Alfie, 41, had been economic adviser to Atchugarry, who guided the South American country through its worst financial crisis.

  

President Jorge Batlle announced the resignation and the new appointment on Tuesday in the capital Montevideo.

 

"We must forge ahead more calmly than under the pressure we worked under in the last year and a half," Alfie said, after being named the new economy minister.

 

List of priorities

  

Atchugarry had been at the ministry's helm since July 26, 2002. After a currency crunch prompted an extended bank holiday, Uruguay's economy contracted by 11 percent in 2002.

  

Alfie said his priority was to control government spending. "Then, we will consolidate the confidence and incipient recovery we have made," he told reporters.

  

"The emergency is past. Now we have very important things (to do) but not when we are up to our necks," he added.

  

He is known as an orthodox liberal economist who has worked in the ministry since 1991, during the administrations of Luis Lacalle (1990-1995), Julio Sanguinetti (1995-2000) and Jorge Batlle, elected in 2000.

 

"The emergency is past. Now we have very important things (to do) but not when we are up to our necks," he added.

Isaac Alfie,
Uruguay's new economy minister

"A political era has concluded and a technical era is now under way," Batlle told reporters on making the surprise announcement. Alfie has no party affiliation.

  

Atchugarry, 51, a Colorado Party loyalist close to Batlle, won a Senate spot in 1999 before taking the economy portfolio. Having ridden out the worst, he then helped get the country's fiscal profile back on track before bowing out.

  

This year, he helped steer the economy back onto firmer ground, directing the sale of public debt securities worth five billion dollars.

  

Alfie is also credited for his role in the successful swap, a first for Uruguay.

  

Both men helped conclude a new deal with the International Monetary Fund (IMF) in May which set revised macroeconomic targets: a forecast budget deficit equal to 3% of gross domestic product; inflation under 20%; and economic contraction of one percent.