President Jose Lopez Portillo last night unexpectedly fired the two key economic figures in his 11-month old Cabinet, Finance Minister Julio Rodolfo Moctezuma and Planning Minister Carlos Tello.
The two men had long been at odds over Mexico's current economic austerity program and its serious political and social cost.
This first Cabinet reshuffle was described in an official communique as a move "permitting the president to make appointments in related areas which require total harmony."
The new finance minister is David Ibarra, 47, a well-known economist, until now director general of Nacional Financiera, the government's development bank. Taking over as minister of planning and budget is lawyer Ricardo Garcia Sainz, 47, who was undersecretary at the Industrial Development Ministry.
Departure of the two ministers has shocked Mexican political and business circles. Neither was a politician. Both were known as accomplished planners and long-time close associates of the president, a former finance minister himself.
The reshuffle comes in the midst of the preparation for the 1978 budget, which is believed to have exacerbated the differences between the two opposing currents of economic budgeting that the men represented within the government.
Last November, the International Monetary Fund, in exchange for a $1.2 billion loan, insisted on a strict austerity program to deal with Mexico's most program, which had sis in 20 years.
The result anthproggam, which had the strong support of Moctezuma, has held down public spending and salaries and by all accounts has brought a dramatic turnabout to the economic situation. Inflation, over 45 per cent last year, is down to about 20 per cent this year, while trade and budgetary deficits have been reduced drastically.
But leftists in the Cabinet, including Tello, warned that deflation was being achieved at too high a social cost. The brunt of the recession, so they said, is being carried by Mexico's already impoverished majority and has resulted in a dramatic drop in purchasing power and employment.
According to a government estimate, unemployment and underemployment now affect an unprecedented 53 per cent of the work force and less conservative economists argue that it is high time for economic expansion.
Today's new economic appointees are thought to be adherents of a middle-of-the-road policy, although neither has made any statements of their intentions.