López Obrador is appointed new Minister of Finance and Head of the Central Bank

Mexican President Andrés Manuel López Obrador has appointed Rogelio Ramírez de la O, an inexperienced public sector adviser, to replace Finance Minister Arturo Herrera, who is running the country’s central bank.

Flanked by two officials, López Obrador sued Ramírez de la On video on Wednesday “as a master of economics. . . experienced, serious ”.

Ramírez de la O, 72, is the CEO of Ecanal of Mexico’s private consulting firm and holds a PhD from Cambridge. He is an ally of the longtime president and was nominated to become finance minister if López Obrador won the 2006 and 2012 elections.

However, he declined invitations to take on the finance portfolio after López Obrador became president in 2018.

Some analysts were skeptical of the possibility. “He literally has no practical experience,” said Eduardo Suárez, Scotiabank’s vice president of Latin American economics.

The weight was broken after the announcement. Financial markets in Mexico have strengthened this week, following the midterm elections on Sunday, in which López Obrador he did not hold his two-thirds majority In the lower house of Congress, denying the ability to change the constitution at will.

If it takes more than two and a half years in the president’s administration, Rogelio needs to know very well the public spending game plan.

Ramírez de la Ok is not expected to play against López Obrador economic perspective, especially in terms of energy, where the populist president favors state-owned oil and public service companies in favor of private investment.

López Obrador confirmed that there will be no change in his priorities: no debt, no taxes or no increase in energy prices, and “the poor are the first”.

That means “he will have to keep juggling,” said Gabriela Siller, head of economic analysis at Banco Base. López Obrador has cut spending to the bone and focused on rainy day savings throw resources into pensions, grants and pet infrastructure projects.

However, it is the Mexican economy Bounce of Covid-19 and is expected to grow by 6.5% this year, after falling by 8.5% in 2020.

“If it takes more than two and a half years in the president’s administration, Rogelio needs to know very well the public spending game plan,” said Alonso Cervera, Latin America’s chief economist at Credit Suisse. “It’s likely to allow the president to get his ideas about the energy sector.”

Herrera said it is likely that Ramírez de la Ok will make the budget, which is due to be submitted by September. Tax reform is also pending, government senior sources said they would not receive wealth or wealth taxes.

The current central bank governor, Alejandro Díaz de León, will step down in December. López Obrador said he had previously announced his replacement to avoid market concerns.

If confirmed by the Senate, Herrera -former former President of the Federal Reserve Bernanke is one of his most important influences- would form a non-Banxico internal group in the central bank’s management. López Obrador led the need for a “moral economist”.

Herrera is well known to investors, but his ability to maintain the central bank’s autonomy in his closeness to the president is less clear. He said he expects to be in his current position for about another month.

Díaz de León mounted last year’s defense when he pushed for a bill that would be passed by lawmakers the central bank forced it to absorb dollars that the banks could not repatriate.

“I think Herrera is cautious and has won the trust of the markets,” Scotiabank’s Suárez said. But he added: “He will have to work hard to show that he has great independence from the government.”