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Published: Saturday January 25, 2014 MYT 5:35:02 AM
Updated: Saturday January 25, 2014 MYT 5:35:02 AM

Chile's president-elect chooses old faces for new cabinet

SANTIAGO (Reuters) - Chilean President-elect Michelle Bachelet named the cabinet of ministers who she hopes will help her pass a planned program of wide-reaching reforms, with little in the way of surprises among the key posts.

Her trusted adviser Alberto Arenas, an economist and Socialist party member, will take the role of finance minister.

Presenting the nominations on Friday, centre-left Bachelet said she had sought a balance of backgrounds for her government, which will take the reins from the outgoing conservative administration on March 11.

She has promised a blitz of 50 reforms in 100 days, including a raft of changes to Chile's tax rules to pay for improvements to education and health.

The new cabinet's main challenge will be implementing Bachelet's ambitious program at a time the economy of Chile, the world's top copper exporter, is slowing and with Batchelet's bloc holding only a slim majority in Congress.

The ministers will also need to keep happy both social movements demanding change and investors keen for assurances that Chile's business-friendly model won't be tampered with.

"I have chosen a work team based on their leadership characteristics, their technical capabilities, their experience and deep commitment to the government program," said Bachelet, who was Chile's first female leader between 2006 and 2010.

The appointments were carefully drawn from across her Nueva Mayoria bloc, which ranges from moderate leftists to communists.

TAX REFORM A PRIORITY

The 48-year-old Arenas had been the favourite to take the finance minister role. He was head of the budget during Bachelet's first term and helped prepare her tax reform package.

His nomination underlined that an overhaul of the tax system would be one of the new president's first priorities, said Pedro Tuesta from consultants 4Cast.

Arenas said after his nomination that he would be looking to tackle tax reform soon.

"Now we will get to work on, among other things, the tax reform and bills so we can send them to Congress when President Bachelet is ready," he said. "Another of the tasks will be an agenda of productivity, innovation and growth to return to a path of growth."

The robust economic growth that Chile, a Latin American success story, has enjoyed in recent years is easing on lower mining investment and a cooling of previously red-hot domestic demand.

One of the immediate challenges the Bachelet government will have to deal with is the fallout of the verdict of the International Court of Justice in the Hague on a maritime dispute with neighbouring Peru.

The verdict is due on Monday and implementing it will fall to the next government and nominated foreign minister Heraldo Munoz, formerly Chile's ambassador to the United Nations and the author of "The Dictator's Shadow," a book about life in Chile under Augusto Pinochet.

The posts of energy minister and mining minister will be filled by veteran politician and businessman Maximo Pacheco and relative unknown Aurora Williams, respectively.

(Reporting by Santiago bureau, Writing by Rosalba O'Brien; Editing by Chizu Nomiyama and Leslie Adler)

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