Peru's interim president swears in centrist Cabinet

Interim Peruvian President Paniagua salutes Saturday before the swearing in of his new Cabinet at the Government Palace in Lima

LIMA. Peru (Reuters) -- Interim President Valentin Paniagua swore in a respected economist as Peru's new economy minister Saturday, part of a new Cabinet headed by former U.N. Secretary-General Javier Perez de Cuellar.

Javier Silva was sworn in at a ceremony in the presidential palace. He served as economy minister from 1978-80 and his extensive international experience is likely to be useful as he steers the fragile $53 billion economy in the period before elections scheduled for April.

Paniagua swore in 16 ministerial posts. The new ministers are mostly middle-of-the-road figures expected to bring cross-party support to the interim government, which aims to hand over power to an elected president in July.

Other appointments included retired former Gen. Walter Ledesma as defense minister and Diego Garcia -- a respected judicial and human rights expert -- as justice minister.

Ketin Vidal -- once a popular hero in Peru when, as head of the police's anti-terrorism unit, he captured Shining Path rebel leader Abimael Guzman in 1992 -- was appointed as interior minister.

Paniagua was installed as interim president Wednesday. On Tuesday, Congress fired Alberto Fujimori in absentia after he fled to his ancestral homeland, Japan, amid escalating allegations of government corruption.

Paniagua, a moderate opposition lawmaker under Fujimori, named Perez de Cuellar as prime minister as his first move as interim president.

The 80-year-old Perez de Cuellar, who was also named as foreign minister Saturday, is considered something of an elder statesman and above the fray of Peruvian politics.

Silva held the No. 2 post in Peru's central bank from 1968-70. He has also served as agriculture minister, vice president of the Andean Development Corporation and Peru's representative to the World Bank, International Monetary Fund and Inter-American Development Bank.

Posing for the media Saturday, from left to right: Prime and Foreign Minister Javier Perez de Cuellar, Defense Minister Walter Ledesma and Minister of Economy Javier Silva

"Silva is a very respected economist and would guarantee stability in the ministry," outgoing Economy Minister Carlos Bolona told reporters Friday.

"The fact that it is Silva gives me peace of mind because he knows the economy, he values stability, fiscal equilibrium and the solution of external debt payments. He can provide economic tranquillity," Bolona said.

Silva will have to tread a thin line between demands from investors for the government to reduce a widening budget deficit and calls from unions for more jobs and higher wages in an economy which grew more slowly than expected last year.

Paniagua's Cabinet has a mandate to lead Peru to the April 8 elections -- which he has vowed will be fully fair after fraud charges overshadowed the April-May polls that returned Fujimori to office for a third term.

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