The military shake-up was announced by newly appointed defense minister Walter Ledesma.
Thirteen of the generals graduated with former intelligence chief Vladimiro Montesinos in the Peruvian Military School of Chorrillos in the class of 1966, according to local media reports.
The other two generals were the head of the joint chiefs of staff, Gen. Walter Chacon, and Gen. Carlos Balarezo, who headed the air force.
The military restructuring came after the interim president, Valentin Paniagua, swore in a Cabinet whose members are known more for their professionalism than for their politics.
The 15-member cabinet is led by elder statesman Javier Perez de Cuellar as foreign minister and prime minister.
Many of the other members have served as ministers in other governments, and come from a variety of political groups.
De Cuellar, an 80-year-old career diplomat who served two terms as secretary general of the United Nations, has a reputation as someone above the political fray. His skills may be called into play ahead of possibly divisive general elections set for April 8.
"People will say it's too good a Cabinet to be a transitional one," said political analyst Mirko Lauer. "The members are professionals rather than well-known activists. The common dominator is their distance from Fujimori."
Opposition member Mercedes Cabanillas said the appointees are known and respected for their professionalism.
Paniagua and his Cabinet are expected to serve
until July 28, when the winner of April's elections will begin serving.
Paniagua was installed as interim president after Congress sacked Alberto Fujimori, who had fled to Japan in the wake of a corruption scandal involving Montesinos.
Economy minister faces fragile economy
The caretaker Cabinet has the daunting task of leading a politically polarized and economically struggling nation. But the Cabinet was perceived as a fresh start toward bringing stability and credibility to the South American nation.
Respected economist Javier Silva Ruete, a former Cabinet member with international experience, was appointed minister of the economy.
"Silva is a very respected and would guarantee stability in the ministry," outgoing Economy Minister Carlos Bolona told reporters on 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 added.
Silva will tread a fine line between investor demands to raise taxes and cut spending and union calls for more jobs and higher wages in a fragile $53 billion economy that has struggled to grow this year.
Silva has first-hand experience with the multilateral lending agencies that his predecessor was courting for $1 billion to bridge next year's expected budget gap.
Number two in Peru's central bank from 1968-70, Silva was Peru's youngest agriculture minister when he took over the portfolio in 1965-67.
He was also vice president of the Andean Development Corporation and Peru's representative to the World Bank, the International Monetary Fund and the Inter-American Development Bank.
Paniagua, who was installed in office on Wednesday, has already said he wants to examine ways of making Peru's $28 billion external debt burden more affordable.
Although economists say that is unlikely to mean a full-scale debt rescheduling, Silva is expected to seek negotiations with individual Paris Club creditor nations to ease the pressure on a stagnant economy.
Silva negotiated Peru's first economic deals with the IMF in 1980 and is also credited with reducing fiscal spending and putting Peru's international reserves back in the black.
Silva studied in Peru, Uruguay, Italy, France and the United States; he worked in Italian and French banks.
Interior minister 'anti-terrorism' expert
The issue of former spy chief Montesinos remains a delicate one for the new government. On Saturday, Paniagua told CNN the government will "cooperate" with congressional and judicial investigations into Montesinos, who is wanted on charges ranging from money-laundering to ordering death squads.
Despite a nationwide manhunt, Montesinos has been in hiding for more than a month. A failure to find the former spy master could prove a major headache for the caretaker government, according to political analysts.
That is probably why Ketin Vidal, once a popular hero in Peru, was appointed as interior minister. As head of the police's anti-terrorism unit, Vidal captured Shining Path rebel leader Abimael Guzman in 1992.
Vidal will likely be in charge of capturing once again
Peru's "most wanted man," -- even if this time it is not a left-wing "terrorist" but a former government official.
The new Cabinet will have to deal with mounting accusations, seemingly published each day, against military officers, politicians and judges considered loyal to Montesinos during Fujimori's 10-year government.
Some key government figures have called for a "truth commission" to probe and publish cases of corruption during Fujimori's 10 year rule.
In the latest accusations, La Republica newspaper said it has evidence that millions of dollars were paid to military officers close to the former spy chief.
As yet, no formal charges have been brought against Fujimori, but many Peruvians see his absence from Peru as evidence he could be linked to Montesinos' activities.
Fujimori, whose parents emigrated to Peru in the 1930s, is listed on an ancestral register that bestows the Japanese nationality that will allow him to stay in his familial homeland.
Other Cabinet appointments included retired former Gen. Walter Ledesma as defense minister, and Diego Garcia Sayan -- a respected judicial and human rights expert -- as justice minister.
CNN Correspondent Claudia Cisneros and Reuters contributed to this report.
![[CNN Money]](http://i.cnn.net/cnn/images/main/fn.logo.newsnet.gif){kind=logo}
![[SI.com]](http://i.cnn.net/cnn/images/main/si.logo.gif){kind=logo}
(
