Nicaragua Fires Author of Its Economic Plan From Central Bank Post

Francisco Mayorga, the Yale-educated monetarist who forged an ambitious economic recovery plan for Nicaragua’s new pro-American government and shouldered much of the blame for its continuing hardships, has been dismissed as president of the Central Bank.

The government announced Wednesday that Mayorga had resigned Tuesday to return to teaching. But the economist made it clear at a news conference that he was forced out over policy differences with other presidential advisers. He said President Violeta Barrios de Chamorro had asked all five members of her economic team to offer their resignations three weeks ago and had accepted only his.

“My positions were different from those of the majority of the economic Cabinet,” Mayorga said Wednesday. “I believe that President Chamorro and Antonio Lacayo (her chief of staff) wanted a team that was more executive and less theoretical.”

Mayorga, 39, helped Chamorro upset Nicaragua’s revolutionary Sandinista leadership at the polls by promising to help her whip hyper-inflation within 100 days. His departure, with inflation on the decline but still running at 30% for October, was the first Cabinet shake-up since she took office six months ago.

Raul Lacayo, a Central Bank vice president, was named to replace Mayorga.

The shake-up came four days after a wide-ranging agreement between Chamorro’s government and the still-powerful Sandinista labor movement over how to share the burden of reviving this impoverished country’s war-battered economy.

Aimed at defusing Sandinista-led labor unrest that has unsettled the new government, the agreement was shaped by a team of government advisers in which Mayorga played a minor role. Some of its provisions appear incompatible with Mayorga’s pet project--the gradual introduction of a new national currency called the gold cordoba and its permanent pegging to the dollar at a 1-to-1 rate.

Since it was first circulated in August, the gold cordoba has replaced one fifth of Nicaragua’s $50-million money supply. To protect it from inflationary ravages that have stripped the old cordoba of 90% of its value since May, Mayorga had moved to introduce the new currency gradually.

But his plan was widely criticized as too radical.

The government’s agreement with the unions, reached after five weeks of negotiations, calls for a quicker conversion to the gold cordoba and for an exchange policy boosting competitive exports.