LIMA, PERU, JUNE 23 -- Prime Minister and Finance Minister Luis Alva Castro resigned last night, triggering a Cabinet crisis in the government of President Alan Garcia and foreshadowing a major shakeup of Peru's controversial economic policy.
Alva's resignation came 10 days after the resignations of the president of Peru's Central Reserve Bank, Leonel Figueroa, and its general manager, Hector Neyra. No candidates to fill those key vacancies in the economic management team have been announced.
Alva quit despite the wishes of Garcia and a large part of the leadership of the ruling left-center American Popular Revolutionary Alliance (APRA), according to senior officials.
Officials said the leaders believed Alva should continue to help direct Peru's economic program, which has begun to show signs of wear after nearly two years of moderate success at holding down inflation and boosting production.
As required by law, all other Cabinet ministers also submitted their resignations, but there has been no sign that Garcia will use this opportunity to recast his Cabinet.
Alva had not hidden his intention to step down to occupy his congressional seat and pursue his presidential ambitions for 1990 without the political risks of managing the economy. Some Peruvian politicians accused Alva of devoting too much time and effort to polishing his public image.
A leading member of Garcia's generational revolt inside the party, Alva reluctantly accepted the premiership and the finance portfolio in July 1985. Although trained as an economist in a provincial university, he had not held a previous managerial position in government and lacked international experience.
He had deep support in the party rank and file, however, and was the party's point man in a Cabinet dominated by the president's personality.
Peru's economy improved last year after four years of stagnation, registering 8.5 percent growth of the gross domestic product and a reduction of inflation to 63 percent from 158 percent in 1985. Consumer purchasing power was also up.
Alva, however, lacked full control over domestic economic policy, which was defined by Garcia and a close circle of independent advisers. Economists said Alva's footdragging on implementing key decisions and, in some cases, contradictory measures has hurt the government's growth-oriented policy.
Independent economists say that inflation is headed for 100 percent this year. The government had been aiming for 60 percent. Manufacturing output has leveled off after high growth last year as the economy has lost steam.