly a deputy director of the International Monetary Fund.

He has also previously worked at the finance ministry, as co-ordinator of economic policy in the early 2000's.

"The figure of Rodrigo Valdes is certainly going to be most likely perceived as a market-friendly new minister, who could perhaps instill a renewed sense of confidence in the outlook for the economy," said Severo.

Any change in the direction the ministry takes would more likely be one of tone rather than significant adjustments to Bachelet's ambitious tax-and-spend reform agenda, economists said.

The other key change was Interior Minister Rodrigo Penailillo, one of her closest allies, who was replaced by current defense minister Jorge Burgos, a political veteran.

Penailillo had been tainted by media reports of connections with one of the companies at the center of a campaign finance scandal and was widely expected to go.

Bachelet also replaced another two key advisors - spokesman Alvaro Elizalde and Chief of Staff Ximena Rincon, who moves to the Labor Ministry. In total there were six new appointees to the cabinet, with three changes of role.

"Today it is time to give the government a new lease of life and this new phase which is as demanding as it is inspiring requires renovated energy and new faces," said Bachelet.

© 2017 Thomson/Reuters. All rights reserved.

   
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Economist Rodrigo Valdes was named as Chile's finance minister on Monday, in a sweeping Cabinet reshuffle by President Michelle Bachelet that saw her core group of closest ministers all replaced.
Chile, Finance Minister
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2015-41-11
Monday, 11 May 2015 10:41 AM
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